Business

Faster, Higher, Richer

For advertisers, the Olympic Games are more golden than ever

JOHN SCHOFIELD February 23 1998
Business

Faster, Higher, Richer

For advertisers, the Olympic Games are more golden than ever

JOHN SCHOFIELD February 23 1998

Faster, Higher, Richer

For advertisers, the Olympic Games are more golden than ever

JOHN SCHOFIELD

Business

Michael Budman, the hip, bushy-browed co-founder of Roots Canada Ltd., is bursting with patriotic fervor. Live on the line from the cramped Kokusai 21 hotel in Nagano, Japan, Budman has just returned from watching Roots poster boy Elvis Stojko place second after an impressive performance in the first round of the men’s figure-skating competition. As it happens, Roots, the official outfitter to Canada’s 153-member Olympic team, is not doing too badly either. “I can tell you that hands down, Canada has won the gold medal for clothing,” the Detroit-born Budman trumpets. The team’s red melton cloth and elkhide “podium jackets” are the toast of the town, he says. And the Roots logo—which is larger than the word “Nagano” on the stylish coats— is flashing across TV screens the world over. “I think that any time you can put yourself on a global playing field like this,” says Budman, “you’re doing a great thing for your brand.”

And, chances are, making lots of money. The ascetic ideals that originally inspired the Olympics have long since given way to unfettered commercialism, and the marketing bonanza surrounding this Winter Games is bigger than ever. Companies hungry for maximum exposure and Olympic prestige are willing to pay almost any price for the right to brandish the Games’ most jealously guarded symbol: the five Olympic rings. Those multicolored hoops, according to a global survey by London-based Sponsorship Research International, are the most recognized symbol in the world—better known than the McDonald’s arches or even the Christian cross. Olympic organizers have learned to leverage that fame to the hilt, swinging rich sponsorship deals that include a growing number of non-cash perks from free clothing to jobs for athletes. And the gold rush shows no sign of weakening. As Paul Shugart, the executive director of marketing for the Canadian Olympic Association, puts it: “There’s no shortage of people who are willing to pay more and more money for sponsorships.”

It’s not hard to see why. The Games are easily the most-watched sporting event in the world—at a time when the television audience for many professional sports is eroding. The 1996 Summer Olympics in Atlanta attracted an average daily audience of 1.2 billion people, making it the most popular sports event in history. In Canada, about 88 per cent of those surveyed in a January poll said they expect to tune into coverage of the Nagano Games at some point during the 16-day extravaganza. In the first three days, that translated into as many as 2.7 million viewers during the prime 8 to 11 p.m. time slot, says Jim Byrd, vice-president of English television networks for the CBC. (CBS, the exclusive U.S. broadcaster, pulled down a prime-time viewership of about 48.5 million.) Amid an increasingly fragmented TV market, with its dizzying array of new channels, that has made the Olympics far and away the best marketing game in town. “Advertisers just have to be there,” says Niraj Dawar, a professor of marketing at the University of Western Ontario in London. “It’s one of the few events where you can still reach a mass audience.” But the appeal goes beyond numbers alone. “In raw marketing terms, the viewer demographic and the exposure you get with the Olympics is about as good as you can get with TV advertising,” says Rupert Duchesne, vice-president of marketing for Air Canada, which paid an undisclosed amount to become Team Canada’s official airline. Unlike most sporting events, sponsors are assured an audience that is almost evenly split between men and women, as well as the eyes and minds of many consumers who rarely watch TV.

That choice audience does not come cheaply. A 30-second commercial during prime time costs $38,500. Still, there has been no shortage of takers. When McDonald’s balked at the price tag, the CBC quickly signed up Subway Sandwiches and Tim Hortons in the fast-food category. They were joined in the coveted Olympic airtime by 10 other major advertisers, including Air Canada, Labatt Brewing Co. of Canada Ltd., the Royal Bank, General Motors of Canada Ltd. and the Dairy Farmers of Canada.

Their messages are hard to miss. Byrd says the main channel will run a total of 5,760 half-minute spots during its 240 hours of coverage. Newsworld, CBC’s all-news cable channel, will run 1,600 ads over 100 hours. The network refuses to release its expected ad revenue figures—“for competitive reasons.” But according to one estimate, the CBC has sold at least $40 million in advertising for the Nagano Olympics, more than enough to cover the $23-million cost for Canadian television rights and the estimated $15-million price tag for production. “It’s a record amount for Olympic coverage in Canada,” says Byrd.

Olympic organizers are setting some records of their own. Last summer, General Motors Corp. gave the International Olympic Committee and the NBC television network an unprecedented $1.4 billion in cars and cash to call itself the official U.S. auto company of the

Olympic Games through 2008. For similar identification with the Games in Nagano and those in 2000 in Sydney, Australia, companies such as Eastman Kodak Co., Coca-Cola Co. and IBM paid the IOC more than $57 million each to become international sponsors. Such sponsorships have raised a total of $648 million for the Games.

The Canadian Olympic Association has been no stranger at the party. For the four years from 1997 to 2000 inclusive, it has already generated more than 60 per cent of its target of $35 million in sponsorships and licensing agreements. By comparison, the association attracted $16 million for the four-year period that included the Atlanta Games. The Canadian Olympic Association receives no direct share of TV advertising revenues: broadcast rights are auctioned off by the IOC. Instead, it makes its money by selling companies status as official “sponsor partners.” The cost: $1 million or more a shot. As a cheaper option, companies that supply $300,000 or more in goods or services to the association are granted more limited rights as “official suppliers.” But all 18 Canadian companies that have paid to join one or the other category are entitled to use the Olympic name, as well as the rings and torch symbols, in their marketing.

Those images instantly bestow a measure of prestige on any advertising campaign. And both the IOC and the Canadian Olympic Association are constantly on guard for so-called ambush marketers—firms that make unauthorized use of the coveted symbols. Last week, the Canadian association successfully forced a regional television ad for Saskatchewan Power Corp. off the air because it depicted five curling rocks coming together to form the Olympic rings.

While the cost of sponsorship is steep, the association says it looks for companies with more than merely deep pockets. “It’s not in our best interests just to sign up a sponsor who writes us a cheque,” says Shugart. ‘We want someone to promote what we’re all about.” That is why the Stentor Resource Centre Inc., which represents Canada’s major telephone companies, funded the development of Olympic books and posters, which were distributed to elementary schools across Canada. Home Depot Canada is an active participant in the COA’s Athlete Job Opportunities Program. The Toronto-based company is committed to hiring 30 Olympic athletes over the next four years, paying them full-time wages to work only half time—an arrangement that will give them more opportunity to train.

The association also puts a premium on firms that are innovative marketers, says David Kincaid, vice-president of marketing for Labatt. Creativity is essential to cut through the clutter of ads that typically accompanies coverage of the Games. “The Olympics force companies to raise the high bar,” says Kincaid, “to make sure they have advertising that breaks through.” Labatt has scored points with viewers during the Nagano Games with an offbeat spot for Kokanee beer that features a Godzillalike creature swallowing, then spitting out, a snowboarden The runaway success of Olympic marketing campaigns like those of Labatt or Roots has given a new meaning to the Games’ ancient motto. To the slogan “Faster, higher,

stronger” sponsors and organizers can now add “richer.” □