A report by credit rating agency Moody’s revealed that although the summer’s Olympic and Paralympics Games are expected to provide a “huge marketing platform” for brands, the benefits are likely to only provide a temporary lift to companies’ earnings.
The government’s decision to extend Sunday trading hours during the event is predicted to deliver a “one-off” lift to revenues. However any longer term benefits for sponsors, will come from increased exposure rather than actual sales.
Adidas reported a “significant deceleration’ in consumer demand for its products in China in the year following the Beijing Games. Despite the drop, the sports business said it grew its share of the mid-teens market.
Moody’s adds that a jump in sales during the London 2012 Olympic Games will make it more difficult to achieve positive sales comparatives for the same period next year.
Sponsoring the games is about more than a hard return on investment for many sponsors now. Indeed, GE used its sponsorship of the Beijing Games to spur a restructure of its entire sales approach, while Cadbury is using this year’s event to put in place a framework for measuring the social impact of its marketing.
David Powell, associate director of sponsorship at agency Redmandarin, says the success or failure of an Olympic partnership is in the hands of the sponsors.
He adds: “Becoming a partner of the Olympic Games offers brands no presence in any of the events and no TV visibility. Around the London Games we’re seeing more sponsors than ever before think about their deals not just as marketing exercises, but actually integrated into the business.”
James Eadie, Olympic portfolio director at Coca-Cola Great Britain, says the brand’s sponsorship strategy has been developed to create social value as well as commercial value that can be assessed against broader business objectives.
Last month, the company announced plans to measure the social impact its London 2012 Olympic Games Sponsorship activity is having on communities around the world.
Leaving a lasting legacy in the capital is also key objective for fellow American company Cisco.
Coca-Cola says its ‘Move to the Beat’ campaign is not about just raising brand visibility for a “few months” and plans to build on the grassroots initiatives already in place for future activity.
While Cisco is using its Olympics tie-up to showcase its network infrastructure, the company is also activating its sponsorship by supporting a scheme called “Out of the blocks”, which encourages children to gain qualifications in maths and science. More than 4,500 are currently participating in the programme, which includes sponsored activity books and digital content.
Cisco has also committed to establishing 50 Networking Academy programmes into schools and colleges in the Olympic host boroughs.
Ian Symes, Cisco’s marketing director for UK and Ireland 2012, says: “When we signed up to sponsor the Olympics, people still thought we were a US tech sales company but we want to change that perception. We’re very much a part of British society and part of the social fabric and as part of that we are encouraging a new generation [into employment].”
Not surprisingly, British brands want to be associated with their home event and Locog’s official roster of dedicated London 2012 partners includes BT, BA, Lloyds TSB and EDF Energy.
The energy company is readying a multi-channel advertising campaign next month to support its grassroots marketing activity.
Gareth Wynn, EDF Energy’s London 2012 program director says the business wants the work it is doing with schools and community groups through its sponsorship to create a “pipeline of young people who are suitably skilled and motivated to come work for us in the future.”
Wynn adds: “Our sponsorship of the games is not an end in itself. We’ve got a platform that allows us to get our message across that we provide low carbon electricity as well our sustainability messaging. We’re now looking at how we can adapt all these aspects for when the Games end.
The Olympic Games offer brands the most powerful and valuable marketing platform imaginable, according to The International Olympic Committee (IOC),
For sponsors this is no longer just about generating hard-returns on investments. Instead brands are using their sponsorships as a catalyst to add social value to their activity.