STRATEGY

Gold-Medal Marketing

For companies looking to profit from the Beijing Olympics, the race is on.
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How to sum up the marketing frenzy that already surrounds the 2008 Beijing Olympics? "In a word: orgy," says Tom Doctoroff, the Shanghai-based CEO of greater China operations for JWT (NASDAQ:WPPGY), the international advertising giant. Big global companies have long traded on the feel-good spirit and massive audience always associated with the Olympics, but the Beijing edition is shaping up to be even bigger than usual. More than one billion Chinese are expected to tune in--not to mention a half-million international visitors and a viewing audience of four billion worldwide--and ad campaigns from the likes of Visa and Lenovo (OTC:LNVGY) are already in full swing. "Every single company under the sun has some kind of Olympic pitch," Doctoroff says. He's talking about big companies, of course. For those who are just now coming to the party, here are six approaches.

1. Pay retail

Degree of difficulty: Moderate, assuming you have money

Before you can slap an Olympic logo on a package, website, or advertisement--or even use the word "Olympic" in a pitch--you must sign a sponsorship deal with one of several Olympic governing bodies. Worldwide sponsorships, which are administered by the International Olympic Committee and, for 2008, the Chinese government, can run up to $100 million. Most of these deals have already gone to multinationals. Still, smaller companies can strike deals at the national level. For example, Jet Set Sports, a travel business in Far Hills, New Jersey, and 24 Hour Fitness, an all-night gym company in Carlsbad, California, have become "official sponsors" of the U.S. Olympic Committee in deals averaging $15 million over four years.

Roots, the Toronto apparel company that made those memorable berets for the Winter Olympics in Turin, is an "official supplier" of the USOC. Suppliers pay less than sponsors, averaging about $5 million over four years. Both kinds of arrangements typically include trademark licenses, complimentary event tickets, and a relationship with a specific team and that sport's governing body (such as USA Track & Field). The proceeds from these deals go primarily to training centers for athletes.

2. Barter

Degree of difficulty: Moderate

For $300,000 worth of donated natural beef and pork, Denver's Maverick Ranch became the U.S. Olympic Committee's official raw meat supplier in 1987. The move gave the company--which had at the time $1 million in sales and $600,000 in losses--instant credibility with retailers, says CEO Roy Moore. Wal-Mart (NYSE:WMT), Publix (OTC:PUSH), and Kroger (NYSE:KR) all became customers, and the bid also dramatically increased Maverick's consumer appeal. "When two packages are side by side, the consumer will pick the Olympic Rings," says Moore. "We have them on everything from business cards to labels."

3. Play with fire

Degree of difficulty: Low, but with high risk of injury

Every year a handful of companies advertise an Olympic connection where none exists. So-called ambush marketing is illegal in the U.S.--a federal law grants the USOC a monopoly on all commercial uses of the Games. Jim Grice, the USOC's chief marketing officer, says he regularly sends cease-and-desist letters to companies that wittingly or unwittingly appropriate its trademark. Last year's transgressors included the Pottery Olympics, an annual ceramics competition held in Bend, Oregon. Meanwhile, despite China's reputation for being soft on intellectual property protection, organizers in Beijing have pledged to bring civil and criminal charges against any trademark infringement.

4. Refer indirectly to the Games

Degree of difficulty: High, requires considerable artistry

That hard-line stance against ambush marketing shouldn't deter companies from pushing the envelope, says JWT's Doctoroff. "You don't have to be an Olympic sponsor to leverage the emotion of the event," he says, suggesting companies use oblique references to the Games such as "Celebrate the spirit of 2008." This time-honored tactic has been used at past Olympics by companies such as Pepsi (NYSE:PEP), American Express (NYSE:AXP), and Nike (NYSE:NKE). Another suggestion from Doctoroff: Make fun of the "crass commercialism" that surrounds the Olympics by parodying sponsors' ads.

5. Look for alternatives

Degree of difficulty: High

There are other ways to bask in the glow of the Olympic torch that don't involve the official Olympic movement. Lester Wolff, a former New York congressman who runs the International Information Agency, a Washington, D.C., consulting firm, acquired advertising rights last year to a fleet of 6,000 Beijing taxicabs and is pitching them to advertisers as a cheaper way to market to affluent visitors during the Games.

6. Play hardball

Degree of difficulty: High

Even the USOC will negotiate for--how shall we say this--its less popular offerings. Many of the 37 U.S. Summer Olympic teams are currently without sponsors, and it's not uncommon for deals to be done only months before the opening ceremonies. The women's curling team didn't lock up a deal with Bank of America (NYSE:BAC) until four months before Turin, for example. For sponsors on a budget, the USOC has a deal for you for next summer: synchronized swimming.

Last updated: Apr 1, 2007




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