Thu, May 12 2016
As the Olympic torch finally arrives in Rio, the countdown to the Games of the XXXI Olympiad is underway. Despite the somewhat tarnished reputation that many sports have suffered following recent scandals, the Olympics still commands huge global viewing figures and vast sums from commercial sponsorship. But is it worth the money? LexisNexis looked at how the media profile of some key sponsors is changing in the run up to Rio2016.
According to the International Olympic Committee, sponsorship accounts for 35% of the organisation's revenue – significantly more than ticketing revenues and only eclipsed by the sale of broadcasting rights.
The gold standard for sponsorship
Despite the scandals that have surrounded other sports such as athletics, cycling and football, the Olympics remains the gold standard for a brand. It is global, universal and many would argue noble. Little wonder so much revenue comes from these associations.
Whilst official figures are confidential it has been suggested by the BBC that the cost of sponsoring the 2012 Olympics (depending on the category of sponsorship) varied between £40 million to £60 million. Most of the sponsors spoke of what a valuable investment this was, citing growing sales figures and brand exposure. The reality is that it is impossible to accurately measure the return that an investment like the Olympics makes. Sponsors partner with the event for any number of reasons and as the European Sponsorship Association's (ESA) chairman Karen Earl commented: "There are a number of reasons why sponsors bought into the Olympics - including it being on their doorstep, it being a once-in-a-lifetime opportunity, tapping into the feel-good factor, or just because they were afraid of missing out."
LexisNexis has analysed three headline sponsors of the Olympics, from the perspective of media profile, a key factor in paying to be associated with the event. Whilst the Olympics remain three months away, we wondered if the proportion of media exposure associated with the Olympics was growing over time for the sponsors. After all, such a major investment would warrant more than a summer window of exposure.
The three sponsors we chose were McDonalds, Omega and Visa: global brands that operate in different segments and have different brand propositions. Would the Olympics association exhibit the same media profile over time?
References to each brand in association with the Olympics were a tiny proportion of the overall media profile that each brand received each month.
This is perhaps not surprising for global entities that would generate large volumes of media profile anyway. However this was still smaller than expected. Even in the best months Olympic profile made up less than 10% of all media references for the brands.
There were also months for each brand where Olympic sponsorship did not even register with the media, suggesting that profile for Olympic sponsors does not follow a growth pattern in the run up to the event.
From December 2015 to April 2016 each brand followed a pattern of association with references to the Olympics in the media, to some extent. Profile for the event was significant in January - driven by "Olympic year" stories in the media - tailed off in February and has grown steadily since. McDonalds' references in association with the event have closely followed this pattern, as did VISA initially. However VISA has not seen a growth in its exposure to match the increase in Olympic stories recently whereas the Omega brand, which the Olympics initially seemed to have little impact around, has recently picked up as interest grows.
This all suggests that brands need to not only invest in sponsorship of the Games but also invest in their own communications programmes to associate their brand with the event. For such a significant spend the media profile of the sponsors has been meagre. As outlined above, this is not the only (or even primary) reason why a sponsor would associate with the Games but it raises a question for the future: will major events need to do more to maximise the media profile of their partners to ensure they continue to generate huge sponsorship fees. In a world where more media than ever is being consumed outside of the mainstream, this is likely to be a significant consideration.
Author: Ngozi Kemjika, via LexisNexis blog.