Jordan 1
Meaghan Jordan
SOBO 270S: The 2008 Beijing Olympics: Challenges and Opportunities
24 August 2008
Olympic Sponsorship: Is It Worth It?
Adidas v. Nike v. Li-Ning
The marketing aspect was an integral portion of the Chinese government’s proposal in
2001 during the bidding process to host the 2008 Summer Olympic Games in Beijing. The plan
was comprised of a number of key points which were, and still are, crucial to successfully
marketing the games. The different topics included the rules and levels of sponsorship, the
licensing agreements, sales approaches and timelines for productions. With the guidelines laid
out, the Olympic committee entered into various contracts and long-term partnerships with both
international and domestic corporations. Since 2001, the promotional materials, in terms of
media advertisements, apparel and strategic product placement, have taken off worldwide to
draw the public’s attention to Beijing. However, it has been proven that the solidly designed
marketing plan has a series of flaws and loop holes which are being taken advantage of by a
number of corporations whose names are not officially attached to the summer games. As the
games approach, is the Olympic committee abiding by the guidelines which they designed over
the course of the last seven years? Are the official sponsors receiving the recognition each
individually deserves or are competitors closing in on the Olympic market? These have emerged
as prominent questions as the final advertising and marketing pushes debut worldwide in the
weeks leading up to the opening of the games. So, it appears that there is serious competition
between a number of corporations, specifically sportswear manufacturers Adidas, Nike and LiNing, and not just amongst the athletes set to compete in the coming weeks. Just like the
outcome of the various competitions it is still undecided who will triumph, the official sponsors
or the outsiders searching for a way to break into the Olympic market by way of a shortcut.
Jordan 2
Over the course of the last seven years major corporations have committed their names to
the Olympic Games with a goal of monetary success through the influx of product sales. These
companies are not only looking to increase sales but are aiming to further launch their products
in the Eastern and Western spheres of the world. The mission as outlined in the primary
proposal states:
“The Beijing 2008 Olympic Games Sponsorship Program shall abide by the Olympic Charter and
adhere to the Olympic Ideals and the three concepts of 'Green Olympic Games, High-tech
Olympic Games and People's Olympic Games';assist in the promotion of the Olympic Movement,
the promotion of the Olympic image and brand awareness of the Beijing Games and COC in and
outside China;ensure financial sufficiency and stability, and reliable technical and service support
for the staging and operation of the Beijing 2008 Olympic Games; provide a unique Olympic
marketing platform for both Chinese and foreign enterprises and encourage the broad
participation of Chinese business entities to enhance their corporate image and brand awareness
through their Olympic association, and provide quality services to sponsors and maximize the
return on their investments while helping them forge long-term partnerships with the Olympic
Movement in China.”1
This statement has been the anchor for all of the marketing strategies associated with the 2008
Beijing Summer Olympic Games. The truth of this statement is affirmed to date by the
advertisements, products and promotions seen globally in anticipation of the game’s opening
ceremony on August 8, 2008.
The levels of sponsorship, as outlined by the Olympic committee, are aiding the
companies in their expansions into a more diverse global market. The five levels dividing the
various companies are the Beijing 2008 Olympic Games World Wide Partners, the Olympic
Games Partners, the Olympic Games Sponsors, the Olympic Games Exclusive Suppliers, and the
Olympic Games Suppliers.2 Each level contains a minimum of ten corporate sponsors from a
variety of backgrounds.
1
2
http://en.beijing2008.cn/bocog/sponsors/n214077622.shtml
http://en.beijing2008.cn/bocog/sponsors/sponsors/
Jordan 3
The World Wide partners consist of globally recognized companies with only one,
Lenovo, being solely a Chinese label. This level has the most prominent labels who contribute
both monetarily as well as materialistically over the course of the three week event. These are
sponsors like Coca-Cola, GE, Kodak, McDonalds, Samsung, Panasonic and Visa.3 The names of
these specific companies are attached to promotional media materials, advertising campaigns,
athletic endorsements and merchandise in the Olympic Park. The second level, which is
comprised of the second highest contributors, is a mix of global and domestic businesses. The
majority of this group is domestic sponsors who are providing local support to the games in
addition to building camaraderie and support amongst the Chinese community. The Bank of
China, Air China, and China Mobile are teaming up to offer internal aid while Adidas and
Volkswagen are contributing material goods. The third tier, the Games Sponsors, are also a
mixture of suppliers and local support. The major companies in this group are UPS, Budweiser,
Tsingtao and Yanjing Beer. The last two groups, the Exclusive Suppliers and General Suppliers
are more generic and are geared towards the corporate aspect of the Olympics.
With the sponsorship brackets determined by attachment fees, the next step of the
marketing plan was designed to provide specific benefits in order to ensure the continued
backing of the companies. These advantages, varying depending upon one’s tier of sponsorship,
included:
“Use of BOCOG and/or COC marks, designations for the purposes of advertising and market
promotions
Product/service exclusivity in specific categories
Ø Hospitality opportunities at the Olympic Games, including: accommodation, accreditation,
tickets for opening and closing ceremonies and competition events, sponsor hospitality village,
etc.
3
http://en.beijing2008.cn/bocog/sponsors/sponsors/
Jordan 4
Ø Preferred option to purchase TV ad space and billboards during the Games period
Ø Preferred option to purchase sponsoring opportunities of cultural programs and signature
events such as the Torch Relay
Ø Participation in sponsor workshops and observations organized by BOCOG
Ø BOCOG sponsor recognition program and acknowledgements
Ø Protection of sponsorship rights via the anti-ambush marketing program of BOCOG.”4
These incentives promised to all the levels of sponsorship were another step towards ensuring
that the corporations fully benefited from their partnership with the Olympic organization. As the
corporate marketing campaigns evolved in recent years or rather months, it became clear the
International Olympic Committee and the Beijing Organizing Committee of the 2008 Olympic
Games (BOCOG) were fighting an uphill battle with the infiltration of non-official sponsors
while simultaneously reassuring official sponsors of their superiority.
The major rivalry between Adidas and Nike in association with the merchandising of the
games, which was not completely unforeseen in recent years, has taken shape in the form of
advertising blitzes in a variety of media mediums, as well as, in heavily pushing their products.
Each of the two well established companies is fighting to be number one in the sportswear
market and the competition has only heated up with the 2008 Olympic Games taking place this
summer in Beijing. Adidas, holding the official licensing for all Olympic merchandising, has
“…reportedly had to pay up to $100 million over four years for the right to use the logo of the
Beijing Olympic Organizing Committee within China and Hong Kong.”5 As stated in the
sponsorship benefits promised by the Olympic committee, Adidas should be at the forefront of
4
http://en.beijing2008.cn/bocog/sponsors/n214077622.shtml
Nocera, J. “The Games Brought To You By…” The New York Times. 1 June 2008.
http://www.nytimes.com/2008/06/01/sports/playmagazine/601business.html?_r=1&pagewanted=1&fta=y&oref=
slogin
5
Jordan 5
the sportswear market as the opening of the games closes in. However, just as in previous years,
it appears that Nike will not forego the chance to hone in on the success of the Olympic profits.
Since the official statement announcing Adidas as the official sportswear of the Beijing
Olympics, Nike and Adidas have been competing with one another in all forms pertaining to the
summer games. From the release of each company’s limited edition Olympic footwear to the
number of advertisements shown worldwide, Nike and Adidas have been going toe to toe, with
little chance of either backing down.
Despite Adidas being the official sponsor with its name appearing throughout Beijing,
Nike will be strongly represented at the games in the form of outfitting various countries teams
with footwear and/or full kits. Nike will "…dress thousands of athletes from more than 100
countries" and create products in "every sport at the games."6
An overwhelming number, 22 of 28,
Chinese teams alone will wear Nike uniforms or shoes, as well as the majority of the teams
representing the United States.7 This is a scenario that the Olympic committee cannot prevent in
terms of helping Adidas maintain a monopoly over merchandising. It is out of their reach since
each of the competing countries Olympic committees holds private contracts with the individual
sportswear companies. The singular advantage Adidas has in terms of sportswear presence is the
agreement to outfit all of the volunteers, staff and officials associated with the Beijing games.
The vibrantly colored and patterned track suits standout amongst the masses of people stationed
throughout the city and on the international television broadcasts, making it near impossible to
forget that it is Adidas who designed the uniforms. The thousands of volunteers, officials and
6
http://www.sportsbusinessdaily.com/article/119880
Nocera, J. “The Games Brought To You By…” The New York Times. 1 June 2008.
http://www.nytimes.com/2008/06/01/sports/playmagazine/601business.html?_r=1&pagewanted=1&fta=y&oref=
slogin
7
Jordan 6
staff wear the “sporty” uniform with pride, exuding the Olympic spirit Adidas aims to symbolize.
It is at this juncture in the Olympic apparel feud that a third company comes into play, raising the
stakes for both Adidas and Nike. Li-Ning, a Chinese sportswear company, has burst onto the
Olympic scene in a similar fashion to Nike. As an unofficial sponsor, Li-Ning will also have a
heavy presence in Beijing through the outfitting of various teams and the Chinese CCTV-5
television network broadcasters. With the brokering of the CCTV-5 deal, Li-Ning will have its
logo displayed on yellow windbreakers and polo shirts across the national television network,
bringing the company name to every Chinese household tuning in to watch the games.8 Very
much like the individual contracts with National Olympic Committees, the BOCOG has no
authority to prevent Li-Ning from promoting their brand, as they are not within any violation of
official Olympic licensing. Adidas, Nike and Li-Ning are vying for attention, each one going to
greater lengths to outdo the other’s uniforms, footwear and promotional gear.
The media coverage surrounding the Beijing games is breaking broadcasting and
advertising records set by previous summer games. Corporations are sparing no expense when it
comes to marketing their products on a global reaching level, the sporting goods companies no
exception. Once Beijing was given the hosting responsibilities and sponsors names were attached
to the games the promotional competition commenced both internationally and domestically.
Adidas developed a marketing plan appealing to the Chinese public through the use of television
commercials, print campaigns and the sales of Olympic attire. As the official sponsor they were
using a number of outlets to promote themselves and win the favor of the Chinese community.
The television advertisements airing feature famous Chinese athletes from soccer, volleyball, and
8
Nocera, J. “The Games Brought To You By…” The New York Times. 1 June 2008.
http://www.nytimes.com/2008/06/01/sports/playmagazine/601business.html?_r=1&pagewanted=1&fta=y&oref=
slogin
Jordan 7
basketball being held up by the Chinese people. The closing frame of the commercials has the
people putting the athlete on the top tier of the medal podium, effectively leading their athlete to
the gold medal. The slogan chosen to accompany the advertisements, “Impossible Is Nothing,”
signifies that the Chinese can win gold because nothing will stop them.9 The fact that the athlete
is wearing an Adidas uniform and shoes creates an association that winners wear Adidas and
compete in the Olympics. The director of Adidas’s Beijing Olympic Games program Erica
Kerner commented that the advertisements were “…about rallying the nation.”10 Similar images
from the commercials were used in the print advertisements seen throughout China on billboards,
the sides of buses and in the subway. Adidas, in an attempt to make their product more widely
available, has been opening on average two stores per day throughout China. In addition to
smaller locations Adidas opened its largest store, 10,000 square feet spread over four floors, in
mid-July in Beijing.11 These new locations and the landmark store make Adidas a top destination
in China for locals and foreigners alike coming to watch the summer games.
The Adidas campaign was innovative and appeared to be successful in winning the
affection of the public. However, the ambush marketing techniques of Nike and Li-Ning in the
months leading up to the games added an even greater amount of stress to the already mounting
pressure Adidas was experiencing while maintaining their prominence in the Olympic
sportswear forum. The promotional technique of ambush marketing “…are those non-Olympic
sponsor enterprises that use the Olympic brand and assets without permission to market their
own brands, thus misleading consumers into believing that these enterprises are Olympic
9
www.youtube.com
Barboza, D. “Western Olympic Ads Cheerlead for China.” The New York Times. 20 July 2008.
http://www.nytimes.com/2008/07/20/sports/olympics/20ads.html?_r=2&hp&oref=slogin&oref=slogin
11
Skidmore, S. “Nike and Adidas Gear Up for International Shoe Wars.” The International Herald Tribune. 4
October 2007. http://www.iht.com/articles/2007/10/04/business/games.php
10
Jordan 8
sponsors. This sort of unethical behavior by ambush marketers have adverse effects, including
violation of the rights and interests of Olympic sponsors, and it also weaken and detract from the
Olympic and Olympic Games brand value.”12 The Nike marketing plan, similar to Adidas and on
the same release schedule, consisted of television advertisements, print campaigns and the sale of
Nike team sponsored apparel. The television ads run in China featured Chinese children and
adults transforming everyday tasks into Olympic events with the closing frame displaying the
Nike slogan “Just Do It”. The sports featured were fencing, weightlifting, relays, discus,
basketball and sprinting; events China has athletes competing in. Along with the domestic ad’s
Nike also ran commercials abroad with brand sponsored athletes appealing to other countries. A
favorite ad portrayed the United States Men’s Basketball team warming up and practicing with
Marvin Gaye singing the Star Spangled Banner in the background.13 The image of America’s
dream team and the song created a sense of national pride, identical to what was felt by the
Chinese in the domestic ads. These Nike advertisements put the full court press on Adidas to
ensure their company would be just as and if not more prominent in the Olympic market. The
brand president for Nike, Charlie Denson “…said during the Olympics, Nike would launch "a
pretty prominent campaign that will run in China. It will run in all the different media
vehicles.”14 This has definitely been achieved with the large number of billboards and ads
plastered in and around Beijing.
Li-Ning has also taken a piece of the pie away from Adidas with strategic product
placement and advertisements. The Chinese owned company ran a number of “Inspire”
12
“Marketing the Beijing 2008 Olympic Games: The Importance of Sponsors.”
http://en.beijing2008.cn/1year/talks/s214119645/n214128929.shtml
13
www.youtube.com
14
Birchall, J. “Nike Plans Olympic Ad Blitz.” Financial Times UK. 1 July 2008.
http://www.ft.com/cms/s/0/17053284-4707-11dd-876a-0000779fd2ac.html
Jordan 9
television ads that were similar in spirit to Nike and Adidas but lacked the visual notoriety. The
advertisements were simplistic, showing their label taking part in certain Olympic events. The
images of the swoosh like logo were on the pommel horse, shooting at a target and diving into a
pool, all events the Chinese are expected to dominate at the games.15 Li-Ning also had a number
of print campaigns on billboards and in magazines which could be seen nationwide.
The ambush style marketing taking place in Beijing with regards to the sports apparel
companies has caused a stir amongst the Olympic sponsors, who are up in arms that the spotlight
is being shared with non-sponsors. Such companies, Nike and Li-Ning, used ambush and blitz
techniques in the final week leading up to the opening ceremony to overpower the market with
their products over those of Adidas. As a sanctioned sponsor, the BOCOG provides certain
services, as defined in the incentives portion of the official marketing strategy, to maintain prime
time advertising for its paying supporters. With the overwhelming number of Nike and Li-Ning
ads appearing in Beijing, the government in conjunction with the BOCOG, issued a statement in
July ensuring the ambush advertisers would be efficiently and speedily dealt with. As a result it
was requested that advertising agencies avoid using Olympic symbols or logos without prior
authorization in addition to asking media companies to show preferential treatment to official
sponsor’s advertisements. At this time the amount of advertisement space in Beijing was
significantly reduced by the government, making it near impossible for non-sponsors to purchase
ad space after what was available had been allocated to the official sponsors. The infiltration of
Nike and Li-Ning has been dealt with according to the regulations recently decreed by the
government in the form of the Olympic committee upholding the promise to guarantee prime
advertising locations in terms of billboard, print and television advertisements. This form of
15
www.youtube.com
Jordan 10
censorship has been seen in and around Beijing. Firsthand knowledge came in the changing of
the billboards in the last two weeks of July in the Wangfujing area of the city. I have been down
in that particular area on multiple occasions and was surprised to see that what had once been a
splash of Nike and Adidas ads had been replaced by generic Olympic advertisements or only
those from Adidas. The Nike presence, including the large store had a much more subdued
presence, in turn only showcasing Olympic sponsors. The reduction took effect on July 11, 2008
and will be enforced through September 17, 2008 when the Beijing Paralympic Games close.
With the government in control of print and television advertising the next medium to monitor is
the broadcasting outlets. It was suggested to broadcasting crews that they not focus on anyone in
the crowd who is blatantly wearing unofficial Olympic gear or holding an unsanctioned
concession brand.16 This absurd request is ideal in theory but impossible to put into action since
the government and BOCOG cannot force spectators to wear only Adidas or official Olympic tshirts. When tuning into an event on television, the spectator views the supporters throughout the
stadium in specific countries gear from a number of sportswear companies. It is illogical and
probably impossible to ask the camera crews to find groups of spectators in only Olympic
sanctioned apparel. Despite the best efforts of the Chinese government and the BOCOG to
combat ambush marketing, Nike and Li-Ning have succeeded in infiltrating the marked through
mass media outlets.
The stages of planning and strategizing a successful marketing plan to work in
conjunction with the Olympic Committee, along with a significant fee is a time consuming
process which has to be beneficial on a variety of levels to the participating corporation. The
question has arisen in the midst of the Beijing Summer Games if Olympic sponsorship is in fact
16
“Playing the Game.” The Economist. 3 July 2008.
http://www.economist.com/business/displaystory.cfm?story_id=11671500
Jordan 11
worth all it is cracked up to be? For the sportswear companies, particularly the non-Asian owned
Adidas and Nike, being associated with the games provides a number of positive incentives.
Adidas, as the official sponsor, is making a huge splash in the Asian market, essentially creating
its own niche for future business ventures. With the overwhelming amount of advertisements and
locations opened in the past three to four years Adidas has increased its sales in Asia by “…25%
on a currency-neutral basis in the first half of 2008, driven by particularly strong growth in
China.”17 One could associate the sales growth to the company’s increased presence as a direct
result of their Olympic sponsorship. The downside to this association between sponsorship and
increased sales is directly disproved by the simple fact that Nike, an unofficial sponsor, has also
increased sales in Asia. At the end of Nike’s last fiscal year which closed on May 31, 2008 the
“…annual sales there increased 50 per cent, to surpass $1bn.”18 Nike’s matched Olympicassociated advertising and marketing campaigns proved to be competitive, if not just as or more
triumphant than with Adidas’ official Olympic operations. A second incentive for the Western
owned Adidas and Nike is the favorable ties they are generating with the Chinese government.
The company’s cooperation with the advertising guidelines will help them with later ventures in
China, which will require government approval or aid. The relationships forged during the
Olympic Games will pave the way for the future.
Li-Ning, the Chinese sportswear company, owned by a former award winning Chinese
gymnast is also taking advantage of the games perks without paying the sponsorship fee. Much
like Adidas and Nike in Asia, Li-Ning is trying to break their brand into the European market.
The outfitting of a number of Spain’s teams, most notably the men’s basketball team, and the
17
Adidas Group First Half 2008 Results. http://www.adidas-group.com/en/News/archive/2008/05_08_2008.asp
Birchall, J. “Nike Plans Olympic Ad Blitz.” The Financial Times. 1 July 2008.
http://www.ft.com/cms/s/0/17053284-4707-11dd-876a-0000779fd2ac.html
18
Jordan 12
United States Table Tennis, team has helped to have the brand’s logo seen abroad. Li-Ning
generally only known in China is a threat to the official sponsor Adidas but in a much different
manner than Nike. The smaller, more rural areas of China know Li-Ning and buy the more
affordable products rather than the less accessible and more expensive Adidas brand.19 Li-Ning
could potentially pull a decent sum of profits away from both Adidas and Nike regardless of
sponsorship but rather through the Chinese people’s loyalty to the more local brand.
The second perspective suggests Olympic sponsorship is not worth the headache due to
the lack of product exclusivity. If corporations are paying large fees for multi-year deals to hold
the official licensing for Olympic apparel and other companies selling similar products are
marketing gear associated with the games without the overhead fee, then why bother with the
official stamp. Large companies like Nike have the funds to compete with Adidas’ marketing,
along with the client base to purchase products linked to the games whether it be a team jersey or
a certain country’s t-shirt. The Olympic logo becomes insignificant when the consumer wants a
t-shirt promoting their country by that teams sponsor and the official sponsor of the games does
not offer that as an option. The IOC and hosting Olympic committee can only do so much to
protect the rights of the official sponsors as promised in the incentive portions of the marketing
contracts. The committee’s cannot fully eradicate the competition. All they can do is aide in
censoring the unofficial companies. Overall, Nike and Li-Ning are matching Adidas in
advertising and presence, but, saved the corporation the fee for a multi-year partnership with the
Olympic federation.
19
Skidmore, S. “Nike and Adidas Gear Up for Olympic Shoe Wars.” The International Herald Tribune. 4 October
2007. http://www.iht.com/articles/2007/10/04/business/games.php
Jordan 13
A concern associated with whether or not Olympic sponsorship is cost effective is if the
companies are seeing a return on their investments. It is possible to accurately calculate how a
company will fare based upon two formulas used by marketing agencies and executives. The
first method is
“…the value of simply having the company’s name put in front of more people, mainly on
television; and the effect on sales. The first of these is the fuzzier part. In essence, companies
track how long their logos or names are on screen—when, say, their perimeter boards are caught
on camera. Then they work out how much it would cost to buy that amount of advertising time.
To that sum, they apply a deep discount factor, perhaps 90%: after all, the viewers are not really
watching the perimeter boards but the match. The resulting number is the company’s estimate of
what the exposure is worth.”20
With the second method “more accurate part depends largely on how much activation companies
do and how good at it they are.”21 These systems are still based solely on conjecture and not
solid facts, which leaves room for a large margin of error no matter how accurate they usually
tend to be. The official and non-official sponsors can predict how much of a return the
corporations will receive but ultimately it is up in the air until all of the Olympic events have
concluded and the final numbers are tallied. In the case of the 2008 Olympics, it is quite probable
that Adidas will make a decent profit from their merchandise sales. However, Nike and Li-Ning
will most likely also see a high return on their advertising investments, without having to have
factored in a high contractual fee with the IOC.
20
“The Business of Sport: Sponsorship Form.” The Economist. 31 July 2008.
http://www.economist.com/specialreports/displaystory.cfm?story_id=11825607
21
“The Business of Sport: Sponsorship Form.” The Economist. 31 July 2008.
http://www.economist.com/specialreports/displaystory.cfm?story_id=11825607
Jordan 14
The question still remains as to whether or not Olympic sponsorship is worth the
monetary commitment without the exclusivity originally promised by the Olympic committee.
There will always be the company competing with its rival, especially in the sportswear market
where there are a number of brands. Hence, it is near impossible to completely monopolize
something like the Olympic apparel market. Overall is Olympic sponsorship worth it? For some
companies it might be and for others who do not see the return that was initially hoped for, it is
not. In this specific scenario, the 2008 Olympic Summer Games, it is crucial that Adidas be an
official sponsor. Had Adidas not paid the official licensing fees, they would have been lost in the
shadow of Nike, who has more of a consumer base in China and the United States, along with a
broader range of global recognition. The newcomer on the scene, Li-Ning, definitely brings a
new element to the table, a domestic competitor with a large fan base in the local culture, but in
the end, one that could not hurt Adidas’ profits in a way similar to Nike. The Olympics were
once a showcase of elite, god-like athletic ability, but, have now been turned into a stage for
consumerism at its highest point. Rather than worrying about what brand is sponsoring the event
or what the athlete is wearing, why not focus on the talent they are displaying at this international
level. Eliminating the petty argument between official and non-official sponsorship would once
again shift the focus back to the talent rather than the attire. Sponsorship may or may not reward
the participating corporation, but in the end, all it does is destroy the true Olympic spirit.
Jordan 15
Capstone Survey
Which company is an olympic sponsor? (Circle the correct logo in each category)
Beverages:
SODA:
BEER:
Apparel:
Jordan 16
Automotive:
Food:
Credit Cards: