SCC Blog
The Business of Beijing
July 31st, 2008When summer rolls around I usually take a brief reprieve from adding any posts to the post but the Beijing Games are nearly upon us and I thought I’d be remiss not to add some quick commentary. Traditionally, this blog has been dedicated to educators around the country. Now that we’ve developed an avid readership from a myriad of professional backgrounds, I suppose we should step up our efforts to contribute more regularly…
So, without further delay, here are a few items in the news as it relates to the Olympic Games that have caught my attention over the past few weeks.
Sponsorship
Top sponsors Coca-Cola, McDonald’s and Visa are leading total media coverage with ad campaigns focused on goodwill for the Olympic Games. All three, which cumulatively garnered 59 percent of traditional media mentions and 67 percent of social media mentions during the period of July 15-28, have introduced ads centered on themes of global unity, working together and achieving dreams (from Dow Jones Insight).
In the staggering figures department, the Wall Street Journal reports that Samsung Electronics Co. is spending more than $100 million on its sponsorship of the Beijing Olympics. Let me repeat that. One hundred million dollars! Doesn’t that conjure up images of that classic line from Austin Powers? It should be noted that, as the WSJ suggests, the Olympic sponsorship has greatly enhanced Samsung’s presence in Asian markets, particularly in China where the company is headquartered.Equally impressive is the overall financial impact of the Games as a whole. A Reuters news story reported that The Beijing Games (along with the 2006 Winter Olympics in Italy) have already generated nearly $4.4 billion in rights and sponsorship deals.
Of course, with the good comes the bad. You can’t talk about Olympic marketing and sponsorship without some rhetoric involving the concept of ambush marketing. Germany’s Adidas is the national Olympic sponsor in China, but in an ambush attempt, global sportswear/apparel rival Li Ning has arranged for the sportscasters of CCTV (China’s largest TV network) to don Li Ning gear on-air throughout the Games.
Social Issues in Focus
Off the top of my head, we’ve had a lot of debate in the news relating to social issues and the Olympic Games. We’ve had doping, cultural concerns, governmental issues, questionable ethics and environmental concerns. We’ve also seen protests and ambush marketing tactics…and the Olympics are still more than one week away.
How important are social issues relating to the Games? Considering several high-profile Beijing Olympic sponsors (Kodak, Lenovo, and J&J) are likely to discontinue any major affiliation with future Olympics because of criticism from human rights groups, I’d say the stakes are pretty high!
Endorsement Potential
The Olympic Games traditionally serve as a great platform for individual athletes to gain global recognition, often times opening the door to potentially lucrative endorsement contracts. The following statistics were published by Dow Jones Insight…I thought they were pretty intriguing.
“For the first time since Dow Jones Insight began analyzing media coverage heading into the Beijing Olympic Games, Michael Phelps is not the most talked-about athlete, at least in traditional media sources (print and online). During the period of July 15-28, Jamaican sprinter Asafa Powell garnered the most coverage, with 17 percent of the total 3,807 mentions of athletes being tracked…However, when it comes to social media, Phelps is still the fan favorite, dominating coverage in message boards and blogs with 28 percent of the mentions tracked, which was nearly double the mentions for Dara Torres, who had the second-highest total.”
Top Ten Athletes (Traditional Press)
1. Asafa Powell
2. Tyson Gay
3. Grant Hackett
4. Michael Phelps
5. Paul Hamm
6. Liu Xiang
7. Dara Torres
8. Jana Rawlinson
9. Jeremy Wariner
10. Allyson Felix
Top Ten Athletes (Social Media)
1. Michael Phelps
2. Dara Torres
3. Tyson Gay
4. Paul Hamm
5. Asafa Powell
6. Liu Xiang
7. Shawn Johnson
8. Allyson Felix
9. Paula Radcliffe
10. Jeremy Wariner
The Olympics also provide a valuable forum for athletes participating in team sports to reach a large audience. If you need evidence, consider the position China’s Yao Ming is in with the Games taking place in his home country. As a potential gateway to China’s 1.3 billion consumers, Yao can facilitate an intriguing connection between brand and consumer via product endorsement. You know Yao’s sponsors will be watching the Chinese basketball team with wide eyes. Yao’s relationship with Apple, Coca-Cola, McDonald’s, Visa and Reebok could help propel their brands to new levels (don’t think for a second that Yao isn’t compensated for his efforts as Forbes‘ reported last year that Yao banked about $40 million in endorsement deals).
Reebok may have the most to gain with Yao’s presence when you consider the opportunity to grab market share in a Nike/Adidas-dominated basketball sneaker market. In an effort to maximize brand presence in China, the company is reportedly launching “limited edition” Yao branded and has erected a 40-foot statue of the NBA star in a popular Beijing shopping district.
That’s about all I have for now…hope you all enjoy the Games. I know I will!
*** Teacher’s Note ***
Take note of anything relating to the business of sports throughout the Olympics. This gives you all a great medium for introducing the concept of how business relates to the sports, event and entertainment industry. Consider who is advertising, who is endorsing the athletes, who sponsors each team, how they are positioning their brands, who they appear to be targeting etc. The Olympics also provide a great opportunity for discussing various social issues relating to sports and entertainment, this year certainly being no exception!
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