Have you ever wondered what it costs to do an advertising tie in with the Olympics?
Every two years, the Olympics, one of the most beloved global events, rolls around, triggering a widespread stroke of patriotism and the unification of countries around the world. Since 1985 the International Olympic Committee (IOC) has published the Olympic Marketing Program, a list of sponsors who not only advertise for their individual brands, but publicize the Olympic logo brand as well.
The IOC grants the companies willing to pay millions of dollars the right to feature the Olympic name in their advertisements, just like a company pays a celebrity to appear in their ads in order to boost sales. The Olympic Partners, or the TOPs, are the top eleven worldwide sponsors who all together pay the IOC $957 million to use the Olympic name. One catch is that none of these sponsors can feature the name of their company inside the Olympic arena, including athlete’s clothing; however, they can use the Olympic name outside the stadium. Additionally, the sponsors only have marketing rights within their exclusive service category; for example, the Coca-Cola Company may only advertise using the Olympic rings within the category of non-alcoholic beverages.
There are also strict rules and penalties for doing ambush marketing and counterfeit merchandise made by the IOC in order to prevent companies that are not sponsors from using the Olympic name. The IOC then distributes 90% of the money to the organization within the Olympic movement, and the remaining 10% goes to the IOC to cover administrative and operational costs. This program not only provides the IOC with revenue to cover the costs of hosting the event, but it also provides the Olympic movement with free marketing. However, the question is if the deal is profitable for the sponsors.
With each sponsor paying nearly $100 million, the expected profit margin for the companies is pretty high. A representative from Proctor and Gamble (P&G) one of the TOP sponsors, has said they plan to generate around $500 million in additional sales because of their Olympic campaign.
Another sponsor named Atos, an information technology company, serves as the IT integrator of the games. By taking on a large project such as the Olympics, the company shows potential clients that they can handle any project thrown their way. There is also the aspect of associating the company’s name with a global event such as the Olympics. Research has shown that the public may perceive the company more positively, prompting consumers to buy more products from the company. Additionally, with a price tag so large, these sponsors make it more difficult and expensive for competitors to enter the global market.
Both the IOC and the sponsors appear to reap major benefits from the marketing deal. The IOC receives capital to fund the games and free marketing. On the other hand, the sponsors are able to expand their customer base and soften their global image.
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