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Are
the Olympics Really Worth It? By Kevin Clancy
and Dan Belmont As the Olympic Games open in Athens, 12 companies including Coke, John Hancock, Kodak, McDonald's, Visa, and Xerox are riding along at the highest sponsorship level for upwards of $50 million each. Yet even before the first tumbling pass or pole vault, at least one sponsor—Xerox—has already announced its decision NOT to renew its Olympic sponsorship deal. Of the 11 others, three remain uncommitted for future Olympics, while 8 have extended through 2008. Some, including Visa, have even expanded their Olympic relationship with title sponsorships of Olympic sporting events that take place post-games. So, who among the 12 sponsors is making the right call for their brand? The more we think about it, the more we wonder if the Olympics represent an effective marketing investment. After all, $50 million is a sizable chunk of change, the equivalent of about 4000 prime time GRPs. What's more, is the Olympics better than some other sport alternative? Better than the Belmont Stakes? Better than a major golf tournament? For that matter, is it better than sponsoring a non-sports event, say, the motion picture industry's Academy Awards? The questions just keep on coming! Does effectiveness of the Olympics differ by brand? In other words, is it a better carrier for Coke than for Xerox? What about the effect of an Olympic sponsorship among prospects open to one of the top 12 sponsor brands versus prospects that aren't? We've come a long way from the days when sponsoring a sporting event meant getting VIP tickets and good views from the deck of a hospitality suite. Sports sponsorships and event marketing in general have become more and more attractive as alternatives to TV advertising and other traditional marketing venues in the eyes of senior managers. This change in practice and attitude is not all that surprising given the major shift in the larger world of advertising from creative-led to knowledge-based, media-led communications planning. P&G, for example, the largest advertiser on the planet, recently made the switch. Media firms have dramatically widened the consideration set of means to enable consumer interaction with brands. As a result, event marketing, sponsorship, and all forms of promotional programs have surged. Budgets for these programs have grown exponentially. According to SponsorClick's Sponsorship Marketing Global 2004 Report, brand marketers worldwide will spend $37.8 billion on sponsorships in 2004 and anticipates that figure will close in on the $50 billion mark by 2006. Likewise, the PROMO 2004 Event Marketing Study reported in January that companies plunked down $132.3 billion on event marketing—including promotions such as mobile marketing tours and guerilla marketing—in 2002 with an average event marketing budget of $827,911, expected to rise by 15 percent to 20 percent in 2004. Sponsorship and event marketing opportunities have proliferated as interest in opportunities and spending has increased. There are the Olympics, Triple Crown horse races, the MLB All-Star Game, NASCAR races and drivers, golf tournaments and players, all forms of professional sports leagues and players, and collegiate sports. There's a big revue of entertainment options from concert series to tours, Broadway shows to museum exhibits. And this doesn't even begin to explore all the creative ideas agencies have for guerilla marketing and other events and promotions such as mobile marketing tours, sampling, product placements in movies and on TV shows, and contests. Naturally, bigger dollar allocations mean more intense scrutiny from senior management and other stakeholders. In turn, the demand for accountability and demonstrable ROI from sponsorships and event marketing has never been higher. Unfortunately, tools for assessing the performance of sponsorships and event marketing in terms of contribution to sales and profitability have always been in short supply. According to the PROMO study we cited earlier, 60 percent of marketers say they are not satisfied with their ROI tools. As author Tom Peters often rants, "if you don't measure it, you don't care about it." Picking the ace of diamonds—our metaphor for an exceptional sponsorship or event opportunity—from the thousands, sometimes tens of thousands, of global, national, regional, and local options is rife with anxiety. Brand marketers may get the vital stats on the audience size and composition of different programs along with the costs for every opportunity, but these details, while important considerations, don't reveal anything about the potential effectiveness or ROI of one sponsorship or promotion versus another. They can only hope that the target audience will associate the desirable attributes of the sponsorship property or event with their brand. Other than a testimonial from another sponsor that may or may not be in the same industry, marketers are left with little more than intuition to guide their sponsorship and event choices. Again according to the PROMO study, 55 percent of marketers report sponsorship planning needs to be enhanced. Some brand marketers have turned to traditional sponsorship research. Unfortunately, traditional research for the most part involves exposing study participants to a few sponsorship concepts and letting the results stand on having picked the best to test in the first place—and the probability of doing that is about one in 1,000 (one in 10,000 or more if we're talking about a brand with global reach). As any gambler would tell you, those aren't great odds. An alternative approach that's transforming the way brand marketers develop sponsorship and event marketing plans is to use a combination of cutting-edge marketing science tools including computer-aided analytical techniques, optimization modeling, and simulated test marketing. Think of it as "sponsorship engineering"—marketers build the most profitable plan with the most effective sponsorships and events for a specific brand and for specific buyer targets. The better engineering processes we've worked with expose study participants to different sponsorship configurations in a competitive context and use a battery of measures to capture the likely effects on consumer behavior and, ultimately, ROI. The more sophisticated systems also consider potential interactions between different options. For example, the true effectiveness of an Olympic sponsorship and an in-movie brand placement in a summer blockbuster may be greater (or less) than the sum of the two opportunities individually. Though it's true there's nothing marketers can do to 100 percent guarantee the sponsorships and events they choose will return the highest ROI possible, sponsorship engineering dramatically improves the odds of marketing success. And as management guru Peter Drucker says, "I'd rather be approximately right than precisely wrong." Using these new tools could make the difference between experiencing, as ABC's Wide World of Sports used to say, "the thrill of victory or the agony of defeat. " Kevin is chairman and CEO of Copernicus Marketing Consulting, a firm specializing in marketing strategy development, planning, and implementation, in Newton, MA. Contact Kevin at kclancy@copernicusmarketing.com. Dan Belmont was previously the president of Carat's Specialist Communications Group, a division of the media services giant that focuses on vertical markets, new media disciplines, and experiential marketing programs. |