|The headline of the release that accompanied LA’s budget talked about “No Surprises”. And I wasn’t surprised that the estimate of $1.93 billion was, by LA’s admission, conservative. That’s what Olympic bids always do when it comes to sponsorship forecasts. But I was surprised at just how conservative it was – in my view overly conservative.To put this into context.The US is the world's largest advertising and sports marketing economy, and in turn its media and brands are by far the biggest investors in Olympic media and sponsorships.|
So I was expecting to see LA estimate the biggest-ever domestic sponsorship Games revenue.
But that's not how it played out.
Yes, the LA estimate would be a record for any completed Games to date. But even allowing for price elasticity of demand, having already signed 15 Tier One and 27 Tier Two partners, Tokyo 2020 appears to have already generated well over $2 billion from domestic sponsorship given its rate card of $128 million and $51 million respectively for Tier One and Tier Two deals.
So that's the new benchmark, from an ad market that's 25% the size of that of the US.
Another benchmark. The LA estimate is less than double London 2012’s final total of just over $1 billion, which was generated by a much, much smaller ad market - 12% of the size of the US - in the teeth of a recession.
When Tokyo won the right to stage the 2020 Games, I predicted that it could reach $2 billion of domestic sponsorship revenue. If LA wins the race for 2024, I believe that over $2 billion is a certainty and $3 billion highly likely.
I suspect that the two other models LA used would have reflected a similar scenario.
But LA didn’t need to run the risk of over-promising and under-delivering. A conservative $1.93 billion works for LA’s no risk budget, and even at the lower end of the scale, still comfortably eclipses the $1.086 billion from domestic sponsorship estimated by Paris, its chief rival in the 2024 race.
No surprise. No surprises.
|Getting an Olympic Games right is rare alchemy. The Road to Rio has been long and hard for athletes, organisers and sponsors alike. In the seven years since it won the bid to host the 2016 Olympic and Paralympic Games, the country has experienced more than its fair share of drama: rioting around #changebrazil, a FIFA World Cup meltdown against Germany, the spectre of political corruption and the tragic emergence of Zika.Is the country really ready for the Games? Can the infrastructure hold up? Will the doping scandal forever tarnish Rio’s moment in the sun?|
These will all have been questions and concerns for the sponsors of Rio 2016 – the 59 different brands that make up the four partnership tiers of the Games represent a unique ecosystem that has helped ROCOG meet its $570m target for sponsorship revenue and played a key role in making Rio a reality.
|While sponsorship is never an exact science, Synergy’s PeRiodic Table is an interactive graphic that allows you to explore a little more about each of the brands that are part of the Games. From sponsorship category to Twitter following, our interactive infographic – designed to be sorted and filtered as you see fit – provides the chance to discover some of the stories hidden beneath the surface of Rio 2016’s sponsorship landscape. Click here for the full table.|
Heritage Matters: whilst the entire list of brands is typically sorted in alphabetical order, it’s notable that Coca-Cola sits before either Atos or Bridgestone in the TOP sponsor hierarchy. This is a quirk of Coke’s gift of rights: they will always be the first-mentioned brand in the IOC’s sponsorship recognition programme, acknowledging a relationship stretching back to 1928.
|If You’ve Got It, Flaunt It: at time of publishing this, only 11 of the 46 brands with an active Twitter handle featured Rio 2016 marques on their profile. A potential missed opportunity for lager brand Skol, whose Twitter presence has perhaps the most overt Olympic theme, but lacks any actual recognition of its officialdom.|
|Missing The Tweet Spot: although it’s true that not every brand has to have a Twitter footprint, it’s interesting to note the official sponsors without a social presence, or those that have failed to build one ahead of the Games. For international brands with only a local relationship (anyone outside the TOP sponsor tier) like Nike, Nissan or Airbnb, the use of Brazil-focused feeds is also worth noting. While likely to be down to the IOC’s commercial restrictions around the use of social media, it will be interesting to see how many of the global Twitter handles end up giving a RT to their local market counterparts.|
Toyota Revs Up For Tokyo: although the brand signed up as one of the IOC’s new TOP sponsors back in 2015, Nissan were already a Tier 1 sponsor of Rio 2016. This means Toyota can only talk about Rio in Japan (something Nissan cannot officially do), before turning their global attention to Tokyo 2020 following the conclusion of the current Games.
|Necessity Is The Mother Of Investment: the outbreak of Zika not only created valid concern amongst athletes and spectators, but also led to the signing of OFF! – the Games first ever insect repellent partner. It probably depends on your level of cynicism whether you think this was to ensure a consistent quality control in terms of the level of safety provided to participants and attendees, or simply to head off commercial concerns around ambush of the category by unofficial brands.|
But day in and day out, Brazilian TV channels are broadcasting test events, qualification events and press conferences. The Olympic Torch Relay starts next week. And of course, Brazilian athletes all over the country are getting ready for the Games.
But on one important front, our athletes face massive uncertainty. While the USOC and their counterparts around the world have released their new Rule 40 positioning, the Brazilian Olympic Committee has yet to confirm its policy. Even by Brazilian standards, this is very late.
With the Games being staged in their home country, many of our athletes have been able to land lucrative personal sponsorships, with some having signed ten or more brands as partners. However, right now, the athletes and their brand partners don’t know what they will be able to do – or not do – to activate their sponsorships before and during the Games.
So with 100 days to go to Rio 2016 and counting, you can add to all the uncertainties about the Games those of the Brazilian athletes, their agents, and sponsors about Rule 40. Watch this space.
Guilherme is the founder of Ativa Esporte, the Brazilian sports marketing consultancy, which is Synergy’s partner in Brazil.
|Japanese brands have history with the Rugby World Cup. Attracted by a big Japanese TV deal, in 1987 they accounted for almost all of the handful of sponsors of the first tournament. I suspect we will see something similar when we get to RWC 2019. Except there will be more Japanese sponsors - a lot more.Well before Japan's electrifying performances in the current RWC, Japan 2019 was always going to be a safe sponsorship bet for World Rugby.First, there's the size and strength of the Japanese economy - the world's third largest, much bigger than any of the Tier 1 rugby countries. Next, as I wrote at the time, back in 2013 when Tokyo won the right to stage the 2020 Olympics it had the unintended consequence of making Rugby World Cup sponsorship more strategically attractive, especially to Olympic sponsors and to their rivals. Then there's the way that Corporate Japan has got behind Tokyo 2020. Tokyo was clearly a big factor in Panasonic and Toyota agreeing huge new global sponsorships with the IOC. And Tokyo is on course to achieve the most successful domestic sponsorship sales programme in Olympic history.And all this was before Japan's three breakthrough RWC 2015 wins, which have created unquestionably the marketing factoid of this Rugby World Cup. The total cumulative TV audience in Japan for the whole of RWC 2011 was just under 25 million. Whereas the live TV audience in Japan just for the Japan v Samoa RWC 2015 match was 25 million.Zilch to 25 million. Zilch to 20 per cent of the Japanese population. Zilch to a world record national viewing audience for rugby.I think that's what they call growth.|
|No surprise then that Brett Gosper, World Rugby's CEO, said last week that for RWC 2019 World Rugby "will make some adjustments to allow more local brands to take part [as sponsors]...ones that sit well with our global partners". Whether this means an increase in some or all of the four current tiers of RWC sponsorship remains to be seen. But I suspect the question is not how many Japanese brands will be sponsors of Japan 2019, but whether there'll be any space left for anyone else.|
With 1,000 days to go to Rio 2016 just gone, it’s interesting to compare the status of Rio’s domestic sponsorship programme with London 2012′s at the same point back in 2009.
What our research shows is, despite London 2012 being in the market at the nadir of the UK recession, and Rio being expected when it was awarded the Games to successfully leverage Brazil’s booming economy, at this stage Rio is a long way behind London in almost every respect.
This should come as no surprise. We’ve commented previously about how, after a stunning start in early 2011 with huge finance and telco category deals, Rio’s sponsorship sales programme has gradually stalled along with the Brazilian economy, and now faces big challenges given the ongoing protests, persistently negative PR about the Rio 2016 operation, Brazil’s economy, and Brazil’s ability to stage major – and even minor – events.
Last week, in an interview with AP, Rio’s Chief Commercial Officer Renato Ciuchini revealed that the organisation was now targeting $1.3-$1.5 billion in domestic sponsorship revenue, and that $650m (£400m) has been raised to date.
By comparison, with 1,000 days to go to London 2012, we estimate that LOCOG had raised $894m (£552m) of its final total of $1.2 billion (£739m).
In other words, London had raised 75% of its final total, but Rio has raised only 50% of its minimum target and only 43% of its stretch target.
Deal Volume and Value
Rio is also well behind London in deal volume.
With 1,000 days to go London 2012 had closed 23 deals in 23 categories, whereas Rio has closed 10 deals in 8 categories (the Bradesco sponsorship covers both banking and insurance, and the telco category sponsorship was acquired by a joint bid by Embratel and Claro).
Conversely, Rio’s average category deal value, at $65m, is much higher than London’s $38.8m.
But on this point, Rio seems to be confident. Back in August, it slipped out an announcement that it had now sold 50% of its sponsorship packages, suggesting that it envisages doing only another ten deals.
If it sticks to this, Rio will have to average $85m for each deal to reach its stretch target of $1.5 billion, and $65m – its current average – to reach its minimum target.
As its current average is skewed by the huge Bradesco and Embratel-Claro deals, together worth $500m, the jury is very much out as to whether Rio can sustain this given the market challenges it now faces.
Rio also lags behind London in all three of the tiers that modern Games Committees use to market their domestic sponsorships.
At the same point in the London 2012 cycle, LOCOG had sold and announced six of its seven Tier 1 sponsorships (BMW was announced a month later, in late November 2009) and six of its seven Tier 2 sponsorships (the seventh, Arcelor Mittal, was announced in March 2010).
In comparison, Rio has three in Tier 1 (finance, telco and automotive) and four in Tier 2 (professional services, beer, packaged foods and dairy products).
But what’s most striking is that whereas LOCOG had eleven Tier 3 deals in place with 1,000 days to go, Rio has only one, with Nike (although oddly, that deal has yet to be officially announced – the Nike logo just appeared on the partners section of the Rio 2016 website).
I’ve written before about how important value in kind (VIK) is to the Olympic sponsorship model and to Games budgets.
Because the Games are the world’s biggest and most complex peacetime operation, it takes far more to deliver them than pure cash. The Olympic sponsorship model is like a giant joint venture, with both the IOC and the local organising committee outsourcing critical products and services from sponsors, without which the Games couldn’t happen – and that’s why the majority of Games sponsorship in the modern era is delivered in the form of VIK.
As such, all of Rio’s sponsorships to date will have included an element of VIK – some (Embratel-Claro, Nissan, Ernst & Young, Nike) more than others.
But the fact that Rio 2016 has done so few deals at this stage compared to London 2012, particularly at the Tier 3 level which is always heavily VIK-based, means that right now it is having to do two things with important budget, cashflow and delivery implications.
Rio 2016 must be paying cash for vital products and services which Games committees normally use VIK deals to finance, which means that its cashflow and overall budget must be incredibly strained. And it must also have had to delay sourcing other key products and services, with inevitable consequences for its operations and deadlines.
Let me be really clear that, for certain types of business situations, and certain brand categories, Rio 2016 has enormous potential for brands in Brazil.
But right now, Rio 2016 is a sponsorship price-taker rather than price-setter in Brazil. Brands have three very good reasons to be wary about investing, and to exert downward pressure on price.
1. The spectre of a Government bailout looms over Rio’s budget even if it reaches its stretch sponsorship target, as a Rio 2016 spokesman recently admitted to AP. If that happens, there’s little doubt that would see the anti-FIFA protests become anti-Rio 2016 protests, which would be a disaster for the IOC, the Games, and of course the Games’ sponsors.
For an in-depth look at the marketing and sponsorship implications of the anti-FIFA protests, our Brazil team’s blog from June this year is a must-read and includes that point.
2. The IOC’s Gerhard Heiberg had this to say in the same AP piece on Rio 2016:
“I know that some sponsors are waiting to see how things are going to be at the World Cup. Will it be a success? Will it be chaotic? If people feel things are going to be very good for the games, it’s easier to get the sponsors. If people feel things are not going to be 100 percent, they will hold back on the Olympics. First they want to see what’s going to happen with the World Cup.”
Absolutely spot-on – and brave of Mr Heiberg to say so. We are aware of a wide range of name brands in Brazil, who would otherwise be primed to become Rio 2016 sponsors, who are adopting a ‘wait and see’ attitude until after the World Cup.
3. The potential value of Rio 2016 to a brand is inexorably dropping. There’s already less than three years to go until the Rio Games, and every day that passes reduces the potential value to a brand – especially when you consider that, given the Brazilian consumers’ overwhelming preference for football and therefore the World Cup, the first half of 2014 is arguably, for an Olympic sponsor in Brazil, a write-off.
|Following up on my analysis last week of the Istanbul, Madrid and Tokyo sponsorship proposals in their 2020 bids, here's my take on what Tokyo’s emphatic victory in Buenos Aires on Saturday will mean for Olympic and Paralympic sponsorship.|
1. Olympic Marketing will move into a distinctly Asian cycle after Rio 2016, with Rio being followed by Pyeongchang 2018 and now Tokyo 2020, offering Games partners the opportunity, as the Pyeongchang Games' leader pointed out in an interview with Reuters on Monday, to 'awaken Asia's great potential'.
2. An unintended consequence of Tokyo's win is that the 2019 Rugby World Cup in Japan now becomes much more strategically important. Brands locked out of Tokyo 2020 by category-exclusive global and domestic Olympic deals will view the RWC as a counter-attacking opportunity, and in turn I suspect many Tokyo Games sponsors will be tempted to add the RWC to their portfolios to block this.
|3. As I noted last week, Tokyo’s business case, underpinned by the size and strength of the Japanese economy, was one of the trump cards in its bid, and it played a key part in its final presentation, with Tokyo bid leader Masato Mizuno skilfully emphasising the scale and commercial potential of the Asian and Japanese markets for the IOC and its stakeholders:"The Games will deliver the biggest live primetime TV audience in history, the biggest local ticketing market, and the greatest possible commercial success. Already, our bid has 21 corporate sponsors, and the IOC can focus on your own crucial programmes to promote Olympism worldwide."|
4. For an early indication of some of the companies likely to populate the Tokyo 2020 domestic sponsorship programme, Tokyo's 21 corporate sponsors are a good primer as they were so closely aligned to many of the proposed categories in the Tokyo Candidate File.
|5. Close the book on which category Tokyo 2020 will sign up first - but not which brand. One of Tokyo's bid sponsors, Toyota, stated last week that they intended to become the first Tokyo 2020 domestic sponsor if Tokyo won. A great gesture of support for the Tokyo bid, which will also have rung the bells at Nissan, sponsors of Rio 2016. Watch that space.|
6. With that kind of competition likely in numerous categories, I'm sticking to the prediction I made last week that Tokyo will sell well over $1 billion of domestic sponsorship, and perhaps as much as $2 billion given favourable economic conditions.
7. There’s not much doubt which of the three rival cities Panasonic would have been rooting for, or that they will now be looking to quickly extend their IOC sponsorship to 2020: currently they are one of three of the ten IOC global sponsors whose current contract ends in 2016 rather than 2020. But with Sony's FIFA contract ending in 2014, and Russia and Qatar, er, beckoning if they renew, we could see Sony taking a run at Panasonic's IOC category.
8. The IOC's ten global sponsors always remain neutral about Host City bids, but I suspect that a poll of them on which city they preferred would have resulted in a split for first choice between Istanbul and Tokyo, with the B2C brands preferring Istanbul because of Turkey’s burgeoning youth market, the B2B brands favouring Tokyo as Japan is home to so many big businesses, and Madrid very much third owing to the weakness of the Spanish economy.
9. My colleague Alex Balfour, former London 2012 Head of New Media and now our Chief Digital Officer here at Engine, made these predictions on Twitter just after the IOC vote about what new technologies we were likely to see at the Tokyo Games:
|10. I mentioned last week that I felt Tokyo stole a march on its rivals by looking at Paralympic sponsorship separately in its bid, earning it plaudits from IOC. This came strongly to mind when the wonderful Japanese Paralympian Mami Sato gave the most uplifting and inspirational of all the speeches in the 2020 bid presentations, about how sport saved her from despair after losing her leg to cancer. Japanese brands will no doubt have taken note, and as a result I'm sure that after the unprecedented success of London 2012, Tokyo 2020 will take the Paralympics to new marketing and sponsorship heights.|
by Bruno Scartozzoni and Guilherme Guimarães
As Tom Jobim, the great Brazilian musician and composer said, “Brazil is not for beginners”.
When Brazil entered the new democratic period in the mid 1980s, it started to change quickly. Fernando Henrique Cardoso, the intellectual president from the social democrat party, took control of hyperinflation, opened the Brazilian economy, reduced government participation in the economy and started important reforms in order to rationalize the state. This was essential to the next phase, when Lula, the charismatic president from the labour party, created all kinds of social programs, giving power of purchase to poor people for the first time in Brazil’s history.
These elements awoke the Brazilian internal market of people hungry for consumption, and, in simple words, that’s the reason why the 2008 global crisis didn’t hit Brazil as hard as it did the rest of the world. And then, suddenly, Brazil was on everybody’s radar, for successful World Cup and Olympics bids.
|Now comes the bad part of this story.|
Despite the economic progress of the last 20 years, our politicians did not achieve other important goals desired by Brazilians.
In contrast to our status as the sixth biggest economy in the world, our public services, especially health, education and security, are at the opposite end of the scale. Add to this corruption scandals with no prosecutions and one of the most unequal distributions of wealth in the world and you have the full picture.
On 3 June a small leftist group called MPL – Movimento Passe Livre (Free Transport Movement) – which campaigns for free public transport in Brazil’s cities, started protests when the new São Paulo mayor announced a R$0,20 (US$0,09) raise in bus, subway and train ticket prices. To start with, most of the population didn’t care less about it, but each day the campaigners managed to congregate more and more people.
The turning point came on June 13, when policemen treated the protesters with disproportionate force, which triggered the population to use the R$0.20 increase as a symbol for something much bigger. It started to represent the poor public services, corrupt politicians, and the threat of hyper inflation. And just like the Occupy Movement and the Arab Spring, social media played a crucial role in scaling the protests and the protest ecosystem: suddenly politics became the only subject that mattered on Facebook and Twitter, which is really new for Brazil.
Coincidentally (or not) it all peaked at the beginning of the 2013 FIFA Confederations Cup.
For some time Brazilians had been saying in a resigned way ‘Imagina na Copa’, meaning ‘If it’s this bad now, imagine what it will be like during the World Cup’. Looking back, with the benefit of hindsight, it’s not surprising this grew into the protests.
The cost of the new and re-built World Cup stadiums had steadily risen from initial estimates and is more than the last three World Cups combined. They are being paid for by public money, in contrast to the promise, when Brazil won the right to stage the World Cup, that they would be privately funded. Add to that that other improvements linked to the World Cup and promised by government like new subway lines will not be ready by 2014, together with the poor reputations of the CBF and FIFA, and you have a time bomb.
It exploded on June 17, with protests in every major Brazilian city, which are now happening every day and night. In the streets and on social media, people started saying Brazil not only wants stadiums, but also health and education to “FIFA standards”.
It’s difficult to predict how and when #ChangeBrazil will end. Ticket raises are being cancelled by the minute, and the President has promised new infrastructure investment and a referendum on political reform, but people are going to the streets anyway. It’s the biggest social movement in the country’s recent history, and probably the first one above party political interests. As the population is claiming, it is democratic, mostly peaceful (until now) and beautiful!
The most visible impact of the protests on brands is that some of the protests’ most-used slogans have been adapted from recent brand campaigns.
Johnnie Walker’s ‘O Gigande Acordou’ (‘The giant is awake’) campaign showed the famous Sugar Loaf Mountain standing up and walking. The line was a reference to Brazilians’ commonly-held view that Brazil is a giant sleeping eternally.
Fiat used ‘Vem Pa Rua’ (‘Come To The Streets’) as its line in a football-themed campaign to ambush the Confederations Cup (they are not FIFA sponsors).
And Vick, the cough drops brand, were also trying to hijack the Confederation Cup, by promoting the hashtag #chupaessa (#suckthis) on Twitter.
As soon as the protests started, people h-jacked these brand slogans, all of which became part of the movement, used in placards on the streets, and on Facebook and Twitter.
There are also examples of brands actively using #ChangeBrazil in their communication.
In fact, almost everyone is doing something about it on Facebook, most of them being more conservative, with generic patriotic posts.
|Stores near Paulista Avenue, the epicenter of #ChangeBrazil, are using the movement’s elements in their displays. Store owners said that they are trying to engage with the moment and avoid looting.|
However, the most interesting #ChangeBrazil ‘activation’ so far has been by Spoleto, a big Italian fast food chain from Grupo Trigo, who license Domino’s Pizza in Brazil. They released a manifesto on their Facebook fanpage, basically saying that they would be opening that space for political discussion, and any brand activation would would be ceased for a week.
|The discussion in advertising forums is about the possibility of brands taking a clear stand. Should they? Fiat thought it was better to leave the conversation and ended their campaign ‘as planned’ on June 22. Spoleto went the other way.|
It will be interesting as well to see which way Brahma will go. The beer brand, which is a World Cup sponsor, was one of the few sponsors meaningfully activating the World Cup association in Brazil, and the only one positioning itself around discussions of the World Cup being good or bad for the country. Last year they released a very emotional and positive campaign telling Brazilians to care less about problems and imagine the party that will take place in 2014. It was a bold move, and divided public opinion.
Will they stand for this message after #ChangeBrazil? It’s another question impossible to predict, but they could broaden the optimistic message. “Imagine the party. Imagine a new (better) country.”
|FIFA, Big Sport and The Protests|
As #ChangeBrazil is partly a reaction to the government’s astronomic spending on the World Cup, many in the international media have questioned Brazilians’ attitude to the World Cup (especially) and the Olympics.
In fact, most Brazilians don’t think the World Cup and the Olympics are the problem. Most dreamed about hosting a World Cup again, and the Olympics are welcome too. Winning the bids is a proof that the world is finally taking us seriously, and it’s very nice for everyone’s ego!
The problem is how the events were ‘sold’ to the Brazilian public, the reality of our infrastructure versus the huge spending on the World Cup, and, as David Owen wrote recently, the evident complacency of FIFA and ‘Big Sport’.
As probably everyone in the world knows now, FIFA has got its PR strategy totally wrong in Brazil, notably when Sepp Blatter told protestors that they should not link their grievances to football, whilst at the same time Neymar was so visibly supporting the protests, and Paolo Andre, the former Corinthians player, recalled that football had been used as a tool of mass control in the past, but now it was the people’s turn to use sport to call attention to their demands.
From here, it’s difficult to see how FIFA can recover its image in Brazil in time for the World Cup, which obviously has big implications for all the FIFA sponsors, who’ll now need to re-think their activation strategies in Brazil.
#ChangeBrazil: 10 Action Points For Brands & Sponsorship
|1. Brazil’s sense of its identity is changing very fast, and more than ever before, brands – both Brazilian and international – will need to listen to consumers and re-think their positioning and messaging. Brazilian values have always been attached to happiness, being easygoing, hard-working and, of course, the ultimate clichés: samba, beaches and football. This kind of thing still reflects what Brazil is, but June 2013 has changed it, evolved it, and made it much more complex.2. An example is what’s happening now. People still care about the performance of the Brazilian team in the Confederations Cup, but conversations in bars are split between football and politics, and this is new, very new.|
3. Now it’s clear that Brazilians are deeply concerned about social issues, which means that brands will need to increase their CSR efforts, especially if they are going to try to wave the Brazilian flag . Those that already have strong CSR credentials have a big advantage: those that don’t have to move very, very fast to have permission to do business in Brazil, let alone marketing.
4. There is lots of white space to integrate sports with CSR in Brazil. We expect to see a big increase in sponsorship of social development programmes and Paralympic sports, for example, but there’s plenty of room in other causes too.
5. CSR campaigns don’t need to be dull. As we wrote recently, there have been some amazing campaigns fusing sport and CSR in Brazil in the last year or so, one of which recently won one of the top awards in Cannes.
6. Celebrities who are out of touch with #ChangeBrazil are a real risk for brands. The untouchables Pele and Ronaldo lost huge credibility with Brazilians after poorly chosen words about the protests – although to be fair Ronaldo’s were said in 2011. Conversely, others such as David Luiz, Dani Alves, and volleyball player Bruno Resende are in the ascendant after stating they were worried about their performance, but that they were proud and concerned about the Brazilians on the streets.
7. Naming rights sponsorship has started to gain momentum this year and looks likely to keep growing. But brands will be wary of the downsides of associating themselves with ‘FIFA’ stadiums, especially the three potential white elephants in Brasília, Cuiaba and Manaus.
8. Brazilians have discovered social media, especially Facebook and Twitter, as the modern Agora, and that has huge implications and opportunities for brands in Brazil, who activate sponsorships very little in social channels compared to traditional media, especially TV.
9. FIFA sponsors will need to work harder than anybody, but especially in social as their fanpages are suffering daily attacks by consumers.
10. Olympic sponsors have a big advantage. They can watch and learn from FIFA sponsors’ efforts next year, and adapt accordingly for Rio 2016. But how long will it be before the protests turn their attention from World Cup budgets and FIFA to Rio 2016′s budgets and the IOC?
|Analysis of industry data suggests that the F1 ecosystem raises over £1b per year from sponsorship. This includes Team Sponsors and Suppliers (ranging from £100m for the big boys to £20m for the smaller teams), F1 Partners (around £25m per year in cash or Value in Kind from each of the 6 global partners) and Race Sponsorship (around £10m for each of the races with title sponsors plus trackside advertising).|
|To put that into context, the London 2012 Olympic and Paralympic Games raised around the same amount (£750m from domestic sponsors plus around £250m contribution from the IOC for TOP partners) – but that was for a 4-year cycle.|
So here’s a question: Given how much is spent on it from some of the world's leading brands, why is F1 Sponsorship not at the leading edge of sponsorship thinking and activation?
It’s fair to say that F1 is ahead of the game in virtually everything else it does. So surely F1 Sponsors should be cleaning up at the major sponsorship industry awards. In fact, over the past 5 years, an F1 sponsorship has won only once out of a possible 47 SIA awards (Vodafone’s Best Sponsorship of a Team or Individual in 2009). Case studies from F1 should be inspiring sponsors in other sports. Here at Synergy, we should regularly be showcasing examples from F1 in the ‘What We Love’ section of Synopsis. But this just isn't the case – at least not to the extent that one would expect.
Don’t get me wrong, there are some great pieces of activation in F1 (I’ll point out some of them later), but as a whole, F1 sponsorship is pretty uninspiring.
Having run the Reuters sponsorship of WilliamsF1 from 2000 - 2003 (yes - I agree - it was nowhere near 'award-winning'!), I thought I would have a go at answering that question based on my own personal experiences.
1. Most Formula One sponsorships are B2B
Reuters primarily used F1 for B2B relationship building. A quick scan of F1 sponsors shows that over 40% have significant B2B businesses. There is little better than F1 if you have a relatively small number of high-value, global customers who you reach through targeted sales and marketing programmes. Travelling around the world to all the key markets, Formula One and Paddock Club™ are the absolute gold standard of corporate hospitality. With this being the focus of the brands' activation programme, it is little wonder that it remains unseen by the mass audience, award panels and the Synopsis editors.
|The activation challenge for the B2B partners, however, is to create the most compelling brand stories and event experiences to attract their audience. Because the fact is, especially in the small markets, most of the B2B sponsors are going after a very similar audience, in some cases exactly the same people.|
2. There is too much focus on brand exposure and logos on cars and not enough on activation
Whenever brand exposure is such a critical part of the sponsorship package, it is easy to rely too heavily on it at the expense of all the other things you can do with the sponsorship. I absolutely hate the “media value” figures that are at the heart of so many F1 sponsorships. However, it is easy to measure and as long as the media value is bigger than the cost of the sponsorship, brands can be tempted to think “job done”. In comparison, Olympic sponsors can't rely on any media value to justify their sponsorship. That's why they have to work much harder and be far more creative with their activation.
|A knock-on effect of this over-emphasis on media value is the fact that it can lead to an under-investment in activation. Typically, the rights fee is so high (because brands are paying for the exposure) that there isn’t enough left over for activation. I’m not a big believer in any rule-of-thumb ratios, but the proportion of rights fee to activation spend when I was at Reuters is definitely not going to make it into any how-to textbooks. I suspect this isn't unusual for F1 sponsors up and down the Paddock|
3. The calendar gives you no time to plan and develop great campaigns
The F1 season is relentless. The first race is in early March and the last race is in late November. In between is a never-ending cycle of travelling and managing the day-to-day execution of race weekends. Everyone goes on holiday during the 4-week summer break and at the end of the season, which then leads into Christmas. Trust me, if you want a year to fly past, get a job in F1.
Which basically just leaves January and February to do any sort of campaign development. But even those months tend to be dominated by tactical planning for the season ahead. There just isn't the time to think about a season-long campaign or a brilliant piece of activation.
Another challenge is the global scale required by an activation campaign. Japan, Abu Dhabi, Britain, the US and Brazil have very little in common with each other from a marketing perspective. So as an F1 sponsor you are sort of in limbo between creating and delivering a global campaign that doesn't quite work in loads of markets and developing local campaigns which feel a bit 'small' and short term.
4. The F1 community is too closed
There are some great people who work in F1. However, it needs more ‘churn’.
For example, when I needed a sponsorship agency, everyone I invited to pitch was effectively a specialist F1 agency. I understand why most sponsors do that, but it leads to a form of 'groupthink' where new ideas are thrown out in favour of "what we did last year" or "what we do with our other clients".
|This happens up and down the paddock. If an F1 team needs a new Account Manager, they are likely to hire someone from one of the other teams. If a brand needs an F1 Sponsorship Director, they are likely to hire someone who has done a similar job at another sponsor. If an F1 agency hires a new Account Director, they typically hire someone who already has F1 experience.|
The danger of this 'closed' community is that it loses the fresh influences and perspectives that drive creativity.
I know it’s tough (I’ve been there myself) but I think F1 sponsors need to be braver and set the bar higher for their activation campaigns. The benchmark should not be: “we want to create the best F1 sponsorship campaign”, but rather “we want to create the best sponsorship campaign”. And to do that, I think that it is critical for sponsors to look for inspiration outside the very small world of F1.
The point of this blog is not to say that there are no good F1 activations - because clearly there are some great examples.
My point is simply that given the number of world-class brands who are sponsors in F1, the amount that they invest and the possibilities of F1 as a platform, there should be far more ground-breaking activation programmes than there are.
Some of our Favourite F1 Activation Case Studies:
Johnnie Walker - Step Inside the Circuit Series
Johnnie Walker extended this campaign with some experiential activity in Travel Retail environments but at its core was some great behind-the-scenes content, from Monte Carlo (below), India, Singapore and other races
One car, no team:
London Grand Prix:
|The Silverstone Chase|
Hugo Boss - Dress Me for the Finale
Using a special online configurator, consumers in each country could create bespoke designs of the drivers’ race suits. The drivers wore the designs during qualifying for each race, while the best two designs as voted by the audience were worn on the Sunday during the Brazilian Grand Prix. Boss also did a good job of connecting this activation to their social media and retail channels:
|Red Bull - Faces for CharityIn exchange for a donation to charity (which Red Bull matched), consumers could upload a photo which was then put on the car for the British Grand Prix.|
Vodafone - Drive to the Big League
|Vodafone introduced this initiative at the British Grand Prix in 2010 which offered one of their small business customers the chance to put their logo on the car for the British Grand Prix. Vodafone have taken it to a whole new level in India now, where they have combined it with a Dragons Den style TV programme to select the winner – watch it – it’s brilliant!!!|
See - it is possible - more of that please!!!
|There is a large group of Olympic sponsors whose primary objective over the next 17 days is to be brilliant, but invisible: the companies who provide vital Games Time services.|
For brands like Atos (IT), BT (communications), Cisco (networks), Omega (timing) and UPS (logistics) the starter’s pistol on their sponsorship fires today. Everything they have done previously has mattered only in being preparation for this point. And if they make headlines in the next 17 days, it will be for one reason only: the Games being badly affected by a problem with their services.
To illustrate the point, all I need to write is G4S. Until a few weeks ago, G4S was familiar only to the big public and private sector buyers of its services, and was hoping to use London 2012 as a showcase to that small but highly lucrative audience. Now, of course, G4S is a household name because it failed to deliver, and the resulting fall-out has been calamitous for its reputation and share price.
In this space, it pays to be invisible. Get it right, and you have a trump card case study in the high-stakes world of big B2B contracts: “If we can do this for the Olympics, the biggest most complex event in the world, imagine what we can do for you.” Get it wrong and you’re where G4S is right now.
All of which reveals other aspects of the widely misunderstood Olympic sponsorship model, and why sponsorship is far more important to the Olympics than is commonly perceived.
The media convey the impression that the Olympic sponsorship model is the same as World Cup sponsorship and the like – a small group of consumer brands paying big money only for marketing rights.
The reality is very different. The Olympic sponsorship model is actually a giant joint venture, with the IOC and the local organising committee outsourcing critical expertise from multiple partners.
Because the Games is the world’s biggest and most complex peacetime operation, it takes far more to deliver it than pure cash. This Atos Olympics ad evokes that perfectly.
That’s why there are so many Olympic sponsors, and why the majority are B2B brands - although every Olympic sponsor, B2C brands included, provides important products and services as part of its sponsorship, without which the Games couldn’t happen.
And it’s why the majority of Games sponsorship is delivered in the form of ‘value in kind’ (VIK) products and services that are budget-relieving. In the modern era, VIK has consistently contributed the majority of domestic Games sponsorship, and I expect LOCOG’s final accounts to show VIK at 60% of its £700m domestic sponsorship total.
So if you’re ever tempted to join the vociferous chorus of those who criticise Olympic sponsorship, ask yourself this: if the sponsors weren’t there, contributing so importantly behind the scenes, how else would the Greatest Show On Earth be as big and brilliant as it is going to be, once again, in London?