|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.
|Shauna Coxsey, Tara Hayes, Matt Cousins and Nathan Phillips. Four names you’re probably not familiar with, but it might not be long before you are. All four are climbers and not just the best in Britain but some of the best in the world. With yesterday’s announcement from the International Olympic Committee (IOC) that climbing is to be one of five new sports added to the Olympic programme, they could be set to take Tokyo 2020 by storm.|
|The progression of climbing from a sport regarded for eccentrics and adventurers to one on the fringes of mainstream consciousness has been swift. Yet the reasons behind its incredible growth are as diverse as the sport itself and the IOC’s decision could be another leap forward.|
Entering the Mainstream
Arguably it was two climbers, Tommy Caldwell and Kevin Jorgeson, who pushed climbing into the spotlight like never before, with their historic free climb of Yosemite’s El Capitan last year. Their epic 19 day ascent of the 3,000 metre Dawn Wall, drew media attention from around the world and made stars (if only reluctantly) of Caldwell and Jorgeson. Whilst the media’s gaze was only fleeting, it gave a unique look at a sport that has slowly been taking off around the world, particularly in the UK.According to the British Mountaineering Council the number of climbing walls in the UK has risen by over 100 in the last five years alone, with 350 public access walls listed in the BMC wall directory. The increase in walls is driven largely by an uptake of young people joining the sport, with the number of people taking part in the BMC Youth Climbing Series rising by 50% over the same period.
Technology, Technology, Technology
So the sport is a clearly a growing force but why and how has it become so, and more interestingly, how far can it go? The simple answer is technology. As with so many extreme sports new technology has allowed climbing to grow through improved equipment, providing a safer and more complete experience of a sport that inherently carries risk – without removing the thrill. Sport climbing is itself a descendant of the introduction of technology. Permanent anchors are secured to the rock face from which climbers can place protection to ensure survival from even the most eye watering falls.
|The shift may appear to be a natural progression from the days of Royal Robbins placing steel pitons into the Yosemite cliffs, but the effect has been more wide-ranging. The improvements in rope, harnesses and other climbing gear has allowed the very best climbers to push the limits of what’s possible. The dynamic and occasionally terrifying nature of these new challenges has opened up the sport of climbing to a new thrill seeking audience, one that is looking to not only participate but create and consume as much content about the sport itself as possible.|
In 2006 film makers Josh Lowell and Peter Mortimer created the first Reel Rock film tour, taking a collection of short climbing films to live audiences all around the world. Now in its 11th year the tour has been a huge success and attracts sponsors such as The North Face, National Geographic and Petzl, highlighting the growing appetite for climbing content. It appears the sport has become as much about capturing the ascent, as the ascent itself. After all, if a tree falls in a forest and no one is around to hear it, does it make a sound?
It’s a question that a number of companies and brands are already looking to answer. Epic TV has been quick to provide a channel for the new band of climbers wishing to share their latest exploits, earning them not just an audience but an opportunity to create their own brand with which to attract sponsorship and turn professional. Climbers such as Alex Honnold and Sean McColl regularly share not just their climbing achievements, but their training regimes and other aspects of their lifestyle that hold as much interest to fans as the climbing.
So the sport is growing, with new stars, increasing brand presence and a highly engaged audience mostly made up of Generation Z and Millennials - surely then a place in the Olympics would be a positive next step for a sport on the rise? Yet there remain concerns, including those from professional climbers such as Adam Ondra, who feels the expected format of the competition may need to be amended to reward the more aesthetic aspects of the sport. It’s a concern that isn’t exclusive to climbing, with the much publicised trouble surrounding golf at this summer’s games proving that format is a difficult area to get right for even the biggest of mainstream sports.
|Where Next? |
Regardless of the concerns around format, it’s clear that climbing is entering another stage of its development and a place in the Olympics will act as validation to the thousands who compete in and watch the sport worldwide. It won’t be long before brands outside the outdoor and adventure space take notice and names such as Coxsey, Hayes, Cousins and Phillips move from the unknown to the everyday.
|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.|
|The tears of joy that marked Rio’s winning Games bid are a distant memory, replaced by troubled preparations, crisis in Brazil and the spectre of doping. But it’s going to be a great party – right?|
|1. Back in 2009, Rio’s winning bid was sold as a showcase for Brazil’s booming economy and the Carioca vibe. Seven years on, Brazil’s economy has tanked, the Petrobras scandal has engulfed the Government and big business, and civil discontent is raging. And if all that wasn’t enough, along came Zika. No modern Games has been staged against such a crisis-riven domestic backdrop. The showcase has become a spotlight on a country in crisis.2. Athletics is uniquely important to the Olympics’ image and credibility. And the spectre that haunts the Olympics is doping – in particular of athletics. So, following the IAAF’s disgrace and the exposure of Russia’s state-sponsored doping, the IAAF decision later this month on whether to allow Russia to compete in Rio is of huge significance. Whichever way it goes, it will be key to the Games story – and the Games’ credibility.3. On the track, one man above all will once again carry athletics, and the Games itself, on his shoulders: Usain Bolt. Rio’s story will also be the story of Bolt’s last Games. Few, if any, have been as important to the Games, to their sport, and to sport itself, as Bolt. Rio will quite rightly be a celebration of that. But the Olympics post-Bolt? Big shoes to fill.4. A great Games off as well as on the track is critical for the IOC. Worldwide, cities and their citizens are increasingly sceptical about the benefits of hosting the Games, leading to fewer and fewer bidders. Rio’s legacy – chiefly, its effect on the city’s image and infrastructure – will therefore be a major talking point. But the biggest scrutiny will be on Games-time operations. Organisational failures continue to dog the preparations: failure at Games Time however is simply not an option.|
5. Famously, the 'Olympic Ethos' is that the most important thing is not winning but taking part. Whereas, if you know Brazil, you’ll know that for Brazilians, sport is all about winning! The interplay between these two contrasting philosophies will be fascinating, especially given the huge importance to Brazilians of winning the Olympic football tournament — the only major football title they’ve never won — and the probability of Brazil winning far more Paralympic than Olympic medals.
6. Creatively, this Games could be special. The creative collisions between Brazil and Rio and the Olympics and Paralympics should be really inspirational for all the brands involved in the Games. I’m hoping they rise to the occasion, particularly the global Olympic Partners, and raise the bar for Olympic and Paralympic Marketing.
7. With the average age of an Olympics fan now over fifty and rising, 2016 is Year Zero for the IOC’s new digital channel – an attempt, above all, to sell the Olympics to the young. How well the Olympic Channel performs in reaching new audiences will, in terms of the future of the Games, be the story of this Olympic year.
8. Rio will be a testing ground for one of the biggest changes to the Olympic sponsorship ecosystem in years – non-sponsors of the Games being officially allowed to use athletes in marketing campaigns around Rio, following the IOC’s decision to bow to athlete pressure and relax Rule 40. Which brands are given waivers, and to what extent their activity impacts Games sponsors will be one of the biggest Rio sponsorship stories to follow.
9. London 2012 was the first truly Socialympics, but Rio will take this to new heights given how social Brazilians are – Brazil leads the world in time spent on social media. And for the Brazilian consumer, one platform will be an incredibly influential force during the Games – WhatsApp, which is used by 100 million Brazilians. Rio will be the first WhatsApp Games.
10. Every Games evolves the Olympic and Paralympic brands. Some leave particularly fond memories — LA, Barcelona, Sydney, London. Some, for varying reasons, the reverse — Munich, Moscow, Atlanta, Athens. All the signs are that Rio will have a more profound effect than most, with the outcome uncertain. Rarely has so much been at stake for the Games, for its host city, and for the IOC. Rarely, if ever, has sport been in such crisis. So let’s hope that when we look back on Rio, we remember it for all the right reasons.
And for being a great party too.
This article originally appeared in the 2016 edition of ‘Now, New & Next’, Synergy’s annual look ahead at key issues in sports and entertainment marketing.
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.
Chelsea’s new stadium by Herzog & de Meuron
Towards the end of last year, Chelsea (finally) submitted plans for their new stadium on the Stamford Bridge site – something of particular interest to me as both a fan and architecture graduate. The release of the designs was followed by the now obligatory social media backlash. A run through comments on various news sites brought up comparisons with a slinky, an ash tray, a filter and, my personal favourite, an egg slicer. Factor in the Gherkin and the Cheese Grater and London is one Baguette away from a rubbish sandwich.
But despite these ‘creative’ insights, I like it.
The UK is littered with identikit stadia, distinctive for their plastic facades and truss supports. In the Premiership, Swansea, Southampton and Leicester’s grounds are almost indistinguishable. The story is much the same in the lower leagues. Reading’s stadium, for example, sticks out on the town’s outskirts like a grey Lego/K’NEX hybrid toy.
I will concede that these teams have an excuse. Many old grounds were in need of an overhaul and the ‘off the shelf’ nature of these pre-fabricated stadia appear the most cost-effective way to improve the match day experience. However, that excuse holds less weight when you consider the super rich teams at the top of the Premier League.
The Emirates stadium cost £360M to build and, whilst impressive in scale, is largely a bland mass of coloured plastic and glass. The Etihad bowl isn’t much better and it looks like Tottenham will be heading the same way too.
There are lots of examples of great stadium design out there. However, the sad fact is a lot of them rarely get used.
The most interesting venues seem to be saved for one-off tournaments – the Olympics and World Cups. It was great seeing 80,000 people pack into London’s iconic Olympic Stadium to watch ‘Super Saturday’ and witness the enthusiasm for football across South Africa’s impressive array of World Cup venues. But there is an under-lying problem. What happens to these stadia following the tournaments’ conclusions?
The notorious issues of legacy and spiralling budgets seem an inescapable side-story to international tournaments. Brazil’s organisation of the 2014 World Cup and 2016 Olympics, both mired in debt and political controversy, is a very current case in point. Montreal’s Olympic Stadium, the debt of which was only paid off 30 years after the 1976 Games, another.
In the UK at least, football is the only sport both lucrative and popular enough to fund such ambitious design, with the Olympic Stadium viable proof. For all Lord Coe’s rhetoric of a strong athletics legacy, we needed West Ham to step in as permanent tenants (landing the deal of the century in the process) to justify the construction cost.
‘The Big O’ designed by Roger Tallibert
You may question why the design of a stadium is actually that important, considering its principal function is purely to seat fans and showcase the sport. However, I would argue that the best venues in the world – iconic landmarks such as the old Wembley, Lord’s and Fenway Park – accomplish much more than pure function.
The reality is most people who encounter these huge arenas do it from the outside and never actually enter, particularly in a prominent city location like West London. Therefore, exterior form and contribution to the local area are crucial.
Looking at Chelsea’s new stadium, the brick piers are the most prominent feature and, in my mind, also the most successful. They give a sense of occasion and celebration which typifies a football match. Two thousand years ago the Romans needed an arena with the grandeur of the Colosseum to do its festivals justice. In the 19th Century, the Victorians advertised their industrial prowess through magnificent train stations, which we still use today.
Monumental brick piers at the new Stamford Bridge
Sport has an equal social impact on our generation. It is part of our national culture and deserves a significant legacy. Somehow I don’t see the Etihad stadium lasting the next 100 years. At least the robust piers of Chelsea’s new stadium look like they might.
The Chelsea project is also in safe, responsible hands. Herzog & de Meuron (the former an avid football fan and player) are excellent architects with an outstanding track record in stadium design. The Bird’s Nest in Beijing is their most famous work but the new stadium in Bordeaux is equally stunning. Add to that the colour changing Allianz Arena and it makes for a fairly impressive portfolio.
|Of course premium design comes at a price, so good on Mr. Abramovich for splashing out on bricks over plastic. Not everyone will like it but at least it makes a statement. A stadium is more than a way to make money from fans. It is a club’s home, steeped in heritage and history, a pilgrimage destination made by thousands every week. Chelsea deserve huge credit for bucking the trend and giving their fans an interesting venue to come to. It might even do some good for the reputation of football, and wouldn’t that be nice for a change?|
|As Ed Miliband stated, the 2015 General Election is set to be the ‘tightest for a generation’. With policy focus on heavyweight areas, and media attention revolving around the potential results and the resultant political permutations, you could be forgiven for growing weary of the wall-to-wall election coverage.|
However, there has been very little attention paid to the topic of Sport. It's clear the seductive vision of the Olympic legacy promised in the 2010 UK General Election has not been realised. London 2012 brought more Team GB medals than any other Games, but participation levels in the UK are still falling, and yet Sport has been sidelined in the 2015 party manifestos. Within the combined 327 pages of the Conservative, Labour and Liberal Democrat manifestos, there were collectively 23 sentences referencing the subject. Not only is this disappointing, but it also seems illogical considering the impact Sport can have on on other policy areas, not least as physical inactivity is said to be costing our national economy £8.2 billion a year...
We must therefore ask: what effect, if any, will the election have on the Sport and sponsorship industry? To find an answer, we pored over the party manifestos, and delved into the political news archives to establish which elements of pre-election party chatter around Sport would actually make it on to the election agenda.
A summary of the major points can be found in our infographic here
For a more detailed view of these key topics, please read on...
Funding cuts leave door open for brands
In the weeks leading up to the 2015 General Election, much of the rhetoric has focused on each party’s approach to reducing the UK’s vast deficit (£101.8bn in 2014 alone). This need for collective belt-tightening makes cuts inevitable. With parties keen to ensure focus on the heavyweight policy areas, such as Education, Housing and the NHS, Sport has taken a back seat.
The prospects for sports funding, especially at the grassroots end of the spectrum, are poor. Whilst this is a worrying trend, any funding shortfall could open opportunities for brands to bridge gaps to provide capital, manpower, facilities and amenities. Work like McDonald’s grassroots football campaign and Barclays' ‘Spaces for Sport’ programme have shown that brands can provide vital funding, equipment and coaching where there is a real need. With cuts to be made, and a prioritisation of welfare services, sponsors could play a key role in keeping Britons active.
Manifesto game plans show limited football focus
|MPs are often accused of politicising football, but parties have comfortably avoided any such accusations around this election, by barely including the national game in their manifestos at all. Following the February announcement of the new Premier League TV deal, worth £5.14 billion, leading politicians wasted no time in adding their two pennies, but Labour's manifesto was the only one to mention the subject.|
Miliband has pledged to ensure the Premier League delivers on its 1999 promise to invest 5% of its domestic and international television rights income into funding grassroots. Further, Labour look to mix pounds and passion with a proposal to enable accredited supporter trusts. The move would mean fans could hold their football club far more accountable by appointing and removing at least two of the directors, and purchasing shares when the club changes hands.
The trickle-down of funds from the new TV deal and the enhanced ability for fans to hold their clubs to account could mean an evolving role for brands. Sponsors' changing role within football can be seen in recent high-profile examples, including that of Ched Evans, where club partners successfully supported Oldham fans in their calls to cancel the signing the player following his previous jail sentence.
After their focus on 'Reclaiming The Nation's Game' at their 2014 conference, it was hoped that football may play a large part in the Liberal Democrats' manifesto, but there were discouragingly few references. One of the few sport-related pledges concerned an exploration of safe standing, a stance that is sure to please a number of fans. Given the popularity of such a policy among football supporters, it might be tempting for brands already involved in the sport to show their own support by influencing policy-makers on this topic.
Worrying times for alcohol, betting and fast food brands
|Alcohol, betting and high fat, salt and sugar (HFSS) brands would have been following the manifesto releases with a sense of trepidation, given the noise from major parties last year. Labour were most forthright in their views, referring to sponsorship of sports events by alcohol brands as 'potentially harmful' and calling for a debate on current rules. Their pre-election consultation on sport also included references to introducing a levy on betting companies, which could act as a new revenue stream for community sport. Additionally, a leaked document also proposed a 9pm watershed for TV adverts for unhealthy products that might appeal to youngsters – a policy mirrored by the SNP.|
However, upon manifesto releases, there was barely a mention of marketing restrictions in any of the aforementioned industries. This does not mean these policies have been forgotten, rather, they appear to have been temporarily sidelined, due to the focus on 'safer' traditional policy areas. Given the impact any fresh legislation could have on brand advertising and sponsorship approaches – as well as marketing budgets – companies and rightsholders in the firing line will have to keep their eyes open.
A lot to learn on school sport
|A minimum of 2 hours per week from Labour, £150 million investment a year from the Conservatives and half a day a week from the Greens. These are the manifesto pledges made by the parties on the subject of school sport. The immediate question is, of course, what on Earth do they all mean? Comparing these disparate units of measurement is an almost impossible task, and that’s before chucking in extra layers of confusion, such as Labour's rebuttal that the Conservatives' promise actually represents a reduction of current funding, when taking inflation into account.|
The lack of a substantial commitment by any party ensures that schools still remain fertile ground for sponsors, as Lloyds Bank National Schools Sports Week programme has shown, and brands that can best understand where funding gaps will arise, once the anointed party has implemented their policy, will be best placed to create fruitful partnerships.
Closing the gender gap
|The push for equality within sport, in terms of both participation and representation, is gathering pace, with FIFA’s No to Racism and Sport England’s ThisGirlCan campaigns being just two high-profile proof-points. But whilst all parties vocalise support for women’s sport when prompted, the Conservatives were the only party to clearly put pen to paper, pledging to push the number of women on national sports governing bodies to at least 25% by 2017. The Green Party included a more vague reference to ‘setting targets for participation by women’.|
The silence was particularly disappointing from Labour, who had put a primary focus on the subject within their pre-election sports consultation. Within the party's ‘More Sport For All’ document, there was even suggestion of a government fund incentivising commercial sponsorship of women’s sport.
Such silence presents sponsors with the opportunity to bridge the gap on gender policy. The profile of women’s sport is growing, but investment accounts for just 0.4% of the value of all the sponsorship deals and just 7% of total sports media coverage. As outlined in Synergy's NowNewNext article on the subject, brands can make a real difference within women's sport if their activity is grounded in appropriate insights. Savvy sponsors with existing partnerships stand to benefit the most. Our advice to the (right) brands not already engaged would be to get involved whilst you can.
Tories target American Sport
Increasingly popular in the UK, it was never going to be long before US sport landed on the political agenda. Referenced in the Conservative manifesto, David Cameron aspires to increase UK links with the major US sports, with a long-term view of franchises based in the UK. More than 600,000 people have already attended each of the previous two NFL events on Regent Street, and the Jacksonville Jaguars have long been rumoured to become a permanent NFL London-based franchise. On top of this, Britons have already witnessed regular-season NBA games on home turf as the Global Games Schedule expands overseas.
The globalisation of sport, as discussed in Synergy’s NowNewNext report, is happening fast. It seems that a Conservative government would be prepared to turbo-charge this process. Sponsors need to be ready for the opportunities - and challenges – that this will bring.
Minority parties explore major changes
|Despite UKIP repeatedly referencing their support for ‘unifying a British culture’, the promise may be somewhat inhibited by a pledge to abolish the Department for Culture, Media and Sport as part of their streamlining measures. Given the department’s crucial role in administrating UK sport at every level, including a major role in delivering the Olympics, the policy seems potentially ill-judged.|
Another policy that stood out from the manifestos was the Green Party’s position on horse racing. The proposal for a whip-free Grand National, and consequent ‘full review of the sport’ would represent a step towards the event being cut from the sporting (and sponsorship) calendar altogether. With £80m bet every year by the British public and 600m TV viewers globally, the policy would have widespread impact.
These more outlandish promises might be laughed off in almost any other election campaign, but given the likely delicate balance of power, concerns are justifiable, especially if either party were to grab power under a coalition or alliance.
Boiling 500+ pages of manifesto down into a seven-point snapshot was easy. Not because the Synergy Insights team comprises some of the brightest sponsorship brains in Britain (although this may well be true), but because sport and sponsorship have largely been sidelined by the UK political parties. While our seven snippets show that the parties have not been totally silent, one thing is emphatically clear:
Sport could use sponsors now more than ever.
Conservative Party https://www.conservatives.com/manifesto
Labour Party http://www.labour.org.uk/manifesto
Liberal Democrat Party http://www.libdems.org.uk/manifesto
Gambling Watch UK http://www.gamblingwatchuk.org/
Office for National Statistics http://www.ons.gov.uk/ons/index.html
Sport England https://www.sportengland.org/
Sport and Recreation Alliance http://www.sportandrecreation.org.uk/
Sports think tank http://www.sportsthinktank.com/
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.
|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!!!