The Lords of the Rings

Sport consumes almost all consumers in some form around the world and more brands are today scrambling to gain visibility through sport. No points for guessing that aside from the highly anticipated 2008 Beijing Olympics, football, car racing, rugby and golf are just a few of the major codes now attracting billions in corporate advertising and sponsorship deals, broadcast rights, merchandising and even corporate hospitality. By Matt Eaton.

It's a good time to be playing in the sporting arena and it shouldn't surprise many to hear that the sports market in Asia is booming. The Singapore Sports Council says the total sports market should reach $17 billion by 2009. The key drivers behind this figure include a strong 6% annual growth in sponsorship and merchandising revenue along with revenue from television rights, which since 2005 has been growing at a rate of around 6.4% each year. By 2009, TV rights alone should hit US$3 billion (S$4.16 million).

Research from IVCast, part of OgilvyAction Sports & Entertainment division, shows an unprecedented rise in sponsorship activity around the region in 2007.

After the headline-grabbing 55% rise in 2006, the sponsorship monitoring index shows an almost identical 54% year-on-year rise.

Ben Heyhoe Flint, general manager of OgilvyAction Sports & Entertainment, says the jump shows the 2006 growth wasn't a flash in the pan and that Asia is currently driving the global average of 14% in sport sponsorship, and obviously one of the main drivers for the growth is the upcoming 2008 Beijing Olympics.

The Olympic factor

When the world's greatest sporting and marketing event crosses paths with one of the best economic growth stories ever, the result could be the opportunity of a lifetime for corporate sponsors of the Beijing Olympics.

The power of the Olympic movement can not be understated. For the first time in history the opening ceremony of the Beijing Games is expected to be the first television sporting watched by a global audience of more than a billion people.

A total of 12 companies hold marketing rights from the International Olympic committee to use the Olympic logo globally, including McDonald's, Coca-Cola, Visa, Panasonic, Lenovo and Johnson & Johnson.

While the IOC does not release details on how much sponsors shell out to align themselves with the Olympic rings, reports suggest the 2006 Winter Games in Turin and the Summer Games in Beijing have already bought in about US$4.4 billion (S$6.11 billion) in rights and sponsorship deals.

Industry watchers however, put the amount a major sponsor doles out for the rights as "close to US$50 million (S$69.38 million)".

"This will be the most successful marketing programme ever in the Games," says Christopher Renner, president of sporting consultant Helios Partners in China. "No question about it."

Global branding machines such as McDonald's and Coca Cola - which is celebrating its 80th year of continuous Olympic sponsorship - will be out in force as expected. But Adidas' arch rival Nike has a policy of not being an official sponsor. Instead it supports individual athletes and sports federations, some of which also receive Olympic subsidies.

Lenovo, China's top PC maker and the only Chinese company to be a global partner of the Beijing Games, aims to show off its technological prowess in computer products and build its brand globally much as Samsung did at its home Olympics in Seoul in 1988.

While a major partner of the Beijing Games, the company will be dropping its sponsorship rights after the 2008 Olympic games and pass the baton to Taiwanese-owned competitor Acer.

A Lenovo spokesperson said the company did not lose the sponsorship, but instead decided not to continue as a worldwide partner of the Olympic Games.

"Our sponsorship of the Games both in Torino and Beijing has been extremely positive and productive, serving as the launch pad to grow from a local brand to a global brand. No other event could have propelled our name toward the minds of customers everywhere, which was precisely what the brand required at the time we signed up," the spokesperson said.

"Our current sponsorships in the Olympic Games, Formula 1 and the NBA provide considerable opportunities to build the Lenovo brand, and you'll see more details of this marketing strategy over time."

But without paying a huge amount for Olympic sponsorship there are still a number of ways brands can get involved.

Yuan Bin, director of Beijing Organizing Committee's marketing department, says there will be a core group of dedicated people protecting Olympic sponsors in Beijing and preventing any ambush marketing stunts.

In a statement she said there will be special efforts made to "enhance brand protection and anti-ambush marketing for the Olympics" as well as other major efforts to control outdoor advertising.

"[We will] continue to raise the standards and improve the quality and efficiency of sponsor services."

But Chris Reitermann, president of OgilvyOne China, says there are many ways in which non-Olympic aligned brands can leverage the Olympic platform.

"Several non-sponsors will aim to bring their brand within the Olympic context," he says.

"This can be achieved through a variety of different means. Several sport and other brands will do this through sponsorship of individual athletes and others simply opt to reflect the spirit of Olympics in their advertising. A master of this kind of ambush marketing is Nike, and I certainly expect a major campaign around the Olympics doing just that."

Despite the huge opportunities, there of course are huge risks, especially as human rights activists step up criticism over China's stance on Darfur, Steven Spielberg's withdrawal as an artistic adviser for the Beijing Games and more recently the pressure on the Chinese government over Tibet.

Damien Ryan, director of Ryan Financial Communications, says sponsors are already being targeted with protests for not speaking out on Darfur by groups including Dream for Darfur which is running a long campaign to pressure major sponsors.

"Just like athletes, the clients I am working with are now in the final stages of preparation ahead of the increasingly controversial Olympic Games," Ryan says. "Sponsors see their involvement in the Olympics as vital given the growing revenue contribution from China and the sheer potential of the country's 1.3 billion consumers. That said, corporate involvement with Beijing 2008 is not without huge risks."

Ryan says athletes and Chinese officials will also be probed by the media like never before on a horde of sensitive issues.

"A simple ‘no comment' or ‘politics and sport don't mix' may no longer be acceptable. All involved in the Olympics had better ensure their communications skills are in peak condition as Beijing 2008 has the key ingredients for a PR disaster."

To date, advertisers and their agencies have vowed to keep a close eye on the unfolding events, but no major sponsors have yet to pull out.

Several major sponsors have in fact stressed their commitment to the Games. A Coca-Cola statement said the company was had expressed "deep concern" for the situation in Tibet, but that the beverage maker "firmly believes that the Olympics are a force for good."

Likely to face immediate pressure could be Lenovo, Coca-Cola and Samsung, the three sponsors of the Olympic torch relay, which begins in March and will pass through Tibet and move up Mount Everest.

Samsung said in a statement: "We believe the Olympic Games is not the place for demonstrations and we hope that all people attending the games recognise the importance of this."

"There's no doubt that the Beijing Olympics is helping this as we've seen a lot of brands investing in 2007 to secure a long-term toehold for the Games," he says. "But it's not just the Olympics that's swelling the numbers. We've recorded a large rise in the sheer number of deals being done in other Asian countries - 2,233 in 2007 versus 1,624 in 2006 - showing that the popularity and relevance of sponsorship is infectious."

Infectious indeed. But while major sponsorship deals are a draw card for big brands with money to spend, managing a sponsorship deal is a major financial and logistical commitment.

Olympics aside

Giles Morgan, group head of sponsorship at HSBC, which is a major supporter of golf tournaments around the region, says the banking group's investment in golf continues to grow year-on-year.

"Golf is a key platform in our brand strategy, both in Singapore and globally," Morgan says. "Golf as a game of integrity and inclusiveness, shares the values HSBC supports, through its promise of fairness and understanding of our customers' needs so it is only fitting that HSBC is involved in a sport that mirrors the tastes and lifestyles of so many of its customers across the globe."

He adds that its involvement with sport is not just about top-level tournaments, but of growing importance are development programmes for children along with more grassroots community activities.

"As well as staging these unique best-in-class events, we are also involved year-round in the grassroots development of golf in these markets. In Singapore we have the HSBC Youth Golfers. On top of that we have the HSBC Elite Youth Golfers, which capitalises on the identification of the especially talented students in our schools programme and develops them still further," he adds.

UBS Asia Pacific is another banking group making major investments in sporting codes, and like HSBC, uses sports for both top tier and community activities.

Oliver Bertschinger, head of sponsorship at UBS Asia Pacific, says overall the group spends a "considerable chunk" of its marketing budget on sports sponsorship activity at both a community level right up to professional tournaments.

He argues that sport is a good way to market the company's brand as well as a tool for UBS employment programmes and hosting its corporate partners.

"We look at sponsorship as being a specialist marketing tool. As much as advertising is a specialty, as much as public relations is a specialty, as much as direct marketing is a specialty, sponsorship in many ways is a marketing asset that we use for very similar goals," Bertschinger says.

A critical factor in the marketing and sponsorship arena is the activation of sponsor marketing activity, where on-ground marketing support, media management and developing community relations is key. With many brands now vying for a space in the sports market and in particular with Singapore winning the Youth Olympic Games bid and the Formula 1 gaining momentum, it is even more important.

Linda Fulford, managing director, Fulford Public Relations, says there has been a huge amount of corporate interest in sport in Singapore, especially leading up to the Youth Olympic bid.

"You are seeing more brands looking at opportunities, but what it really means is that more people have thought about the benefits you can get from getting involved with a sports event. But I wouldn't say the sports market is overcrowded, not at all.

"Maybe in Europe where you see a lot of brands it's very hard to distinguish who is involved in which sport, but here it's fairly much in its infancy, so it's great to see the support of big brands coming in."

Fulford cites the ASEAN Tour, a grassroots golf tournament, which Mercedez-Benz signed on as a three-year sponsorship partner, as a good example of where major brands can make a difference.

"For a significant brand like Mercedes to put its name to a fledgling tour is pretty amazing. For them to say ‘we see the potential in Asian sport' and put money behind a developing tour is really telling of how corporates are looking at sponsorships now," she says.

For a industry in its infancy stages, Fulford adds that sponsorship in Asia has come a long way over a short time.

"There is a much deeper understanding that you do have to put an activation budget together as well as the sponsorship dollars and the smart brands as really the ones going out there and getting people engaged with what they're doing," Fulford adds.

Finding the X factor

Sport has today evolved across a number of cultural and technological boarders, in a similar way to music. This is especially true for the youth market where sport is no longer confined to sports grounds. Young people today use streets and public areas as their urban playground, largely because they are free of charge and open all hours.

This appropriation of the city for sports, dubbed "parkour" by BatesAsia, is a particularly strong trend around Asia.

A BatesAsia 141 study, launched across six Asian markets, found that for youth, sport is as much about personal choice and freedom of expression as it is about winning and losing.

The research showed sport has also crossed into the realms of music and high fashion with major designers now producing lines of sports apparel. The partnership between Nike and iPod is symptomatic of these merging worlds.

The BatesAsia research rings true in Singapore where the Singapore Sports Council in early March announced a "movement" to encourage young adults to embrace a sports lifestyle in a similar vein to clubbing or shopping.

The initiative, called the Sports Party Animal Movement or S.P.A.M, looks to educate adults between the age of 20 and 39 years that sport can be just as fun and exciting as other lifestyle activities and be used as a means to socialise and keep fit.

As part of the S.P.A.M initiative, the SSC is throwing parties, holding a Sports Babe & Hunk Search and a series of fashion themed events. California Fitness has also aligned its brand with the SSC project to offer membership to its venues.

"Through it we aim to drive home the message that sport like any other lifestyle activities are great for social bonding," Oon Jin Teik, CEO of Singapore Sports Council, says.

"Young people can meet new friends, have a good time and most importantly, keep fit."