More than 17 million people live in Beijing, China, the host city for the Summer Olympics that open Friday. That is more than the population of the past four host cities — Athens, Sydney, Atlanta and Barcelona — combined. China counts 1.3 billion residents, more than any country on Earth.
Never before has an Olympics been staged in a market so big — and so underserved. Though capitalism has been a fact of life in China for years, no brand category has been captured the way, say, Wal-Mart dominates the U.S. retail market. Which means: Olympic sponsors are staring at a once-in-a-lifetime opportunity to engage and snare the Chinese consumer. Do it right, and the payoff could be massive.
According to IEG, a sponsorship tracking firm in Chicago, the host organizing committee in Beijing has secured about $740 million in sponsorship revenue — only $56 million shy of the combined amount brought in by the 2004 Athens committee and the 2002 Salt Lake City committee during the Winter Olympics. Sponsorships handed out by The Beijing Organizing Committee of the Olympic Games, or BOCOG, are coveted because they give the companies rights to use the Olympic name when promoting their products within China.
That’s only part of the cost for major sponsors like Adidas, which paid an estimated $80 million, according to IEG, and Anheuser-Busch, which paid $20 million to $30 million. Add tens of millions more for marketing expenses, television commercial costs, travel, accommodations for staff and other expenses, like Adidas' costs for opening its biggest store ever this month in Beijing.
These marketers believe the price of an Olympic tie-in is worth it. Reports this summer already have offered evidence. According to Forbes.com, a survey by China’s largest market research firm uncovered that more than two-thirds of the respondents “consider Olympic sponsorship a stamp of approval with regard to the quality of a company’s products.” About half planned to buy products made by an Olympics sponsor. Among the 2,000 people surveyed, Coca-Cola stood out as the brand most associated with the Games.
Based in Atlanta, Coca-Cola has served as an Olympic corporate partner since 1928. Its current contract with the International Olympic Committee — with an estimated cost of $65 million to $75 million for each four-year cycle — runs through 2020. Kevin Tressler, the company’s director of sports and entertainment marketing, says the Games help drive market share and volume.
”China is one of our key markets,” said Tressler. “The opportunity is huge to amplify our brand messages.”
Two commercials to be broadcast globally — one featuring NBA basketball stars Yao Ming and LeBron James, and the other focusing on Beijing's Bird’s Nest Stadium — will run throughout the Games, along with other advertisements that will run strictly in China. As the Games approach, Olympic sponsors such as Coca-Cola have a lot of advantages.
For example, starting about a month before the opening ceremonies, the Chinese government began giving Olympic sponsors preference on advertising space at the Beijing airport, on the city’s subway lines and on TV stations featuring Olympic content, the New York Times reported.
That limits the ability of ambush marketers — companies with no official Olympic ties — to try to link their name to the Games. Companies such as Nike, which will have a presence through its clothing of certain athletes and teams, will be hard-pressed to buy billboard ads and other marketing that imply an official relationship with the Olympics.
Of course, Olympic sponsors risk the possibility of bad publicity. The torch relay — marred by protests regarding China’s treatment of Tibet — was a prime example. Coca-Cola, one of the sponsors of the torch relay, says it hasn’t regretted its choice. Said Tressler: “We believe the torch relay is clearly a force for good.”
From Coca-Cola to Kodak to McDonald’s, corporate giants are spending tens of millions of dollars to ingratiate themselves, through athletics, in the world’s biggest market.
One example of the potential payoff: China’s sportswear market is expected to nearly double by 2009 from just three years earlier, according to ZOU Marketing in Shanghai. The investment is huge, but the rewards for companies targeting a still largely untapped market could be Olympian.