Is Olympic Sponsorship Feeling the Hurt?

Reading a very interesting article today from AdAge titled ‘Olympics Feel the Hurt As Sponsors Steer Clear

According to the article, the international Olympic Committee is being hit by the struggling ad market and worldwide recession as four of its TOP sponsors — the highest sponsorship tier, paying an average of $80 million to $100 million for a four-year cycle — have dropped out since the Beijing Olympics ended in August. 

AdAge also stated that the IOC said it has replaced Lenovo with another computer company, Acer, and its sponsorship total from the TOP program stands at $900 million for the 2009-2012 cycle. But that is mostly from increases in the cost of sponsorships for Acer and the eight remaining TOP members: Atos Origin, Coca-Cola, General Electric, McDonald’s, Omega, Panasonic, Samsung and Visa. Panasonic and Samsung are committed through the 2016 Olympics; Coca Cola’s deal is through 2020. 

The IOC earned $866 million from the dozen TOP sponsors of the last four-year cycle, from 2005 to 2008, which included the 2006 Winter Games in Turin, Italy, and the 2008 Summer Games in Beijing. President Jacques Rogge said he was hoping to reach $1 billion in TOP sponsorships, and that the IOC realizes it will not reach 12 TOP sponsors again. 

It does look like that fewer sponsors are paying more as Olympic sponsors. However, I am not sure if it is a question of Olympic sponsorship not delivering ROI as opposed to limiting the number of sponsors to optimize the overall spend. Some of the Beijing sponsors were there for China business objectives as the key driver and would not be be for the longer term.   

Certainly, more than than ever with the next Olympics there will be more focus on assessing sponsorship ROI for the sponsors involved. A good thing for sponsors, the IOC and the shareholders overall.

I have the view that the next Olympics will involve even greater investments by sponsors because the property itself is fundamentally sound. The investments are large but they represent global investments for global brands. What do others think about this?

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