Riding the Olympic wave in Asia: what is the value of sponsoring the Games?

Presently, the top tier sponsors are The Olympic Partners (TOPs), which is currently a group of 13 companies including Alibaba, Coca-Cola, Panasonic, Samsung and Visa, who are global sponsors usually contracted on a long-term multi-games contract. During the 2013-2016 Olympic cycle (Sochi and Rio), TOP sponsors contributed USD 1 billion to the Olympics.

However, this global level of sponsorship has often been proven prohibitive and often does not represent value for regional players, says Cassandra Soh, a senior executive with the Sports Business Group at Deloitte Southeast Asia.

On the other hand, Soh explains, local Games organisers have the rights to offer local sponsorship and suppliership programmes that are specific to that particular Games and are generally limited to the four-year Games period which can make much more financial sense. In fact, these deals are so popular that in the same 2013-2016 Olympic cycle, local sponsorships totalled over USD 2bn.

“For the companies trying to sell the rights, it means they can focus all their efforts on the Asia Pacific region rather than having to constantly shift geographic focus every few years, which can be a big advantage for an Asian marketing companies like Dentsu,” says Soh.

“Having the Olympic Games in Asia also represents a great opportunity for Asian athletes as athletes traditionally do better at Games held in their own continent than they do on the other side of the world – with more support during the games and more opportunities to train at the actual venues that will be used,” she adds.

Shawn McBride, executive vice president of Sports at Ketchum Sports & Entertainment and the head of Ketchum Sponsorship, concurs with Soh and notes that next three Games are being referred to as the ‘Asian swing’ for the Olympic Movement, which is a big opportunity to not only create a sport and cultural legacy in each of the countries and primary markets that are hosting the Games, but within the region, as a whole.

In addition, he says one issue that the IOC, organizers, rights holders and sponsors will be paying close attention to is the content consumption of broadcast viewing, digital and social, which are habits of fans and what lessons learned from PyeongChang 2018 might be applied in two years.

“The fact that, in the US especially, all of the events will be not only widely broadcast, but also streamed live across NBC platforms is a major step to meet the on-demand, viewing habits of today’s consumers and is certainly something that will become standard operating procedure for Olympic Games moving forward,” he adds.

As to how the Games staying in Asia impacts sponsor trends and what this means for the state of the Games, Svetlana Picou, executive vice president of global and chair of Global Olympic at Weber Shandwick says that the Olympic flag settling in Asia for the next four years means a host of businesses and organisations have been mapping their plans not for one, but for three Games to come.

This includes those directly involved in the Games (such as international federations, global Olympic partners, suppliers, architect and venue design firms), or those who seek to benefit from the Olympic spotlight and increased consumer demand generated by the Games by accelerating their expansion in Asia.

“The situation requires thinking with a longer term view in mind and across geographical borders as Korea, Japan and China are not unchartered territories for businesses. The space is already crowded, not only with international players, but also with strong or quickly rising local brands,” notes Picou.

“In fact, in some sectors such as tech, it’s even more crowded that it might be in some European markets. The Tokyo 2020 Games has already set an unprecedented record of domestic sponsorship, with 47 companies listed as partners as of early 2018, some of them sharing the same product or service categories. Standing out will be tough. Creating a meaningful and lasting engagement – even tougher,” she adds.

McBride meanwhile, believes that while there was a relatively muted engagement from a sponsor activation standpoint this year in PyeongChang, it is unique to the issues related specifically to this Games and will not be relevant in two to four years time.

At the same time, he feels that TOP sponsors, and especially Team USA sponsors, will continue to support athletes and leverage their sponsorships from advertising, digital and social standpoints.

“It is important to note the Asian market is a key one to so many multinational companies, not to mention the success the IOC has had getting Asian headquartered corporations – such as Toyota and Alibaba – recently involved in the Olympic movement as global sponsors ensures strong support moving forward,” he adds.

Experts also advise potential sponsors to keep the younger generation in mind when planning for the Games as the IOC is trying to attract millennials to watch the competition because multiple studies have shown that there was a 30% drop in television viewers between the ages of 18 and 34 for Rio 2016, as compared to London.

Changes are already being made, with the IOC introducing new sports over several Games that it hopes will attract a younger crowd, like Kiteboarding, Beach Handball, BMX Freestyle, Break-dance and Sport climbing at the 2018 Youth Olympic Games (YOG) in Buenos Aires, while Tokyo 2020 will see athletes competing in Karate, 3x3 Basketball and Sport Climbing.

There will also be more fan engagements, with the opportunity for youngsters to try out sports around the Olympic venues and an increase in digital and social media connectivity, ‘behind the scenes’ content on key platforms.

“While TV remains a powerful media - and a key stream of IOC’s revenue – both IOC and official broadcasters realise that traditional ways of broadcasting do not reach all of their target audiences anymore,” explains Picou.

“That is why official broadcasters, social media and multi-devices are increasingly integrated in IOC’s content distribution approach which includes a newly created Olympic Channel. With each millennial in Asia Pacific spending almost one day a week on their mobiles browsing social media platforms, watching videos or shopping, rethinking how the Olympic Games is delivered to the youngest consumers becomes even more relevant.”

Noting that the first YOG was held in Singapore in 2010, Kunihito Morimura, president and chief executive officer of Dentsu Sports Asia says: “Not only was the YOG a key milestone for sports in Asia, it also contributed to the engagement of the youth in the Olympic Movement. I believe that it is important to support the growth of the young future Olympic athletes and to give a chance for them to showcase their talents on an international level.”

Picou also points out that just like how South Korea, Japan and China compete for leadership in technology and innovation, PyeongChang 2018, Tokyo 2020 and Beijing 2022 have been competing for the merit to be named the most innovative Games in history.

A host of innovations by brands were put in place in PyeongChang this year that allowed fans to engage with the games in a variety of new ways – from watching the competitions in virtual reality or via drone-shot footage and various interactive exhibitions.

Giving an example, Picou says one member of the Olympic TOP partners’ family is currently working on a best-in-class cloud-computing infrastructure to establish a sport hub combining ecommerce, content, Olympic Games news and information about various Olympic sports and athletes.

"Robots will even be used by the organisers to give directions to visitors of the Games and clean the venues. In addition, a recently signed-off deal between partners will specifically allow Gen K and millennials to engage with entertaining “Stories” on a daily basis on their main platform of choice," she adds.

Summing it all up, Picou stresses that for brands to truly reap the benefits of sponsoring the Games, they need to do their homework, then learn on the ground, respect the differences and refine their strategy accordingly. They also need to think of possible synergies and optimisation routes working across markets.

“Think Gen K and millennials; embrace the speed of technology and innovation. You also need to know your competitor base well – locally, regionally and globally,” she adds. “It’s not only about your product, it’s about what you stand for.”