Worth its Weight in Gold?

Come July 27th, millions of people around the world will turn their attention to London as that city hosts the opening ceremonies of the Summer Olympics. But if recent trends continue, interest will gradually fade over the following two weeks, possibly leading to some of the lowest television ratings for the Olympics ever, especially among the much-coveted younger demographic. The International Olympic Committee (I.O.C.) is increasingly concerned about this possibility and, in an effort to turn things around, has enlisted one of its longest running sponsors, The Coca-Cola Co., to help.

After all, the committee’s thinking goes, who better than Coca-Cola to help reignite the passion for the Olympics in millions of young consumers?

As Claudia Navarro, Coke’s Global Olympic marketing director, explains: “The I.O.C., for London especially, called us and said, ‘You know we’re really concerned, we really would like to contemporize the games and we see that we need to find a way to bring youth again, especially youth, closer to sport. We’re seeing a trend where the Olympic games are starting to be viewed by a little bit of an older demographic.’ The I.O.C., we like to believe, really sees Coca-Cola as the partner that helps them deliver that vision because we have found a relevant way to connect with youth around the world. We are helping contemporize what we do with the Olympic games and as a result deliver against that vision of bringing youth closer to sport.”

And the way Coke is doing so goes well beyond just selling soft drinks. For this year’s games it already has used social media in an innovative way to start building excitement among the world’s young people about the Olympics. And it has flexed its financial muscle to invest in charities in the host country that will touch thousands of youngsters: a three-year partnership with StreetGames, for instance, that will bring athletics to 110,000 young people in the most deprived areas of the United Kingdom.

Coke hopes initiatives such as these will help to firmly entrench its brand into the hearts of younger consumers, and, for the Olympics, deliver on revitalizing a passion for sports among a whole new generation of young people.

But at the same time, this year’s Olympics will be taking place in a world vastly different from the Summer Games of just four years ago. It is one that is increasingly fractured from a media perspective, with younger viewers just as likely, if not moreso, to be playing video games, updating their Facebook accounts, tweeting or watching YouTube, rather than spending hours watching broadcast television.

Couple that fallofff in viewership with the fact that Coke’s core business—carbonated soft drinks—continues to struggle, and the question must be asked: Is the sponsorship of such a major event like the Olympics, with its enormous investment in time and resources for the company, still worth it?

Conversation Starters
Part of the answer may lie in how Coke is harnessing the power of social media as part of its marketing plan for this summer’s Olympics. In a break with past tradition, Coke brought a new transparency to the creation of its Olympics-related ads. Hundreds of teens who were invited to take part in the filming of its “Move to the Beat” Olympic ads, also were given free reign to tweet, Facebook and otherwise flood the internet with their shared experience. “We approached our London 2012 campaign in a bold, new way in order to create stories that teens would love and that they would want to share,” says Jonathan Mildenhall, vice president of Global Advertising Strategy and Content Excellence for Coke. “This wasn’t about shooting a television commercial. It was about inspiring teens to move, and capturing the story from multiple angles and viewpoints in order to create pieces of film that could be spread across multiple media platforms.”

Creating such stories around the Olympics is why Ted Wright, founder and CEO of Fizz, a word-of-mouth marketing agency that focuses on the beverage sector, believes sponsoring a major event like the Olympics is probably worth the investment for Coke. “It’s worth it,” he says, “if you can leverage the sponsorship and increase the amount and the frequency of conversation that you can have with your consumers.” Wright says that if the function of marketing is ‘selling more stuff to more people more often for more money more efficiently’—quoting Sergio Zyman, former chief marketing officer for Coca-Cola—“The reality is broadcast doesn’t do that as effectively as it once did. And the numbers prove the effectiveness of that is dropping precipitously.” But an event like the Olympics, he says, is different. “There are a couple of things that focus everybody in the world. There’s the World Cup, the Super Bowl, the Olympics. What I have found to be interesting is that sponsorships of large-scale events are still very useful for those people in the beverage industry, but how they are useful is what has changed. They are allowing big brands to have conversations with people. It gives them the opportunity to have conversations with their brand fans about things that are cool and things that are interesting.”

Also, there are few events that match the power of the Olympics’ overall positive message: that of bettering oneself, giving it your very best effort. This is invaluable for a brand like Coke, especially when you consider how battered it has been in recent years by critics of sugared soft drinks. What better event to associate with than one which revels in fitness and athletics night after night, day after day, for two weeks? “I would say the beauty of the partnership between Coca-Cola and the International Olympic Committee is that we really share many of the same values,” says Navarro. “So things like excellence, friendship, respect, we fundamentally believe in together. But moreover, I think what really defines the purpose of the partnership is our joint vision of building a better world through sport.”

Beer and Conversation
Heineken is another global brand that views sponsorship of major events like the Olympics as an integral piece of its marketing. Explains Hans Erik, brand activation manager for Heineken, another major sponsor of this summer’s Olympics: “We want to be part of the conversation, and over a beer great conversation happens. So we facilitate that process and I think that’s where a digital strategy today has to be part and parcel of your sponsorship strategy.”

And the very nature of the product it sells was also one of the reasons why being a sponsor of the 2010 Vancouver Winter Olympics was so important for Molson Coors Canada. “Because beer is innately social, it was a natural fit for our brands to be at the heart of the celebration occasions from coast to coast,” says the company’s manager, external communications, Forest Kenney. “Molson Coors became the official supplier for the 2010 Vancouver Olympic Games as a springboard to showcasing our main brands at a time of heightened Canadian pride.”

William Chipps, senior editor, IEG Sponsorship Report, says the Olympics is similar to other live sporting events that offer brands a unique way to get closer to their consumers. “It allows beverage companies to tap into key consumer passion points,” he says. “Consumers love their favorite sports teams and beverage companies and other types of sponsors want to tap into that passion and have it rub off to their brand and ideally have consumers buy their product more because of that passion.” But Chipps also says the very nature of sponsorships has been changing during the past few years. As consumers embrace social networking, this has had a major impact on sponsorships. The ability to tweet or update a brand’s Facebook page about a sponsorship has armed beverage brands with a whole new way to get close to their consumers. “Just about every major sponsorship has or should have a social media component,” he says.

Another trend Chipps has been seeing in today’s economy is more and more companies looking to forego the higher price tag associated with exclusive sponsorships. “Instead they’re looking for some kind of area within the sports venue or the sponsored venue that they can kind of claim ‘ownership’ of,” he says.

But as one of the most important marketing events for Coke, it will be going all out at this summer’s Games. Navarro says that this is the biggest campaign for the Olympic games that The Coca-Cola Co. has ever developed, with 108 markets around the world participating.

As Muhtar Kent, chairman and CEO of Coke, put it when asked at the Beverage Forum in New York in May about Coke’s Olympics sponsorship: “I think the world needs these rays of hope right now more than ever before and it’s a great movement and it’s a great honor to be part of that movement. We look very much forward to playing a part and ensuring these games are going to be a success not just for Britain and Europe, but for the whole world.”

 

Sidebar: Coke’s Olympic Marathon

It may be one of the longest-running sponsorships of any event in the world. Coke has been a sponsor of the winter or summer Olympics for 84 years, since the games were held in Amsterdam in 1928.

“You can imagine that after 84 years, we are almost like a married couple,” says Claudia Navarro, Coke’s Global Olympic Marketing director.

And for Coke, the Olympics has truly become a Herculean task, with thousands of employees involved. Coke sets up a dedicated team for the Olympics in the host country about four or five years in advance. “Immediately, we move in to work with the host country,” says Navarro, “to engage them in what we call the Future Host Country Program.” Through this program, Coke starts transferring all its prior learning. “Actually,” Navarro says, “that is one of the key competitive differences for us in a sponsorship like the Olympic Games—the continuity that we bring in the learning from one Games to the next.”

One reason Coke is a good fit is that it is already located just about everywhere. “We think about everything that is going to be happening in this country outside of the normal operations of the business,” explains Navarro. “For instance, we became presenting partners of the Olympic Torch Relay, a massive undertaking.” When all is said and done, the Relay will allow Coke to get its brand within a two-mile radius of up to 90 percent of the population of the U.K.

The nature of Coke’s Olympics sponsorship has changed dramatically over the years. “We started off in Amsterdam and at that time we had a Coca-Cola poster and we sent a couple of boxes of product,” says Navarro. “And if I think about what we’re doing for London where we are leveraging multiple platforms to share a new story for the games, I think we’ve come a long way. Our campaign currently has digital components, out of home, TV commercials, and it has a lot of programs developed in exclusivity with the International Olympic Committee. So, I would say from that regard, the partnership has become a lot more intimate and a lot richer.” — Andrew Kaplan
 

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