PLATFORM:FOR MOST OF the athletes competing in the Olympic Games in Beijing, the difference between success and failure is easily defined, albeit sometimes the margin can be heartbreakingly small. The line between "the fastest man in the world" and the guy who came second can be fractions of a second, but at least there is certainty in the result.
For sports like gymnastics, high diving and boxing, the result is more subjective and the viewing experience less compelling as a result. Likewise, for some of the world's biggest businesses, which have invested millions of euro to associate with the Beijing Olympics, it can be hard to know what winning looks like.
The International Olympic Committee (IOC) sells sponsorships in four-year cycles to cover both Winter and Summer Games. The top tier of sponsors (known as TOP sponsors) each pays an average of $72 million (€48.4 million) for four years, allowing the IOC to reap $866 million in sponsor revenue, a third up from the previous cycle of Athens 2004 and Salt Lake City in 2002. But there are signs that the Beijing Games marks a shift in the relationship between business and the Olympic movement.
Of the 12 TOP Beijing partners, only eight have signed on for Vancouver/London. China computer company Lenovo came on board for the Beijing cycle, which had the 2006 Winter Games in Turin bundled in to the package. More worrying for the IOC is the loss of three major American companies: Johnson Johnson, Manulife Financial and veteran Olympic sponsor Eastman Kodak, which signed up to the IOC's TOP partnership programme in 1986.
"It's just not the best way for us to spend our money," Kodak chief executive Antonio Perez said.
He's not the only CEO to ask some tough questions of his marketing department. Across the board, the rise in the price of Olympics and other elite sport sponsorships has forced companies to look at it with a more critical eye: what is the return on investment (ROI)?
Until recently, the answer to that question has been downright flaky, relying on public recall research and the murky business of "equivalent media value". (A euro value is allocated each time the company's logo is seen on screen or in the pages of a newspaper, roughly equivalent to an advertising rate card). The confidence of men like Perez is undermined by media reports routinely showing that despite their huge expenditure, nobody has noticed them at all.
Fournaise, a London-based research group, interviewed 1,500 Beijing residents earlier this year to find that just 15 per cent of those asked could name two of the IOC's 12 global sponsors, and nearly half could only name one: Coca-Cola. "If you are a traditional marketer, it's a big waste of money," said Fournaise CEO Jerome Fontaine.
Post-Beijing, we can expect a raft of similar research with headlines claiming the failure of Olympic sponsorship. But this is only part of the answer, and a new generation of sponsors is seeking a more concrete answer to the ROI question. For example, American conglomerate GE is unlikely to score highly in public recall tests, but few would consider its backing of the Beijing Games a failure. The company has used its deal to bring in $700 million of new business from 400 Olympics-related projects, including rainwater recycling at Bird's Nest stadium, the iconic centrepiece to the event. Another TOP sponsor, Atos Origin, a business-to-business IT company, has played a central role in building "digital Beijing".
This "opening up" of China to its business partners was one of the IOC's key reasons for awarding Beijing the Games in the first place: they were lobbied assiduously by sponsors such as Coke and McDonald's, who saw the Olympics as a Trojan horse into the fastest growing economy in the world, affording high-level access to decision-makers within the Chinese government - the people who can greenlight the big infrastructure contracts.
However, despite the money flowing in to Olympic HQ in Lausanne, there is one issue that continues to trouble Jacque Rogge and the other IOC chiefs. The average television viewer watching the Olympics is rapidly approaching 50 years of age. This is one figure that will be of interest to GE, which also owns NBC television.
The network has paid $2.2bn for the 2010 and 2012 Games, about two-thirds of the IOC's TV income. As American companies such as Kodak and Johnson Johnson leave the fold, the IOC hopes they will be replaced by their equivalent from the new economies across Asia. But if NBC were to walk, the hole it would leave in the IOC's finances would take some filling. Currently, CCTV, the Chinese state broadcaster, pays less than New Zealand in terms of rights fees.
