Are Olympics Sponsorships Worth It?

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"Coke has not in the least reconsidered its Olympic sponsorship," says Kevin Tressler, director of Coke's Worldwide Sports & Entertainment Marketing. Neither has GE, which has landed $700 million in revenues from 400 Olympics-related projects such as rainwater recycling at Beijing's Bird's Nest stadium. GE is a partner in London 2012, too.

Chinese Market Immaturity Was a Draw

There are other factors that make the Beijing Games unique. While provisions of the IOC charter ensure that nonsponsors' ads are restricted in and around Olympics venues to prevent ambush marketing (BusinessWeek.com, 3/12/08), Beijing extended the ban to all outdoor advertising in the city's airports, buses, and billboards within the city center. And just two weeks ago, the China Advertising Assn. took things even further, by saying use of Chinese Olympic athletes by nonsponsors was banned countrywide during the Games—something no other host country would attempt. (Companies can, however, apply for exemptions, as Nike (NKE) has done for its spots featuring China's gold-medal winning hurdler Liu Xiang.)

Another draw of Beijing 2008: the relative immaturity of the Chinese consumer market, and the intense pride among Chinese in hosting the Games. "For any kind of marketer or advertiser, you have to view the Olympics in Beijing differently from Olympics in other countries," says Michael Zhang, managing director of MediaCom China (MCCM). Government officials will notice which companies show up in support (BusinessWeek.com, 5/28/08) even if consumers don't, a major factor for sponsors in a country where guanxi, or relationships, are such an integral part of doing business.

But corporate relationship-building with government officials is unlikely to rank high when companies weigh the costs of sponsoring the 2012 Games. "I don't see that as important in London, where you are talking about a developed and mature market where commercial realities stand on their own merits," says Richard Basil-Jones, managing director of Nielsen Media Asia Pacific in Hong Kong.

Instead, marketers will have to weigh whether there are more cost-effective ways to reach consumers and leverage Olympic enthusiasm without having to pay the high price. Frank Vial, strategy director of branding agency Landor Associates, argues that in a world that's moving toward targeted marketing, "maybe the Olympics will have to reinvent itself as something other than a global, monolithic brand."

Balfour is BusinessWeek's Asia Correspondent in Hong Kong and Jana is deputy Innovation editor at BusinessWeek. With Jena McGregor in New York