Analysis: Why Olympic Sponsors Won't Get the Gold in China

Marketing research shows that big Olympic sponsors like Adidas and Coca-Cola are unlikely to get a decent return on their investment

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Shaun Rein, founder of Shanghai-based China Market Research Group (CMR), has some bad news for official Olympic sponsors like Adidas (ADSG). He says shelling out tens of millions of dollars, the reported cost of a sponsorship (Adidas won't specify what it has spent), won't boost sales enough in China to justify the expense or even help gain an edge in brand awareness on competitors.

In a recent study, CMR found that almost 80% of Chinese consumers don't care who the actual Olympic sponsors are. What's worse, many consumers don't even know: Some 40% of those surveyed thought Nike (NKE) was the Games' official sportswear partner (half of the respondents correctly named Adidas). That means the ambush marketing has been effective.

Ambush Ads

While the Beijing Olympic organizing committee has ratcheted up its assault on ambush ads in Beijing, Scott Kronick, president of Ogilvy International Public Relations, says a major challenge for official sponsors like Adidas lies in spreading its message beyond the city limits. Adidas, it seems, would agree. It plans to launch some 5,000 stores in both urban centers and more remote areas of China this year. Opening stores in fringe cities, Kronick says, is a good way to capitalize on the growing Chinese market and remind consumers of Adidas' Olympic ties.

Part of Nike's brand-awareness success in China has come from being associated with official sponsors in completely different categories. Chinese hurdler Liu Xiang, one of the athletes Nike is sponsoring, is also being backed by Coca-Cola (KO), which is an official Olympic sponsor. This sponsorship blend is a recipe for confusion, according to Rein's research.

Rein says the key to untangling sponsorship lines and distinguishing brands could lie in the digital world. China has at least 253 million Internet users (according to the China Internet Network Information Center), and a large percentage of Chinese under 32 spend the majority of their leisure time online. Rein says Olympic sponsorship isn't worth a company's money if its online presence is less than that of its competitors.

Pepsi vs. Coke

He cites Pepsi (PEP), which has teamed up with several Chinese portals to launch a digital marketing campaign that is giving rival Coca-Cola heartburn, as a good example. One of Pepsi's partner sites is Suho, an Olympic sponsor. It's easy, then, for Chinese consumers to associate Pepsi with the Games despite no mention of official sponsorship or use of trademarked Olympic symbols on Pepsi's part. Rein says Pepsi is able to win the battle for Chinese Internet users because Coke's digital campaign is less interactive and more focused on the under-18 crowd. To turn this tide, he adds, Coke needs to increase its site's interactivity.

But even if Adidas and Coke can secure their images as official sponsors, what then? Chinese consumers who prefer Pepsi or Nike aren't likely to switch allegiance over sponsorship status. Unless companies like Coke and Adidas can convince the Chinese that their brand and respective products are superior, Rein says, those eight-digit sponsorship fees aren't worth it.

Oriana Schwindt recently graduated from Northwestern University's Medill School of Journalism in Chicago, IL. She writes for the Innovation and Managing channels of BusinessWeek.com.