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Why the Olympic sponsors have been uncharacteristically quiet in the build-up to Tokyo 2020

As Tokyo 2020 finally gets underway in Japan, international marketing activity around the Games has been subdued. On the back of a build-up marred by the pandemic and public opposition, sponsors are weighing how to promote their association with an event that will be a far cry from the one they were promised.

22 July 2021 Sam Carp

As the Olympic torch relay made its way through the Japanese prefecture of Yamanashi on a particularly overcast day in late June, small smatterings of onlookers sporting face masks were pictured waving at the side of the road as the parade passed by. Trailing the torchbearer was a truck displaying the logo of soft drinks giant Coca-Cola, which is just one of many Games sponsors now tied to an event that is going to feel very different to what they signed up for.

Indeed, when Covid-19 forced the postponement of Tokyo 2020, it rocked the very foundations that underpin the financial prosperity of the Olympic juggernaut. The party line might be that these Games are going ahead for the benefit of the athletes and the watching world, but arguably the biggest motivation is to fulfil the billions of dollars’ worth of commercial contracts upon which the International Olympic Committee (IOC), and by extension the broader Olympic movement, relies.

Sponsors, for their part, have handed over hefty sums to secure the right to integrate the Olympic rings within their campaigns and products, as well as to promote themselves to the Games’ vast global audience. Ricardo Fort, who recently left his role managing Coca-Cola’s sports partnerships to establish the Sport by Fort Consulting firm, says that most brands will have spent the last 12 months upgrading and updating their campaigns to make them “more relevant to today’s reality”, but admits that sponsors lost value in “many different ways” when Tokyo 2020 was postponed.

“They had to replan and reschedule activities,” he says, “and some of them had media buys that they had to get back or renegotiate, so the financial impact for all the sponsors has been significant. All of them had to go through a lot of negotiations to reduce the impact of the postponement. Of course, a cancellation would have been worse, but the postponement nevertheless was still painful.

“When it comes to the Games now, as long as the Games are happening, you're still going to get the vast majority of your value. And this is what matters for sponsors.”

A vehicle sports the Coca-Cola logo as the Olympic torch relay reaches Hokuto in June

Even with the Games going ahead, though, sponsors are being forced into significant compromises. It also remains to be seen what rights will be delivered. From an operational standpoint, Fort says partners’ primary concern will be the safety of their staff travelling to Japan. With overseas spectators already prohibited from attending, organisers were recently forced to ban all fans from the Olympics after a surge in coronavirus cases, further limiting the opportunity for in-person engagement. Companies also won’t be able to take advantage of their hospitality benefits to the extent that they would under normal circumstances.

And all of this will be happening in a host nation not in its usual celebratory mood, but rather plunged back into a state of emergency, which some onlookers believe will impact how the Games are perceived.

“My worry has been the damage to the Olympic brand,” says Rick Burton, a sport management professor at Syracuse University who served as chief marketing officer for the US Olympic Committee during Beijing 2008. “You're going to have Games unlike any we've ever seen before. There aren’t going to be very many spectators. I think the experience for the athletes is going to be very sterile. I just think a lot of that experience is not going to be there for these Games.

“Then, as a follow on from that, if the ratings are down, if sponsors are dissatisfied with what they've got, versus what they hope for, how long is the recovery period for the Games? I'm not expecting it to be long. I think there could be some residual rub off with Beijing in ’22, but I'm imagining that we'll be back to what we expect of the Olympics by ’24.”

As long as the Games are happening, you're still going to get the vast majority of your value. And this is what matters for sponsors.

The pictures emanating from Tokyo will inevitably be at odds with the images of sold-out stadiums that have typified previous editions of the Games, but it is also true that the overwhelming majority of the global population will still be engaging with the event either on television or via a digital device. Elizabeth Lindsey, who is the president of brands and properties at Wasserman, the LA-based sports marketing and talent representation agency, believes the savvy sponsors will find alternative ways to recoup value.

“Everybody wants to activate in a live arena, everybody wants to grab on to that passion that happens when people are in the moment experiencing these amazing moments in sports,” she says. “No one wants to go away from that, but no one anymore is talking about that and that exclusively. It’s that and this digital environment, it’s that and this social-forward activation campaign.”

Many of the grumblings in the build-up to Tokyo 2020 have been voiced – privately, at least – by the domestic sponsors of the event, who collectively pitched in more than US$3 billion prior to the Covid-19 outbreak to secure themselves what was supposed to be a once-in-a-generation commercial opportunity. The Financial Times previously reported that some Japanese companies had called for a second delay of the Games so that more spectators would be able to attend, while others have purportedly brought in consultants to assess whether their association with the event will lead to brand damage.

But less has been said about the members of The Olympic Partner (TOP) programme, a group of 14 blue-chip brands whose multi-Games contracts are worth hundreds of millions of dollars and together account for approximately 18 per cent of the IOC’s revenue. That is perhaps understandable, given that the worldwide partners have deals spanning several editions of the Olympics, meaning they have more reason to be accommodating than the domestic sponsors. It would also be fair to suggest that the Games’ Japanese partners will be anxious about alienating consumers in their home market.

The IOC's TOP sponsors account for approximately 18 per cent of the Olympic body's revenue

“It’s been 23 years since the last Japanese Olympics – that’s a generation ago,” Terrence Burns, an Olympic marketing veteran who has worked on numerous winning bids, tells SportsPro. “The opportunity for domestic partners is always more intense and deeper because the Games are taking place in their home nation. Domestic partners tend to be in the market earlier with their promotions, and often more aggressive and creative given it’s a once-in-a-lifetime opportunity. 

“They have one shot, so to speak, to make their Olympic investment work for them from an ROI perspective. For the TOPs, there’s always the next Games.”

While that might be true, Burton says that the IOC and its sponsors will be having “daily conversations” about what will happen in various different scenarios, including if there’s an outbreak of Covid-19 or if a brand does not end up getting the benefits it was promised.

He continues: “When you're on the sponsor side and you convince senior management that you should be in the Olympics, there's a lot of money on the line, and you're the individual that has said, ‘these are going to be good for our company.’ And now, it may not bear itself out in this particular situation.

“There will be a lot of sophisticated and stressful discussions going on. And those sponsor organisations are going to be saying: ‘You owe me. We understand, but you owe me.’

“That's going to be interesting for what the IOC is going to do to accommodate each of those partners. You only have so much inventory, so many assets to give away. As soon as the Games are over, you don't have something next week, you don't have something in September to give to someone.”

Sponsors will be concerned about losing value as the Games go ahead without fans in attendance

Around six weeks out from the Olympics is typically when brands will start shouting from the rooftops about their association with the five rings, rolling out advertising campaigns and launching special products and packaging. Yet at the time of writing, approaching July, things were eerily quiet.

There also appears to be a reluctance among brands to promote their plans for Tokyo. General Electric, which joined the TOP programme in 2005, declined to be interviewed for this feature. Airbnb, sponsoring its first Olympics this summer, Procter & Gamble (P&G) and Visa did not respond to requests for comment.

That silence is likely down to a number of factors. Burton suggests that some sponsors may have been “hedging their bets”, and consequently scaled back their plans because they didn’t have certainty six months ago that the Games would definitely be going ahead. Fort points out that marketing budgets have been tightened as a result of the pandemic, which is something affecting more than just the Olympic partners.

You cannot fail to acknowledge the struggle, but you don't want to focus on it, because I think what people need to see is a return to joy.

However, it is also a reflection of the fact that sponsors are ultimately weighing their business decisions against wider moral issues. These Games will be taking place during a pandemic that has claimed millions of lives, and in a country where the results of public opinion polls have repeatedly shown that a significant share of Japanese people are against hosting the Olympics this year.

Opposition has since started to soften, but it is hardly the perfect backdrop against which to be selling your brand.

“The pandemic has understandably created heightened levels of anxiety in populations all across the globe,” says Burns. “Tokyo 2020 and the IOC are relying on science and medicine to alleviate this anxiety and fear as it pertains to the Games – it is a race against time – and neither TOCOG nor the IOC have any control over these two.”

He adds: “With just weeks to go, it is obvious that the TOP partners’ promotional plans and programmes are muted for these Games. I think we will see limited marketing activity and of course advertising on the broadcast. If I were a TOP partner or TOCOG partner, I would shift my marketing focus to contracted athlete ambassadors and allow them to tell their Tokyo experience stories via their – and the brand’s – social media channels.”

Toyota, which this week said it will not be airing Olympic TV ads in Japan, will shuttle attendees to and from Games venues in its automated e-Palette vehicles 

Of course, Tokyo 2020 will not be the first Olympics to go ahead in controversial circumstances. Five years ago some athletes decided not to travel to Rio due to fears over the mosquito-borne Zika virus, while Brazilians were also critical of the investment dedicated to hosting the Games amid the country’s already deteriorating economic situation. The IOC has also faced calls to move the 2022 Winter Olympics from Beijing due to deepening concerns over China’s alleged mistreatment of Uighur Muslims in Xinjiang.

Fort says it is “quite normal” for there to be a lot of talk about non-sporting issues in the build-up to the Games, but notes that the conversation starts to shift when the action gets underway.

“There are always sentiments in the host country or abroad and a lot of people suggesting the Games shouldn't happen because of whatever reason,” he adds, “and then when the Games happen, everybody realises the importance of that to uplift people in general, the host and people that enjoy sports. So what we're experiencing now, it's an extreme case because of Covid being extreme compared to anything else, but it's not unusual.”

Still, this summer presents unique creative challenges for those sponsors who will be releasing campaigns and activating in the coming weeks. It is perhaps less of a concern for the technology firms such as Atos and Intel, whose services support the delivery of the Games, but for more consumer-facing sponsors like Airbnb, Coca-Cola and Toyota, it will be critical that they get the messaging right.

“I think there's a really fine line; it is definitely a challenge,” states Lindsey. “You cannot fail to acknowledge the struggle, but you don't want to focus on it, because I think what people need to see is a return to joy.

“If you're a brand activating around the Olympics, if you can demonstrate your own perseverance and resilience, that is a perfect match to the athletes themselves. I just hope to see the brands live up to that. It's the opportunity to shine. Now let's see if they do.”

Those interviewed for this piece also advised that brands should be wary of attaching themselves to the idea that these Games mark a return to normal. IOC president Thomas Bach has said on numerous occasions that Tokyo 2020 can be “a light at the end of the tunnel” of the coronavirus pandemic, but it is evident that that will not be the case for countries still struggling to contain the virus and experiencing slower vaccine rollouts.

“I would be cautious about claiming victory over the virus too early and using the Games as a proof point,” warns Burns. “I understand that sentiment was and remains a part of some Olympic stakeholder messaging, but I think it’s a bit naïve and also dangerous.

“Instead, I would stress that the Olympics’ ability to unite us with hope, even in challenging times like these, is unparalleled in sport or frankly anything else.”

In terms of measuring value, Burns adds that sponsors will be under increased – and what he describes as “misplaced” – pressure from their boards to demonstrate the return on their investments given the “perceived reduction” in rights and benefits. Burton agrees that it is “a very hard science” to quantify the value sponsors will receive this summer, but notes that it could be “very, very painful” for organisations if their numbers are down during the Games given how much they have invested in the relationship.

I would be cautious about claiming victory over the virus too early and using the Games as a proof point. I think it’s a bit naïve and also dangerous.

Yet despite all of that, there is a growing consensus that once these Games do get underway and the first medal is won, the positives of being associated with the Olympic message will ultimately supersede any talk of lost value or brand damage that has dominated the build-up to Tokyo 2020.

“Live sports is transcendent, and then you have the Olympics, which are even more transcendent than even most live sports, because they're for a bigger purpose,” says Lindsey. “To have something as powerfully emotional as the Olympics come back and connect those communities when we've been so radically disconnected, I think will be even more transcendent than in a normal year.”

Ultimately, as Burton puts it, “the Games have a certain magic” that few – if any – other sporting gatherings can match. Those sponsoring Tokyo 2020 will be hoping that sentiment still rings true even after the most trying of 12 months.

“I think that once the sport begins and the individual stories of the athletes emerge, the public dialogue about these Games will shift,” Burns adds. “I don’t think any sponsor who truly understands the Olympic brand is worried about brand damage to their own brands – if anything, quite the contrary if done right.” 

This article features in Issue 114 of SportsPro Magazine. To find out more or to subscribe, click here.

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