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Sponsors Find Olympic Connection a Double-Edged Sword

May 9, 2008

Risky Brand Strategy
By Wieland Wagner in Shanghai
Spiegel (Germany)
May 7, 2008

The sponsors of the Beijing Olympics are pursuing a risky,
double-pronged strategy: Within China, they are pushing their
participation in the games, while simultaneously playing down their
role in the West. In the Internet age, it's an approach that can
easily backfire.

Coca-Cola has paid millions for the right to sponsor the Olympics.
But is the pricy marketing strategy worth it, given the negative
publicity surrounding the event?
Getty Images

Coca-Cola has paid millions for the right to sponsor the Olympics.
But is the pricy marketing strategy worth it, given the negative
publicity surrounding the event?

When it comes to sport, it's the taking part that counts. Or at least
that was the way it seemed until recently for more than 60 companies
worldwide, which together are estimated to have paid several billion
euros for the privilege of being part of the Olympic Games.

In return, they have received a spot on the subtly graded hierarchy
of sponsors. Sponsors at each level are entitled to different rights
when using the Olympic rings in their advertising. Twelve
corporations, including Coca-Cola, McDonald's and Visa, are so-called
"worldwide Olympic partners" of the International Olympic Committee
(IOC), which means they are entitled to use the games worldwide in
their marketing campaigns. Each of them is believed to have paid up
to $100 million (€62 million) for the privilege.

And then there are the national sponsors, which, in the case of the
German Olympic Sports Association, are companies like energy
conglomerate E.on and Mercedes-Benz. At the next level are the
sponsors of the Olympic Organizing Committee in Beijing, which
include Adidas and Volkswagen.

In the case of VW, the German automaker's subsidiary in China, as
well as the two joint venture companies VW operates in the People's
Republic, have paid at least €50 million ($80 million) for their
share of the sponsorship pie, as well as providing the organizers
with a fleet of 5,000 vehicles in Beijing. The Wolfsburg-based
company didn't receive much in return. It can advertise its support
for the games in China, but not in any other country. On the other
hand, this is looking more and more like a plus, given the current
political brouhaha about the games.

The automaker is also cautiously toning down its involvement in
China. Subsidiary Audi had planned to accompany the torch relay in
Tibet with its Q7 SUV. But now the plan was cancelled -- for
logistical reasons, according to the official explanation.

But even this is a risky strategy. The secretary of the Chinese
Communist party at Audi's Chinese joint venture partner has already
delivered a stern message: "It is an honor for Audi to be allowed to
accompany the torch. Under no circumstances will Audi be a disgrace
to this mission." It sounds like a warning. By withdrawing as a
sponsor of the Olympics, Audi could make itself a target of the
public's wrath in China.

Audi's experience illustrates the reason why most international
Olympics sponsors are pursuing a double strategy. While downplaying
their commitment to the games for the benefit of their customers in
the West, they are continuing their jubilant campaigns in China.

But in this age of the Internet, this is the sort of strategy that
can easily fall flat. In one instance, for example, Chinese patriots
became incensed over a Coca-Cola poster at the train station in the
northern German city of Bremen, a photo of which they had discovered
on the Internet. The poster depicted three Buddhist monks on a
rollercoaster, accompanied by the slogan: "Make It Real."

"Germany has begun showing ads for Tibetan independence," wrote one
furious blogger. "Coca-Cola, I'm going to remember that. From now on,
I won't touch that lousy product."

The beverage giant reacted immediately. The poster was from 2003, the
company explained, and the whole thing had nothing to do with Tibetan
independence. Besides, the people at Coca-Cola wrote, the outdated
poster in Bremen had been removed immediately.
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