industries

Olympic halo dims

Canadian companies forked out $757 million on sponsorships to soak up some of the aura around the Vancouver Games. Less than 1½ years later, has that investment reaped a proportionate return? Our study suggests the answer is no.

The Olympics are the definition of a feel-good, high-profile event. It’s not surprising, then, that Canadian companies forked out $757 million on sponsorships to soak up some of the cheerful, patriotic aura around last year’s Vancouver Games. Less than 1½ years later, has that investment reaped a proportionate return?

Our 2011 reputation study suggests the answer is no. While the overall 2010 numbers were buoyed by the “Olympic halo” effect, reflecting consumers’ enthusiasm for all things Canadian, the score slump across all categories this year, back to roughly 2009 levels, demonstrates how tough it is to preserve that glow. It’s a discouraging finding for companies that link their marketing to large, international events. Can an enterprise like RBC—which, at 63 years, is the longest supporter of the Canadian Olympic team—justify investing $110 million for the sponsorship rights to the Vancouver and London Games if the quantifiable benefit lasts only a year?

Helping advertisers and sponsors extend that high beyond the three weeks the Games last is a challenge for the Canadian Olympic Committee. “You can think of the Olympics graphically, where the games represent peaks and off-years represent valleys of impact and influence for advertisers,” says Christopher Overholt, COC chief operating and marketing officer. But he argues the benefits do linger. At the COC’s May workshop for sponsors, many reported a lasting increase in customer numbers or revenues, says Overholt. For example, HBC’s iconic red mittens from the Olympics had a phenomenal season when they were relaunched this past winter.

The return-on-investment scorecard is more subtle than just money coming through the door, argues Alan Middleton, marketing professor at the Schulich School of Business. When brands advertise on or sponsor events like the Olympics, Super Bowl or FIFA World Cup, they’re looking for “activation”—creating new customers—but also to boost their image for the long term. It can take months, or even years, for a company to collect enough data to chart which events made a difference in its reputation. But sometimes, says Middleton, marketers can be myopic. “Many of these companies’ [internal marketing departments] only track the short-term results after a big event, which can be used to con the C-suite into making further investments.”

He says that charting long-term changes in reputation is especially important for Canadians. “There’s a phrase, ‘We know what we know.’ Canadians are slow to change their perceptions. It means that when companies have really reinvented themselves, we don’t see it right away.” Associating with events like the Olympics fosters an upward trend, not a revolutionary change. There is also a real risk in wide-scale reputation damage if things go wrong. At the Olympics, for example, the eco-friendly ice-resurfacing machines from Olympia, a sponsor, kept flooding the ice, and the company had to allow Zambonis to clean up the puddles.

One hard-to-quantify ROI from sponsoring large events lies in blocking competitors’ exposure, as most such sponsorships are exclusive for business categories. For example, Coca-Cola’s contract with the World Cup runs from 2005 to 2022, meaning Pepsi is shut out. As well, top-tier advertisers with sponsorship agreements often get first rights of refusal on future or affiliated events. (Pan-American Games, for example, are owned by the International Olympic Committee.)

Additionally, companies often place high value on the effect event sponsorship can have on staff morale and loyalty. “Bombardier’s torch relay was one instance where there was a great residual effect internally, and the ability to touch people at a local, personal level,” says Jeannette Hanna, a Toronto brand strategist. Charitable sponsorships, such as Four Seasons’ support for the Terry Fox Foundation and the CIBC’s Run for the Cure, can have a similar influence. “Organizations are starting to quantify that sort of value,” says Hanna. “That’s as important as customers.”