Mumbai: Even before the world’s greatest sporting spectacle — the Summer Olympics — opens in Beijing on 8 August, the winners and losers are already emerging in the marketing arena.
Soft drinks maker The Coca-Cola Co. and Chinese dairy producer Yili Group have forged ahead in the Olympic marketing campaign, leaving other Games sponsors such as Air China, China Netcom Group Corp. and State Grid Corp. of China trailing behind, according to the findings of a study by marketing consultancy R3 and CSM Media Research.
The firms, which met 12,000 people to research the Olympic preferences of China’s consumers and changing trends, found that some Olympic sponsors are reaping ten times the return on their media investments that the laggards are able to generate.
In the sponsorship stakes, advertisers that have chosen athletes wisely and maintained consistency are leading, says Gregg Paull, principal at R3.
More than 93% of those surveyed have a strong interest in the Olympics – higher than ever. “There’s a fever pitch in China towards this event like no other in its history” said Paull, though he also cited new concerns.
“Terrorism and inflation have been mentioned before, but they are now by far the two most dominant negative issues – Chinese are worried how these games may affect their hip pocket and their country’s security,” he added.
The measured advertising expenditure by the top sponsors for the last three months was RMB9.1 billion ($1.33 billion), a 49% increase from the previous three months. “Not only are sponsors dominating the mass media, we’re seeing them extend this activity to activation events, both around the Torch Relay and standalone activities” said Matt Brosenne, international client service director at CSM Media Research in Beijing.
There’s also been unprecedented investment in TV sponsorship in the last three months. There was a 65% increase in the sponsored broadcast hours, led by live Torch Relay programs, associated with Coca-Cola, Samsung Group and Lenovo Group.
Local milk company Mengniu sponsored more than 50 hours of TV programming through this period, four times more than any other company. “Despite the fragmentation of media, prime time TV viewership is still strong this year in China, and marketers continue to invest to get returns” said Brosenne.
Return on Investment
On the question of return on investment, R3 and CSM linked sponsorship cost and total media investment to both consumer perception results and published business data for mainland sales. Paull said they had developed a proprietary method called the OP (Olympic Performance) Index, which weighs brand awareness, purchase intent, value and recall.
The big finding: while some companies such as China Mobile have invested close to RMB 5 billion ($731.5 million) in measured media over the last two years, their “cost per OP point” is RMB31,000 ($4,535). By comparison, Coca-Cola has a cost per point of RMB4,000 ($585) while some such as China Netcom have a cost per point of RMB50,000 ($7,315). So purely from a consumer impact aspect some companies are outperforming others by ten times, he added
Paull said Coke packs just the right combination of experience, athlete management and focus that a lot of other sponsors have lacked. “They have an 86-year head-start over most companies in this area , with the longest sponsor history and great shared learning across the Olympics and World Cup,” he said.
Companies such as Chinese oil explorer Sinopec Corp, Air China, China Netcom and others have all done tactical work to support their investments, but the payback has been poor.
The Olympics will dramatically change the marketing landscape in China for the better, according to R3 and CSM. The marketing industry is just 20 years old in China – countries like India have a 60-year head start, said Paull. “That said, there’s been more development in the last few years that the previous decade – standards towards sports and athlete exploitation, on-ground activation and increasing consumer sophistication have generated much more professional and more targeted thinking” he added.