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THE REAL MARATHON: SIGNING OLYMPIC SPONSORS
This year's Olympic torch hasn't even been lighted yet, and Andrew Craig already is worrying about the next summer games, scheduled for Atlanta in 1996. Craig, deputy CEO of ISL Marketing, the International Olympic Committee's exclusive agent for sponsorship sales, has to convince skeptical corporations that sponsoring the Atlanta games is a wise investment. The 1996 sponsor's fee is expected to be about $43 million, more than double this year's levy, so it's no surprise that Craig concedes, "Atlanta will be a tougher sell."
In a year when the Olympics' glamour event seems to be "ambush marketing," that's an understatement. At the '92 Olympic Games opening July 25 in Barcelona, 12 corporations that paid an average of $15 million for global rights to promote their link with the Olympics are wrestling to get maximum impact from their outlays--roughly $450 million in total advertising and promotion costs. Official sponsors are increasingly jittery about competitors who buy broadcast airtime during the Games and come off looking like backers for no fee at all.
There may be a lot less to entice potential sponsors for Atlanta and the 1994 Winter Games in Lillehammer, Norway. Big spenders that have already signed on for the next go-round--such as Coca-Cola Co. and Eastman Kodak Co.--are pressing the International Olympic Committee to protect their investments. And the Atlanta games' organizers are signing up their own sponsors at $40 million a pop. With Olympics advertising clutter and ambush promotions on the rise, "this thing is growing into a monster," says Michael Tette, Kodak's Olympics manager.
INSULATED. Slaying the monster is the job facing ISL, the independent Swiss outfit that since 1985 has been the IOC's marketing agent. Founded by the late Horst Dassler, who also started Adidas, ISL cooked up the notion of wrapping global Olympic marketing rights into a single package. The scheme has given the games a revenue base insulated from the vagaries of TV-rights fees, bringing the Olympic movement a record $170 million this year. It also earned ISL a reputation as the foremost marketer of premier sporting events, including soccer's World Cup.
Atlanta poses ISL's biggest challenge yet. Companies complain, for example, that their rights to advertise as an official sponsor of the games do not prevent competitors from underwriting individual teams. Fuji Photo Film Co. this year is trumpeting its link with the U.S. track-and-field squad--and undercutting the value of Kodak's Olympic investment, Tette grouses. Partly to ward off attacks from PepsiCo Inc. and others, Coke also bought rights to 38 separate U.S. teams.
But such maneuvers haven't prevented the war of the airwaves. Companies without a sponsorship tie-in are growing more aggressive about jumping on the Olympic bandwagon. Federal Express Corp. ran a series of spots during the 1992 winter games in Albertville, France, that led 61% of viewers polled to believe--wrongly--that Federal was an official sponsor. The news was not exactly greeted with rapture at the U.S. Postal Service, an official sponsor.
FREEZE OUT. As ambushers get more savvy, the rising sponsor fees get harder to swallow. ISL and the IOC "may be pricing themselves out of the market," says Theo Leenders, events director for Mars Inc., a Barcelona sponsor. To help justify the high costs, ISL is spreading into everything from sports market research to merchandise licensing. Most important, it has begun selling broadcast rights on behalf of the owners of sports events, using the position to freeze out ambushers and cut good deals for sponsors. New ISL CEO Brian McGrath, former head of Columbia Pictures' TV and film marketing, should help that effort.
It's easy to see why ISL wants to vault into TV sales, especially in Europe, where fees are soaring just as U.S. rates are cresting. This spring, ISL made its first sale--for the 1993 and 1995 Track & Field World Championships--which cleared $92 million. The average 15% commission on such deals should add nicely to ISL's estimated 1991 billings of about $200 million.
But while ISL believes that the new services benefit clients, others see them as potential conflicts of interest. Oneexample: Is it kosher for ISL to offer market research on events for which it also sells sponsorships?
But that's not Andrew Craig's biggest worry. Executives of multinational corporations will soon be asking him, "What, exactly, does $43 million buy me?" He'll need triumphant results in Barcelona to provide a satisfactory answer.Jonathan B. Levine in Barcelona, with Karen Thurston in Atlanta