Winners and Losers at the Olympics
We know which athletes won and lost in Turin, but what about the companies and individuals looking for business gold? Professor Stephen A. Greyser looks at the results—and the possibilities ahead in China.
There's much more at stake in the Olympics than medals. Giant corporations are eager to tie huge marketing and advertising campaigns to the Olympic rings and ideals. NBC spent more than $600 million to win the broadcast rights for the Winter Games that just ended in Turin. And athletes who gained glory on the slopes or on the ice are looking for endorsement opportunities that will lead to a post-Olympics pot of gold. In short, the Olympic Games are big business.
Harvard Business School professor emeritus Stephen A. Greyser has been studying, teaching, and writing about the business of sports for over thirty years. He offered his perspectives on the Turin Games in a recent conversation with HBS Working Knowledge.
James Aisner: The U.S. Olympic team came away from Turin with mixed results—from the disappointments of the Alpine skiers to the gold medal performances of speed skaters Joey Cheek and Apolo Anton Ohno and snowboarder Shaun White. What's your analysis of the winners and losers from a marketing point of view?
Stephen Greyser: For athletes, marketing is about endorsement value. Meaningful endorsement potential is made up of three elements. One has to do with the visibility of the event. Are we talking about figure skating, a sport whose artistry and excitement regularly attract huge television audiences (including many women viewers), or bobsledding, which normally attracts little attention in the United States?
The second element is performance. Gold is a lot better than silver; silver is better than bronze, and not medaling usually puts you out of the endorsement money.
The third element focuses on the personality of the athletes and the "story line" that they bring to the table. Joey Cheek won on both counts. Outgoing and likeable, after winning gold at 500 meters and silver at 1000, he showed his generosity and concern for those less fortunate by contributing his cash rewards from the U.S. Olympic Committee to a global charity that benefits children. Later this month, his picture will adorn a Wheaties box—an opportunity given to a very select group of athletes. But as far as endorsements are concerned in the long run, he's hurt by the fact that speedskating isn't on TV very much.
Michelle Kwan has everything going for her, but when, for whatever reason, you're not able to compete any longer at the highest level, you're on thin ice. If she's back in top form at the World Championships, she may be able to generate a fresh set of endorsement interest.
Sasha Cohen has a lot of potential. If she performs well in the Worlds, she can leverage her Olympic silver medal into gold from corporate America.
Contrast them with downhill racer Bode Miller. Here was the number one male skier in the world making it clear to one and all that he just didn't care or worse, was doing his best to do badly. That really hurts. He went from anointed to disjointed.
Q: What do you think of the Olympics brand itself—the five rings and the spirit and enthusiasm they engender?
A: The Olympics is one of most powerful brands in the world. The only other sporting event in that league would be the World Cup in soccer, which has a huge following every four years just about everywhere except the United States. Golf's biannual Ryder Cup, which pits American golfers against top international players, has a specialized niche with a much smaller audience.
A lot of the Olympic Games' cachet comes from the fact that they take place infrequently—only every two years, with the Winter and Summer Games alternating. That helps make them special. They are also driven by the fact that they are a showcase for competition among the best athletes in the world in a large number of sports—a level of competition epitomized by the Olympic credo of citius, altius, fortius—faster, higher, stronger. And they engage national pride. Witness Sweden's enthusiasm over its gold-medal hockey team.
Twelve major multinationals, including Coca-Cola, McDonald's, John Hancock, Omega timepieces, Visa, Samsung, and Lenovo, the Chinese computer manufacturer, have paid more than $50 million each over a four-year period to be official worldwide sponsors of the Games. That means they want their brands associated with the Olympic movement, the Olympic logo, and the worldwide footprint the Games make in the global economy. John Hancock, for example, will continue to leverage that cachet this spring with its sponsorship of the Champions on Ice tour, featuring Olympic medalists. Other organizations lay down their money to be sponsors of the U.S. Olympic Committee or their own national Olympic Committees. Add to that the companies that spend a fortune to buy TV ads in the U.S. during the competition itself, because they believe that the audience is right for them in terms of size and demographics. So, there's no question that these are special events that businesses want to be associated with.
The Olympics is one of most powerful brands in the world.
Q: That said, although the games drew an average of 21 million viewers each night on NBC, the ratings were down. What happened?
A: One obvious reason, of course, is the difference in time zones. Turin is six hours ahead of the east coast, so if all one cared about was knowing who won and if there was no indication that some event was particularly exciting and worth seeing, that person could hear the results on the radio on the way back from work, get home, tune into a program on another network, and be perfectly content.
But there are other reasons for the lower ratings as well. Unlike the Summer Games, the Winter Olympics presents fewer sports with a broad U.S. national following—and so fewer "heroes" for people to become attached to. American audiences are not going to be excited by sports like the biathlon. Second, this year the other networks countered with first-run programming. Shows like "American Idol" and "Dancing with the Stars" continued to be big winners. And finally, there are more sources of information and entertainment than ever before. For millions of younger people, the Web is much more appealing than television.
It's important to remember, however, that we can't judge NBC solely on the basis of what was shown on the flagship broadcast network. The Olympics were aired on the networks of NBC—that is, NBC, CNBC, MSNBC, and the USA Network. Together, they satisfied different levels of viewer interest. Evening programming on NBC was geared toward a broad-based, family audience with taped coverage of important events and highlights of others. The cable channels were aimed at ardent fans who wanted live, beginning-to-end, daytime coverage, from cross-country ski races to early rounds of the hockey tournament. And then there were the real fanatic fans and new media aficionados who wanted to download data and pictures from the NBC Web site on their laptops and cell phones. As we look ahead to the Summer Games in Beijing in 2008, that segment of the audience is going to be increasingly important. The flip side for TV executives is that all this will continue to reduce the number of those tuning in for the evening prime time broadcast.
Q: Speaking of Beijing, Cisco, Google, Microsoft, and Yahoo have recently garnered some negative headlines for concessions they made to do business in China. As companies plan their marketing campaigns for the Summer Olympics there, what do they have to worry about?
A: In the court of U.S. public opinion, these companies have suffered the consequences for making concessions to the Chinese government rather than sticking to global standards of privacy and censorship. What would happen to the select group of worldwide Olympic sponsors I mentioned, for example, if there were some sort of Tiananmen Square-type event in China in the days leading up to the Games? No logical person would blame those companies directly, but inevitably some negative contagion would be connected with their name and reputation.
Q: Will some companies avoid getting involved in the Summer Games as a result?
I don't think so. The enormous size of the market in China and the importance of establishing a corporate presence for the future are irresistible attractions. For two-and-a-half weeks, Beijing will be the center of the world's attention. Athletes will be there in droves. So will teams of marketers from the world's corporations. The competition should be extraordinary for those in suits as well as shorts.