Five Rings, Five Questions

The Economic Model That Has Sustained the Olympics Since Los Angeles in 1984 Is Under Threat

Posted by David Wolf on 08.05.08 @ 11:58 PM

David Wolf

If you watch CNN, you probably think that the most important issue hovering over the Beijing Olympics as we count down to the opening ceremonies has to do with air quality, or potential protests, or internet censorship.

All of those things make great copy, to be sure. But if you look carefully through the haze, you begin to discern the looming outlines of problems that, while perhaps less newsworthy, are more fundamental to the Olympic movement and the companies that spend tens of millions to support it.

1. Does Olympic sponsorship -- with its huge upfront fees, restrictive conditions, political sideshows, and the growing number of sponsors and "partners" competing for attention -- offer the kind of return on investment our business now demands of campaigns?

Four out of 12 global sponsors -- including Lenovo and Kodak -- will not be back after 2008, according to BusinessWeek. Will this year's sponsors do as well as they had dared to hope? I mean, really, 12 logos on a billboard?

12 logos on a billboard?

2. Short of waging widespread cyber-warfare, is the International Olympic Committee capable of dealing with the threat posed by the internet and digital technology to the fortunes of Olympic broadcasters -- and sponsors? Former IOC VP Dick Pound has his doubts. He says the internet is the second most severe threat to the Olympics after doping.

3. If the games themselves are becoming a tough sell for sponsors, after the experience this year, is there any question that the torch relay is doomed?

4. Is the political sideshow around the Olympics such a drain on the credibility of the games and the IOC that it is threatening the future of the movement? Has the resulting security sucked the fun out of the games?

5. We assume ambush marketing is a bad thing, and the IOC is doing everything they can in Beijing to quash it. Are they fighting a battle that can be won? Should it even be fought?

In short, the real issues here in Beijing are not about Beijing at all. They are about the Olympics themselves. The economic model that has sustained the Olympics since Los Angeles in 1984 -- following the financial debacle of the Montreal Olympics of 1976 -- is under threat, and the IOC is quietly worried.

I will be looking at these issues over the next three weeks. Yet I come not to bury the Olympics, but to praise them. I will be walking the city in an effort to discern answers, looking for the arrows that point to a sustainable future for the games, for solutions that might let the Olympic movement emerge from Beijing better, wiser and stronger than it is today.

2 Comments

By daryl orris | Minnetonka, MN August 6, 2008 10:14:06 am:

Dear David,

Naysayers all, those who worry over trivial concerns miss the entire point of the Olympics: athletic competition on a worldwide scale. And then the opportunity to see the new China - its like going to MARS and finding life - and interviewing the Martians -- 'look Martha, they are green and they talk real funny.'

1.) Does it pay off? I have an Omega watch on my wrist, not a Rolex. I prefer Coke over Pepsi, and so on. And Kodak has too many problems itself to really matter. What a buy, to associate yourself this this grand spectacular, spectacular. Live competition, as NFL sponsors know gets a tuned in audience receptive to commercial messages.

2.) The addition of the Internet to NBC's televised offerings is a way for them to begin convergence. What an opportunity to experiment with New Media, and to develop new metrics to justify the addition of the new platform for promotion. I believe that NBC and its advertisers are going to find that Interactive New Media is going to keep viewers longer with better commercial results for both. 3.) This is what I really wanted to comment on: I recently returned from China and travel extensively throughout the country beginning in Hong Kong , to Shenzhen, Guangzhou, Shanghai, Jilan, Beijing, Wuhan, to Xian, and back to Hong Kong. What I learned is no single region can define all of China - other than the race of the peoples, it is Chinese, but the regional cultures are as diverse as the land itself. Beijing is the perfect venue for China, it offers a glimpse of modern and ancient China. Its peoples are amazing and as President Ho says: they are seeking a harmonious society. And to a great extent they have achieved just that. You also find out that it is a culture of complaint - much like the USA because the Chinese are human beings and it is our nature to complain. China's participation and hosting the Olympics is akin to an international trade show - they are looking for customers for their products and services. They win because the Olympics opens the floodgates of tourism that will never stop. What the world will see during the televised events is the new China and it will glue everyone to their televisions and PCs just as if we were broadcasting from MARS. Truly, those advertisers astute enough to invest in the Spectacle will win big. Moreover, what the learn about New Media will forever change advertising. All of the sponsors will win on televised events, but the real winners will be those that pay close attention to NBCs secondary streaming on the Internet. What they learn will be well worth the monies they expended up front.

3.) After this year everyone will be clamoring for a piece of the action - with even earlier promotion compared to this year's event.

4.) The political sideshow is the media's doing. They'll find that viewers are more interested in the Chinese culture than it is in its political intrigue. 5.)

It shouldn't be fought - the real stars will be apparent and resulting boom in their business apparent as well.

Compared to other Olympics this one compares to the 1936 Olympics hosted by Hitler. In the same way people wanted to see the new Germany, people today want to see the new China. Those smart enough to see this opportunity are sure to be big winners. Somehow the media and broadcasters don't understand the worldwide interest in China and how people want to see and learn more. The China of Pearl Buck novels is long gone. The new China is truly something to see. I see nothing but win win here - winning for the advertisers/sponsors, and a win for viewers. 8/8/8 will be truly fortuitous for those lucky enough to be sponsors.

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By daryl orris | Minnetonka, MN August 9, 2008 08:40:10 am:

David -- Did I call this one or what?

The opening ceremonies did everything that I expected and more. I was awestruck by both the ancient beauty and technological marvel that unfolded in front of me. Compare that to last year's Superbowl half time thingee.

My comment: "And then the opportunity to see the new China - its like going to MARS and finding life - and interviewing the Martians -- 'look Martha, they are green and they talk real funny." is happening. If the opening ceremonies didn't peak interest nothing in this world ever will.

Then too, as I said before: "Naysayers all, those who worry over trivial concerns miss the entire point of the Olympics: athletic competition on a worldwide scale." That is chapter two in this epic saga.

The talk of political unrest is nutty. I live in Minneapolis where protest groups are being told they have the right to demonstrate during the Republican Convention as long as its in Siberia. Like we don't have problems here? Tibet is akin to Utah wanting to succeed from the United States, and sure there are problems there as there are here. But the difference I saw while there was that China is a nation of 1.3 billion citizens who work together like Japan, all for the common good -- in this case harmony. Where America is a nation of individuals all out for themselves. Little doubt who is going to win in the end - better start learning Mandarin now, work with your kids because before its all done China will own us lock, stock and barrel. Some say they own us now - without them we couldn't be policeman to the world to protect our self-interests. I believe that when it is all said and done, the next Olympics participant will be scratching their heads saying how will be ever top that? The answer is: hire them. I am sure that they want. Like I said: this is the world's biggest trade show - opening the flood of tourism and lining up new and potential customers. It appears the red menace is working well for one fifth of the world.

China and the U.S. is almost like the Grasshopper and Ant fable. Start learning Mandarin because when they become your boss by buying the company you work for, they'll require it.

It amazes me when I hear political commentators talk about China and say they are learning as they go, instead of realizing how we are seeing true wisdom unfold. Thinkers that are ten steps ahead of us. The notion that China is a backward nation needs to be dispelled immediately. They have already figured us out, now we need to learn more about them.

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