LONDON, 2 June 2008 – The Fournaise Marketing Group, one of the global leaders in Marketing Performance Science to Generate More Customer Demand (specialising in tracking, boosting and auditing the real time performance of marketing campaigns deployed offline and online) believes that close to US$1 billion in marketing sponsorship spending could fail to deliver the effectiveness results expected by Olympics marketers and sponsors. This estimate is based on the findings of its recently-completed Fournaise Olympics Sponsorship Effectiveness Report.
A record 12 worldwide and 21 local sponsors and partners are forecast to spend more than US$2 billion in sponsorship and endorsement money on the Beijing Olympics. US$5 billion is estimated to be spent on advertisements in the build up to the Games with millions in advertising revenue expected during the Games itself. With these figures, Beijing 2008 could well be the most marketed Games of all time.
However, when it comes to delivering results, with sponsorship and endorsement ranked by marketers in 9th and 10th positions respectively in the global Fournaise marketing Effectiveness Ranking (EFFER) combined with the current (and increasing) 40% Marketing Wastage Rate (MWR) estimated by marketers in China in the Fournaise 2007 Global Marketing Effectiveness Report– whereby US$4 out of US$10 spent in marketing are believed to fail to deliver results – Beijing 2008 could also set a record for the highest marketing sponsorship wastage since the beginning of the Olympic movement.
This is reinforced by an alarming fact: “out of the thousands of ads our post-launch marketing performance boosting solutions have been measuring and auditing in China for our clients during the pre-Olympics build-up, a whopping 75% did not deliver the results expected by the marketers in charge and were way above the estimated 40% MWR in China” said Jerome Fontaine, CEO & Chief Tracker of The Fournaise Marketing Group. “While the increase in spending is a gold mine for the traditional and online media industry, the apparent lack of results has already started to create boardroom battles between marketing and finance teams and is definitely putting more pressure on marketers to deliver hard, tangible results” Fontaine continued.
To put the issues in context, we must go back to the most basic of questions: why be an Olympic sponsor?
The report shows that with top-tier sponsorship packages estimated by analysts to be in the area of US$60 million per brand, the majority of MNC marketers involved in the Olympics internally see the greatest show on Earth as a launching pad to:
- First, penetrate and tap deeper into one of the world’s largest markets – China and its upcoming 290 million-strong middle class – to increase market share and boost sales on a medium to long-term basis (ie generate incremental business and grow shareholders’ value);
- Second, demonstrate commitment to the host country and build what the Chinese call the ever essential but intangible notion of relationship (or “guanxi”) with its customers or potential customers.
“With international and local sponsorship and endorsement commitments dwarfing Athens 2004 and Sydney 2000, Beijing 2008 is going to be the most brand-cluttered Games of all times. So relying on the traditionally media-heavy (and highly expensive) “awareness-creativity-visibility” sponsorship model, and on the equally media-heavy “high-profile athlete” endorsement strategy to stand out from the clutter and hopefully get incremental customer demand is going to be marketing suicide” Fontaine added.
The report highlighted the example of Chinese 100-metre hurdler, 2004 Olympic gold medallist and world record holder, Liu Xiang, who while being sponsored by a limited number of organisations, was shown to be associated by Chinese consumers to a whopping 20 brands – most of whom weren’t even his sponsors!
The report also highlighted that despite the heavy marketing push in China by sponsor brands in the last six months (in traditional and online media), 85% of Chinese consumers could not even correctly remember 2 of the 12 top-tier worldwide sponsors, while only 9% could mention at least 1 of the 21 local sponsors across any of the categories.
The brand clutter is such that 78% could not even clearly recall the messages advertised by Olympic sponsors in the media while another 25 local and international brands (who are not Olympic sponsors) appeared in the list thought by Chinese consumers to be actively involved in the Olympics as sponsors.
The bottom line: a gigantic marketing chaos created by a formidable brand message overload.
The report identified four challenges marketers must overcome in order to make their sponsorship and endorsement spending work harder for them and not go down the clutter drain:
- They must change their marketing approach and be prepared to be held accountable at all times for their spending. How? By measuring the impact on their company’s top and bottom line of every single sponsorship and endorsement budget spent before, during and after the Games, using metrics that will speak the language of their top management and shareholders;
- They must focus on the right business-oriented marketing metrics (also called “hard” metrics) that truly matter in hyper-cluttered and hyper-competitive market environments – not awareness, not recall, not viewership, not eyeballs, but quantifiable and profitable direct personal engagement with their target audiences;
- Forget about the traditional “soft” awareness-based and “likeliness-to-buy” research models to measure effectiveness: they must have the automatic, systematic and “through-the-line” systems and processes to track and audit actual results;
- They must be prepared to handle the truth, to take the necessary action to adjust their plans and to move their budgets to where the results are coming from in order to achieve the highest yields, real time.
“Because without a clear visibility on the actual effectiveness of their spending, marketers will be working in the dark, relying on traditional yet inaccurate metrics to take decisions that may ultimately lead them to wastage. Their Olympics sponsorship dollars would then be nothing more than a straight donation to the International Olympic Committee (IOC) and the Beijing Organising Committee (BOCOG) – which is great for sports but not so great for top management and shareholders. And behind closed boardroom doors, that could lead to Olympics sponsorship budgets being cancelled and re-routed to maybe less flamboyant but more result-proven areas in the future,” Fontaine concluded.
About The Fournaise Marketing Group – The Marketing Performance Booster®
Fournaise is one of the Global Leaders in Marketing Performance Science to Generate More Customer Demand.
Their Technology Solutions Track & Boost the performance of any marketing strategy and any ad campaign, in any media (traditional, online and mobile), on ny audience, anywhere in the world – automatically, seamlessly and real time.
They feed Marketers with the critical Marketing Performance Data they need to generate more customer demand for their products/services.
Fournaise’s solutions are used across 20 countries worldwide and 13 vertical industries by FORTUNE 500 companies, Large Corporations, SMEs and Advertising Agencies.
Fournaise’s Global Headquarters are in the UK, with operations in the US, Asia and Australia.
About The Fournaise Olympics Marketing Effectiveness Report
The Fournaise Olympics Marketing Effectiveness Report is part of the Fournaise Global Marketing Effectiveness Report, a private and internal global research program conducted by The Fournaise Marketing Group – The Marketing Performance Booster™. It involved more than 3,000 business-to-business (B2B) and business-to-consumer (B2C) marketing professionals (including Chief Marketing Officers, Vice-Presidents of Marketing, Heads of Marketing and Marketing Directors) working for Large Corporations and Small and Medium Enterprises (SMEs) in North America, the United Kingdom, Australia, Greater China, India and Singapore (when combined these regions/countries represent close to 70% of all reported global marketing and advertising spending – offline and online – in 2007). It also involved more than 1,500 consumers across 5 major cities in China.