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Risky Brand Strategy

Sponsors Find Olympic Connection a Double-Edged Sword

By Wieland Wagner in Shanghai

The sponsors of the Beijing Olympics are pursuing a risky, double-pronged strategy: Within China, they are pushing their participation in the games, while simultaneously playing down their role in the West. In the Internet age, it's an approach that can easily backfire.

When it comes to sport, it's the taking part that counts. Or at least that was the way it seemed until recently for more than 60 companies worldwide, which together are estimated to have paid several billion euros for the privilege of being part of the Olympic Games.

In return, they have received a spot on the subtly graded hierarchy of sponsors. Sponsors at each level are entitled to different rights when using the Olympic rings in their advertising. Twelve corporations, including Coca-Cola, McDonald's and Visa, are so-called "worldwide Olympic partners" of the International Olympic Committee (IOC), which means they are entitled to use the games worldwide in their marketing campaigns. Each of them is believed to have paid up to $100 million (€62 million) for the privilege.

And then there are the national sponsors, which, in the case of the German Olympic Sports Association, are companies like energy conglomerate E.on and Mercedes-Benz. At the next level are the sponsors of the Olympic Organizing Committee in Beijing, which include Adidas and Volkswagen.

In the case of VW, the German automaker's subsidiary in China, as well as the two joint venture companies VW operates in the People's Republic, have paid at least €50 million ($80 million) for their share of the sponsorship pie, as well as providing the organizers with a fleet of 5,000 vehicles in Beijing. The Wolfsburg-based company didn't receive much in return. It can advertise its support for the games in China, but not in any other country. On the other hand, this is looking more and more like a plus, given the current political brouhaha about the games.

The automaker is also cautiously toning down its involvement in China. Subsidiary Audi had planned to accompany the torch relay in Tibet with its Q7 SUV. But now the plan was cancelled -- for logistical reasons, according to the official explanation.

But even this is a risky strategy. The secretary of the Chinese Communist party at Audi's Chinese joint venture partner has already delivered a stern message: "It is an honor for Audi to be allowed to accompany the torch. Under no circumstances will Audi be a disgrace to this mission." It sounds like a warning. By withdrawing as a sponsor of the Olympics, Audi could make itself a target of the public's wrath in China.

Audi's experience illustrates the reason why most international Olympics sponsors are pursuing a double strategy. While downplaying their commitment to the games for the benefit of their customers in the West, they are continuing their jubilant campaigns in China.

But in this age of the Internet, this is the sort of strategy that can easily fall flat. In one instance, for example, Chinese patriots became incensed over a Coca-Cola poster at the train station in the northern German city of Bremen, a photo of which they had discovered on the Internet. The poster depicted three Buddhist monks on a rollercoaster, accompanied by the slogan: "Make It Real."

"Germany has begun showing ads for Tibetan independence," wrote one furious blogger. "Coca-Cola, I'm going to remember that. From now on, I won't touch that lousy product."

The beverage giant reacted immediately. The poster was from 2003, the company explained, and the whole thing had nothing to do with Tibetan independence. Besides, the people at Coca-Cola wrote, the outdated poster in Bremen had been removed immediately.