Chasing the gold dust of 'Brand Olympics'

The economics of Olympic sponsorship
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Story highlights

  • The business Olympics are now well under way -- and the streets of London are paved with branding gold
  • There are eleven global "top-tier" sponsors of the games, each paying around $100 million
  • The investments are fiercely protected by branding police
  • The attraction isn't just sales -- it's being involved in the second most valuable brand in the world

The streets of London are paved with Olympic gold.

Visa Europe, Dow Chemical and Panasonic branded taxis drive down central London's Oxford Street, now bedecked with Olympic flags and banners.

McDonald's and BT branded telephone boxes stand on street corners, lit by lamp posts emblazoned with the LOCOG sign of the organizing committee. The business Olympics are well underway.

Blog: Olympics: Money spinner or dud?

There are eleven global "top-tier" sponsors of the games, each paying around $100 million for a contract, and 44 other sponsors. These companies are the only ones that can display the London 2012 logo -- or any Olympic branding.

The brand police, made up of 280 enforcement officers from the Olympic Delivery Authority, along with a LOCOG brand protection team, will be clamping down on businesses that use pictures of the Olympic rings and words that include "Olympics," "2012," "medals," "gold," and even "London."

Read also: Is the Olympics worth more than Google?

The $100 million price tag to official Olympic sponsorship is well protected, but what will these companies get in return?

According to Luc Bardin, group chief sales and marketing officer of top-tier sponsor BP, the biggest benefit is the association with such a powerful brand. "Selling petrol is one way in which we express and serve society, but it is by a long distance not the only one," he said. "[What's] incredibly important is the way in which we are part of this country, in other countries' lives, and in many villages and communities."

Cadbury is the official "treat provider" with a sponsorship covering the UK. Norman Brodie, general manager of the Cadbury London 2012 program, agrees with Bardin.

"It makes fantastic business sense if you can use this to excite people," he said. "It's the catalytic property, the transformational property of being a part of the Olympics -- that's the gold dust, the magic dust and what we have done is sprayed it around."

The Olympics is the second most valuable brand in the world, after Apple, according to a report by Brand Finance. They calculate the Olympic brand is worth more than all of its other major sponsors -- including Samsung, GE and Coca-Cola -- put together. They have valued the Olympics brand at $47.6 billion, an 87% increase since the Beijing Olympics in 2008.

Comment: Olympic sponsorship: Must it be so unhealthy?

David Haigh, chief executive of Brand Finance said, "Companies will cough up large amounts of money to sponsor sports, events, teams and individuals if they believe they are going to get the money back."

According to Haigh, it is now mainstream for companies to use high level analysis to determine how much of a return they can expect to get from sponsorship of events. "The Olympics seem to work," he said, "and [those companies] are getting bigger and bigger budgets."

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