Olympic Sponsors See Games as a Mixed Blessing

In the year following the 1984 Summer Olympic Games, some companies that paid up to $13 million to be official sponsors have found that a few competitors derived as much marketing benefit from the Games by using less costly Olympic tie-ins or plain, old-fashioned advertising.

Eastman Kodak Co., which advertised heavily during the Games, maintained its dominance in the film market over upstart Olympic sponsor Fuji Photo Film Co. Likewise, Nike, which had no Olympic tie-in but managed to put Nike footwear on many Olympic athletes, saw its Los Angeles-area sales increase 25% last summer. Nike says it remains more closely associated with the Games in the minds of most Americans than Converse Inc., which made the official athletic shoe of the Games.

Still Receiving Requests

“We are still receiving requests for Olympic paraphernalia from collectors and other people who are under the impression that we sponsored the Olympics,” says Chris Van Dyke, a spokesman for Beaverton, Ore.-based Nike. “I think the problem,” says Van Dyke, tongue-in-cheek, “was that too many companies were becoming the official breath mint or the official toilet paper company. It resulted in over-commercialization.”

Even before the Games started, some official sponsors expressed concern that other companies would derive as much prestige--at far lower cost--by using pictures or phrases indicating tie-ins with the Summer Games.

Companies such as Kodak balked at paying the hefty sponsorship fees demanded by the Los Angeles Olympic Organizing Committee and chose instead to heavily advertise their affiliation with various amateur U.S. athletic teams. Still other companies, such as Nike and Nissan Motor Corp., managed to become steeped in the Olympic aura through advertising or endorsements from Olympic athletes.

What’s more, for some official sponsors, misfortune seemed to overwhelm whatever good will was left over from the Olympics.

This month, for example, Atlanta-based Coca-Cola Co. announced one of the most stunning marketing reversals in business history when it admitted it goofed by taking the original Coke off the market in May and introducing a sweeter version.

During May and June, another Olympic sponsor, United Airlines, suffered a strike by pilots, while Los Angeles-based Atlantic Richfield Co. underwent a major restructuring--selling off a network of 2,000 East Coast gas stations and firing 2,000 employees.

Even for those companies among the 30-odd sponsors that had an uneventful 12 months after the Games, a big question remains as to whether official LAOOC sponsors actually fared better than those companies such as Kodak and Nissan that hooked other Olympics tie-ins.

Some Winners, Losers

“There were some winners, and there were some losers. It really depended on how much the company really got into it,” says Craig Elledge at Group Dynamics, a Santa Monica-based sports and entertainment marketing firm.

“The people who were really smart were those who got something” that continues to associate the company with the Olympics. For example, official LAOOC sponsor McDonald’s erected the swim stadium at USC, Arco built a new track for the Coliseum, and Southland Corp. constructed the velodrome at Cal State Dominguez Hills.

For Coca-Cola, whose worldwide name recognition has been nurtured in part by sponsorship of every modern Olympic Games since 1928, “the benefits of sponsorship go beyond the game year,” spokesman Charles Templeton says.

“It’s not like advertising” where campaigns are often quickly forgotten by consumers, he says. “It’s an opportunity to associate your company with a successful worldwide event,” however nebulous the benefit may be.

There were some measurable results, however, especially for companies that had defined marketing objectives.

Companies such as Nissan and Levi, which wanted to increase their visibility and raise consumers’ awareness of them through the Olympics, did consumer surveys before and after the Games. Those studies typically showed significant increases in awareness after the Games were over.

For example, Nissan Motor USA, a sponsor of the ABC Olympic telecast, designed its advertising program to increase awareness of the company’s name change to Nissan from Datsun.

Successful Campaign

Robert B. Kent, vice president of marketing services at Nissan Motor USA in Carson, says post-Olympic studies showed that consumer awareness of the name change more than doubled from what it was before the Games.

Aside from image and awareness, most firms had hoped to use Olympic marketing programs to help boost product sales.

“After all, that is the name of the game from an advertising standpoint,” Kent says. Nissan aired 140 commercials during the Olympics. “We hope we moved someone out of the living room into the showroom.”

Nissan had a record year in sales, but, Kent says, “There is no way I can give you a concrete number and say because we were a television sponsor that we sold one or 1,000 or 100,000 more vehicles.”

Similarly, Buick, which staged a big tent sale after the Olympics to sell the vehicles used by the LAOOC and local rental companies, experienced a “significant” increase in sales in the Los Angeles area. But Joe Adams, assistant general sales manager at Buick, is reluctant to attribute it directly to the Games.

“We know that being associated with the Olympics made people consider Buick for their transportation needs who never had,” he explained. “We don’t have that researched, but we can tell from conversations with our dealers and wholesalers. (The Olympics) generated extra floor traffic.”

For some firms, however, the Olympics coincided with tough times.

Boosted Ad Budget

Levi--the world’s largest apparel manufacturer, best known for its Levi jeans and other Western wear--poured $50 million into its Olympic marketing effort over a four-year period. Its 1984 advertising budget alone leaped by $34 million to $153 million, largely because of hefty purchases of commercial time during Olympic broadcasts.

But the spending failed to stave off an unexpected decline in basic denim’s popularity. In the fiscal year ended Nov. 30, 1984, the company’s sales declined 8% to $2.5 billion and earnings fell 79% to $41.4 million. The largest year-to-year drops in sales and earnings came in the company’s third and fourth quarters, which fell after the Olympics. (Levi’s performance has recently rebounded, and per-share earnings for fiscal 1985 are expected to be more than double those of 1984.)

Although the company insists that it benefited from an association with the Games, it acknowledges that sales of its Olympic merchandise were disappointing.

“Sales of Olympic-related products weren’t as strong as was expected,” a Levi spokeswoman says. “There was a feeling that there wasn’t any real distinct marketing advantage realized from the retail promotions with the Olympics.”

One of the most closely watched competitions was between Fuji and Kodak. The Japanese film maker beat out Kodak to become the official film product sponsor. Not to be outdone, Kodak sponsored the U.S. Track Team and advertised on the ABC Olympic broadcast.

Opened New Markets

For Tokyo-based Fuji, the estimated $9 million the company spent for LAOOC sponsorship provided instant credibility and opened new retail markets in the United States. Fuji’s goal was to increase market share and establish itself as another film brand. Kodak, in turn, embarked on a high-profile, Olympic-oriented promotion to counter Fuji’s sponsorship.

The Rochester, N.Y.-based company had been the LAOOC’s first choice. But, in a decision that gave some Kodak insiders misgivings, Kodak failed to make a commitment after 18 months of negotiations and opted instead to spend about $1 million to affiliate with the U.S. Olympic Team and sponsor the U.S. track and field team.

But anxious Kodak executives are believed to have spent millions of dollars more in Olympic-related television advertising out of fear that Fuji would capitalize on the LAOOC sponsorship and challenge Kodak’s dominance in the photographic film industry.

Bill Relyea, an analyst at F. Eberstadt & Co. in New York, who follows the firms, did a market share survey at the end of the third quarter of 1984. His study showed that Kodak did not lose any ground, maintaining its 85% share of the U.S. 35-millimeter film market. Relyea says Fuji gained market share, too, but at the expense of private-label and other film brands rather than of Kodak.

Carl Chapman, vice president and general manager of Fuji’s photo division, argued that the Olympics “must have increased our market share--our sales are up.” More important, he added, the tie-in with the Games “legitimized” the Fuji brand.

Looking for Encore

He says new distribution outlets and awareness of Fuji continue to rise, “but not at the same rate” as during the Olympic marketing push. “We’re trying to find an encore, but it is very difficult. Nothing meets all the criteria of the Olympics.”

Southland Corp.’s Olympic sponsorship proved such a worthwhile investment that the company has transformed its Olympic planning committee into a sports marketing program with continuing emphasis on cycling and other amateur sports.

The Dallas-based parent of the 7-Eleven convenience store chain built two velodrome facilities--one at Cal State Dominguez Hills and another at the U.S. Olympic training center in Colorado Springs--and also supported the U.S. cycling team. Robert C. Balink, manager of sports marketing, says the company reaped tremendous publicity from media coverage of cycling. The idea now is to build on that high visibility with in-store cycling promotions such as bike cap giveaways and the 7-Eleven bike club for kids. Balink says the promotions have helped to increase store traffic and build consumer loyalty.

“The more attention we pay to the customers, the more Slurpees we can sell and more (athletic) programs we can support.” Cycling, he maintains, is a natural fit for Southland because bicycles are a common denominator among people. “It’s as American as motherhood, apple pie and 7-Eleven.”

Established Relationships

Many companies such as Pacific Bell, the telephone operating company that is a unit of Pacific Telesis Group, used their Olympic affiliations to entertain existing customers and woo potential business. Through contacts established during the Olympics, Pacific Bell’s sister company, Pacific Telesis International, for example, established marketing relationships with China, South Korea, Spain and Mexico. The San Francisco-based telecommunications company is negotiating several contracts, a spokesman says.

He says the Olympics also helped the newly independent Bell company distinguish itself from its former parent, AT&T.; Similarly, AT&T; Communications, the long-distance unit of American Telephone & Telegraph, says the national and international coverage of the Olympic Torch Run it sponsored helped publicize its new logo and identity.