Game changer (and why I am proud to work here!)
The rise of Samsung shows the transformative effect that global sports partnerships can have on brand awareness: Today that recipe is being replicated by other growing companies – from Acer to Adecco to AON. David Benady reports
1993 and, in a hunting lodge on the outskirts of Frankfurt, Lee Kun-hee, the visionary boss of Korean electronics and industrial giant Samsung, is exploding with rage. Having summoned the corporation’s top brass, he pulls no punches as he tears into the company’s sloppy practices and low quality products. “Change everything,” he tells the executives.
Over the next 15 years, Samsung is transformed from a producer of second rate me-too products into a respected brand that will overtake Sony in electronics and challenge Nokia in mobile phone handsets. But it wasn’t just a renewed focus on quality that propelled Samsung into the public’s consciousness; it was a concerted campaign to boost brand awareness.
Central to this was the Olympic Games. Lee, a scion of Samsung’s founding family, was a dedicated advocate of the Olympics and it was Samsung’s long-term sponsorship of the Games that in no small part powered Samsung’s extraordinary rise to global ascendancy.
In 1996, Lee became a member of the International Olympic Committee and, in a strategy document for Samsung, he stated: “Devise strategies that can raise brand value, which is a leading intangible asset and the source of corporate competitiveness, to a global level.” A year later, Samsung signed up as a major Olympic sponsor or TOP (The Olympic Partner) and has been a senior sponsor of every winter and summer Olympics since then. In 2007, Lee signed up the company to sponsor all the Games until 2016.
Lee understood that building a global brand was about more than simply making desirable products. The Olympic tie-up would create awareness of the Samsung name but also show that the company grasped the wider importance of corporate philanthropy and social responsibility. As one Samsung insider says: “The first step of Samsung’s move to grow the global brand was to get simple brand recognition and then awareness of being a high quality brand. As they enter new global markets they have found there is already an awareness of the brand name because of the Olympic sponsorship.”
In 2008, of course, Samsung’s corporate reputation was hit by Lee’s conviction for fraud but some believe that the warm glow of corporate responsibility communicated through Lee’s commitment to the Olympic movement may have mitigated the worst effects of the tax scandal on Samsung’s reputation.
Samsung is just one of many emerging brands that have exploded on to the world stage since the mid-90s using the springboard of sport. Leading players from China, Korea, Thailand and the Middle East have used global sporting sponsorships to get their names known and to build their reputations.
So it is no surprise that alongside well-established Olympic sponsors such as Coca-Cola, McDonald’s and Omega, some lesser known brand names have become involved. Taiwanese PC manufacturer Acer became a TOP sponsor in 2008 as it seeks to boost global awareness of its rapidly growing business. London 2012 has a deal with Adecco, the employment bureau group that previously operated as Alfred Marks in the UK. Steve Girdler, Adecco’s director of London 2012 explains the tie up in terms of the connections between the event and Adecco’s business. “There are many analogies between the workplace and sport - the importance of leadership, dedication, teamwork, competition and the belief that people can truly make a difference,” he says.
However, he declines to comment on the role the sponsorship will play in building name recognition for the brand. However, some brand owners baulk at the expense and hard work involved in a full Olympic sponsorship – the nine TOP sponsors pay up to £50 million for each Games and have to provide much of that in kind through supplying staff and technology. Olympic sponsors buy the right to use the ring logo in their advertising and can leverage the association through corporate and internal marketing. But their brand names cannot be exhibited in the sports arenas or through TV broadcasts. As the Samsung insider says: “They have never been particularly interested in exploiting the Olympic sponsorship in the way that other sponsors do with other properties. They take a genuinely altruistic view of putting something back into the community. They are more interested in exploiting other properties such as their Chelsea shirt sponsorship or the NFL tie-up in the United States.”
Even so, the Olympics holds a compelling attraction for emerging brands looking to signal their global ambitions. Chinese computer maker Lenovo described its tie-up with the 2006 Turin Winter Olympics as its “coming out party on the world stage.” Lenovo had just acquired IBM’s personal computing division and used the Olympics to demonstrate its transformation into a global brand. It also backed the Beijing Olympics as a Worldwide sponsor.
But the restrictions on branding at Olympic events has deterred many bourgeoning brands. A surer way of stamping a brand name on the worldwide public’s consciousness is through linking up with football.
Mobile operator Vodafone has made extensive use of sponsorship to build its awareness as it has grown into the world’s biggest mobile business. Global brand director David Wheldon says Olympic sponsorship gives uncertain returns. “The Olympics is very good on the internal engagement level and you get the ability to use the rings in marketing. But there is no presence for the brand in the games themselves and no TV visibility. Unless you invest heavily in making the Olympics work for you, you won’t reap the benefits,” he says. He compares this to sponsoring club and league football which offer measurable criteria of awareness such as viewers’ screen time exposure to the brand name. And of course the main Olympic Games only take place every four years, while many brands need a constant drip of exposure to familiarise people with their existence and to become part of the wallpaper of their daily lives.
Vodafone’s push under former boss Sir Christopher Gent to become a worldwide player inspired its Manchester United shirt sponsorship between 2000 and 2006. The English Premier League is a powerful global property watched in 202 countries and the football clubs are closely followed in Asia, the Middle East and Africa.
The mobile operator’s biggest leap on to the global stage was its take-over of Mannesmann in 2000 - the largest corporate takeover in history. The deal led to the rebranding of Germany’s Mannesmann D2operation and Italy’s Omnitel under the Vodafone name. Wheldon says Vodafone’s Formula One sponsorship was vital for building name awareness in both countries. The brand was sponsor of the Ferrari F1 team, a powerful property in Italy which was gaining fame in Germany from its German driver Michael Schumacher. Another significant property was Vodafone’s £8 million-a-year sponsorship of the UEFA Champions League between 2005 and 2008.
Vodafone’s sponsorship strategy has helped it build name recognition in countries before it even enters them. “In Ghana, spontaneous awareness of the brand before we entered the market was already 27%. That comes from our global sponsorship portfolio. In some markets where we don’t operate we have over 50% awareness. Sponsorship has done well in laying the groundwork of awareness for us,” says Wheldon.
By comparison to the continuous hammering home of brand messages from regular football games and F1 races, Olympic sponsorship seems loftier. Its attraction lies more in its ability to communicate brand values. PC manufacturer Acer signed up as a TOP Olympic sponsor in 2007 and will supply hardware and technical assistance at the Vancouver Winter Olympics in 2010 and at London 2012. Vice-president of marketing and brand Gianpero Morbello says the sponsorship will be assessed by measuring awareness of the company’s core values before and after each Games. He claims the Olympic association will build Acer’s brand values of competition, speed and dedication.
He adds: “The Acer brand is relatively wellknown, though we still have a way to go. We are strongly pushing the brand as we’ve already reached an important level of market share.” Acer recently became the world’s second biggest PC company with its purchases of Gateway and Packard Bell.
Recent sponsorship announcements in UK football demonstrate the lure of the Premier League for brands seeking global fame. Earlier this year, US re-insurance giant AON signed up to replace AIG as Manchester United shirt sponsor in a deal reportedly worth £20 million a year. AON’s vicepresident of global public relations David Prosperi says the deal aims to build brand recognition and values after a period of acquisitions. “From a business point of view, you have to look at brand awareness of Manchester United in China and India where our clients and prospects are big fans of the club. If you can provide an opportunity for a client or prospect to attend a match or be involved in an activity with a team member, that is a tremendous opportunity to provide value to a prospect,” he says. He plays down AON’s lack of any obvious connection with the world of football. “We share with Manchester United an ambition for worldwide appeal and the pursuit of excellence. We both want to be number one in our areas,” he says.
Global sponsorship properties are a powerful way to promote the name of an emerging brand, outstripping ad campaigns and other forms of communication, though prices are being pushed to stratospheric levels. There is evidence that the Olympics is losing some of its allure for global brands (see box ‘On the slide’). But the rings have an irresistible lustre for many emerging brands wishing to associate themselves with its exalted values of responsibility and ethics.
As for Samsung’s ex-boss Lee Kun-hee, his Olympic involvement may be far from over. The South Korean Government is being lobbied to grant him a pardon so he can resume Olympic diplomacy and help the country’s bid to stage the 2018 winter Games in PyeongChang.
On the slide?Olympic sponsorship has endured turbulence recently. After Beijing, four TOP sponsors pulled out. Johnson & Johnson, Lenovo, Kodak and ManuLife all ended their deals.
According to M&C Saatchi Sport & Entertainment’s Neil Hopkins, the nature of being a sponsor has changed. “Global sponsors needed to be in for the long haul - Kodak had been in since the start of the last century. In the last year, we’ve seen change at that top level,” he says. This may reflect dissatisfaction with the lack of opportunities to exploit the tie-up.
The Li Ning strategySponsoring a global sports property can do more than spread a brand name to new markets. An Olympic link can be a powerful tool for building the stature of a brand in its home market.
Chinese sportswear brand Li Ning sponsored a number of international teams for the 2008 Beijing Olympics including the US table tennis team, Sudan’s track and field athletes and Sweden’s Olympic delegation. But this was not to boost its international standing, since 99% of its sales are within China. The brand, once China’s top-selling trainer marque, had slipped into third place behind Nike and Adidas. It sought to create an illusion of international standing to compete with them. Abel Wu, its head of footwear told Business Week: “As a local brand, we need an international image.”
London 2012 will be a watershed for local sponsors. Lloyds TSB was the first to sign up as a local partner and other UK brands such as BT, EDF and BP were on board by the end of 2008. They seek to project a positive image within the UK rather than looking for international recognition. “The London Olympics is generating more local money than any other, probably because the UK is a mature sponsorship market,” says Neil Hopkins.
