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Marketing the 2008 Olympics[]

Beijing Olympics already presenting hurdles for marketers[]

Tuesday, August 08, 2006, by Geoffrey A. Fowler and Wendy Lee, The Wall Street Journal,

(Mei Fong contributed to this article.)

In Chinese ads, viewers can see Olympic hurdler Liu Xiang racing with kangaroos to pitch Visa cards to the nation's yuppies, who like their Australian vacations.

They can also see Mr. Liu with a can of Coke. And drinking Yili milk, and wearing Nike shoes, and hawking China Mobile cellphone services.

For Beijing Olympics advertisers, it may be hard to be heard above all the noise.

Olympians usually win contracts to pitch just one or two products after they bring home the gold. That 23-year-old Mr. Liu already has marketing deals with Visa International, Coca-Cola Co., Yili Group and Nike Inc., plus several others, reflects both the allure and the challenge of advertising with China's 2008 Olympics.

The Beijing Games are catnip to marketers. By now it has become a truism that China's economy is red-hot and boasts 1.3 billion consumers. Johnson & Johnson, never an Olympic sponsor before, has climbed on board as a partner in the 2008 Games. Sir Martin Sorrell, chief executive of marketing heavyweight WPP Group PLC, reckons that by the time the Games come along, China could be the world's second-largest advertising market. Sir Martin has said it is "difficult to think of any sporting or cultural event in the world that could be bigger."

But in some ways, it may be too big. Thirty-six companies have by now snapped up marketing rights to the 2008 Games, and the Beijing Organizing Committee, or Bocog, is still at it, choosing a final round of suppliers. Already, travelers on Beijing's ring roads see the 2008 logo splashed across billboards for dozens of different companies. Computer maker Lenovo Group Ltd. sells special-edition USB memory sticks featuring the Games' five cute mascots at a premium price. To launch its new Sagitar model, Volkswagen China Group, which coordinates the activities of Volkswagen AG and its two joint ventures in China, made a splash over several months by giving away a new Sagitar to every Chinese gold medalist at the Torino games this past winter in Italy.

"If anybody starts now, it's a bit too late," says Sheng Li, Visa's head of marketing in China, who began his Beijing Olympics campaigns in 2004.

It hasn't been cheap, either. Beijing-specific endorsements in some categories have, atypically, cost advertisers as much as they would usually pay to be international sponsors of more than one Olympics. In the hotly contested car category, Volkswagen China Group eventually put in the winning bid of about $100 million in cash and kind, according to people familiar with the matter.

The group's director of Olympic marketing, Anthony Laver, estimates that in the 12 months before the Games, official sponsors will spend up to $2 billion on advertising.

With the Beijing Olympics acting as China's coming-out party, Chinese companies were under pressure to bid, keeping prices high for the already-coveted event, people familiar with the matter say. Eight of the 11 Beijing Olympic partners are Chinese companies, including utility and energy companies such as State Grid Corp., China Petrochemical Corp., or Sinopec, and China National Petroleum Corp.

In addition to the sheer number of messages jostling one another in consumers' minds, advertisers face a raft of problems unique to China, where sports marketing is still a nascent industry.

The Olympics traditionally are home to one official brand of credit card, one computer, one wristwatch. But the 2008 Games are already home to three official beers: Tsingtao, Yanjing and Budweiser. The decision was rare, and required special permission from the International Olympic Committee.

"One beer cannot cover all China," says Liu Jun, Bocog's deputy director of marketing. Each of the beer companies established a different target audience, Mr. Liu says.

"Our point of view is this is the first time that China will conduct the Olympics," says a Tsingtao Brewery Co. representative. "We believe it is a great thing that many Chinese brands and businesses are able to participate."

In China, sports marketers can find the rug pulled out from under them. For example, the nation's "diving prince," Tian Liang, who won a gold and a bronze medal in Athens in 2004, was kicked off the Chinese national team after he did too many commercials.

Then there is the case of the omnipresent hurdler/hawker, Liu Xiang. When Mr. Liu recently broke the world record in a competition in Lausanne, Switzerland, Nike -- which isn't an official sponsor of the Games -- made him a T-shirt featuring his 12.88-second time to wear as he stepped off the plane back home. Nike says it was one of the fastest campaigns it ever produced. Yet one of Mr. Liu's other sponsors, dairy brand Yili, soon launched its own campaigns touting the 12.88 figure.

Chinese consumers find all this confusing. A survey released today by Chinese marketing consultancy R3 and research firm TNS found that, without prompting, Chinese consumers associated Mr. Liu with no fewer than 19 brands.

"Few companies are succeeding right now in building unique associations," says R3's principal, Greg Paull. There is "tremendous potential for star associations to be 'overcooked,'" he says.

Visa is dealing with Mr. Liu's overexposure partly by featuring him in unconventional settings, like with the Australian marsupials. In addition, since 2004, Visa has sponsored the low-key national women's field-hockey team. The company's marketing manager, Mr. Li, says ads featuring the team underscore Visa's commitment to sporting, not just celebrities.

In China, it is coaches, not professional agents, who usually manage the careers of athletes. So Volkswagen provides its own media training to all the athletes it works with. "We let them understand what role they play and how that links to our connections with the Games," Volkswagen's Mr. Laver says.

Bocog has established a sort of sponsors' club, offering conferences at which companies gather to discuss shared problems and coordinate marketing activities when they can.

International brands seem to be off to a slower start than their local rivals, though marketing experts disagree on exactly when and how brands should use their Olympic association. Eight of the top 10 brands that Chinese consumers associate with the Olympics are local, according to the R3 and TNS survey, even though only one of 11 world-wide IOC Olympic partners is Chinese.

Many of the Games' international sponsors, such as McDonald's Corp., have relied on their long-term associations with the Games to build goodwill. But Chinese media have been closed to foreign content for so long that few consumers in China get the connection. In the survey, McDonald's ranked 27th among brands that Chinese people associate with the Olympic rings. The fast-food giant came in right after Chinese textile maker Heng Yuan Xiang.

Donald Chan, the China national managing director of Publicis Groupe SA's Leo Burnett ad agency, is advising some of his clients, which include McDonald's, to start planning -- but wait on delivering ads until the second half of 2007. "Local brands are now trying to build a competitive presence against multinationals," he says. "But in terms of Olympic experiences, there is nothing going on right now. A lot of multinationals were using the World Cup to stay engaged instead."

The multinationals and Chinese brands may be on different schedules because they are looking for very different results from their expensive marketing rights. "The message for the multinationals is that, 'We are here in China, and we are going to be part of this transformation that is taking place,'" says Scott Kronick, president of WPP Group's Ogilvy public-relations agency in Beijing. "The message for local companies is that, 'We are a famous Chinese company that has the potential to be a global brand.'"

Yili, whose corporate goal is to become a global brand by 2010, has been one of the most aggressive Olympics advertisers since it announced its sponsorship of the Games in November 2005. "Sports resources are limited, and whoever strikes first prevails," says Yili's brand director, who declined to be named. The company tried to sign up athletes before Yili had won the official sponsorship.

And China's record with intellectual-property rights has left some brands nervous about "ambush marketing," or fu ji shi ying xian, in which brands either steal the Olympics logo or find ways to work Olympic images into their ads. "It's a very tough job for Bocog. We must protect rights at the same time, so many companies in China want to be associated with us," says Bocog's Mr. Liu.

The group has already shut down some unauthorized use of its logo and is considering launching educational campaigns on state TV to inform the public about the phenomenon. The campaigns may even feature hurdler Liu Xiang.