Michael Payne

Alibaba: A Chinese Internet Phenomenon Goes Global, Olympic Style

jack-ma-and-thomas-bach-in-davos
Jack Ma, founder of Alibaba and IOC President Thomas Bach seal the deal

China is sports mad. And when one of the biggest emerging markets in the world wants something, the eye may pop. For example, soccer superstar Cristiano Ronaldo was offered over USD100 million per year to play for a Chinese Super League Club, with an additional USD300 million to go to Real Madrid for the transfer.

While Ronaldo turned the Chinese down, others are turning their thumbs up.

At the World Economic Forum in Davos, in mid-January, 2017, the International Olympic Committee announced the addition of Chinese e-commerce giant, Alibaba, to the IOC’s exclusive group of global sponsors known as TOP Sponsors. Alibaba is one of the biggest e-commerce businesses in the world, and joins such firms as Coca Cola, Toyota, Visa, McDonalds, Bridgestone, Samsung and GE granted rights to the marketing of the famed five rings.

This deal is huge: USD 800 million over 12 years or 6 summer and winter Olympiads. In addition to payment, Alibaba will also build a global shopping platform for the IOC, as well an Olympic-related digital TV channel in China, which will help build the IOC’s reach within this highly valued market. Considering that the 2022 Winter Olympics will be held in Beijing, Alibaba becomes a significantly powerful and possibly pathbreaking partner for the IOC in building stronger relations within Chinese business and government circles.

As Alibaba founder and CEO said, “We are proud to support Olympic Agenda 2020, using our innovations and technologies to help evolve the Olympic Games for the digital era.”

According to sports marketing consultant, Michael Payne, who was intimately involved in the early days of the IOC’s TOP program, “This is so much more than about marketing or sponsorship. It is potentially the single biggest, groundbreaking partnership the IOC has done to date.”

A pedestrian walks past Alibaba.com adve

Alibaba is a powerhouse in China, particularly with its e-commerce businesses T-Mall and Taobao. But these services are not as well-known as sites like Amazon, and those who know them may be wary of their reputation for selling counterfeit goods. Thus major brands and buyers…beware.

According to the IOC, building the e-commerce platform for the IOC will give Alibaba greater incentive to figure out how to uncover the counterfeit goods from flooding the market.

Additionally, its growing cloud services business is weak overseas. Jack Ma wants to increase global revenue ex-China to fifty percent. Cloud services is already an area where Alibaba is gaining global traction. Being a TOP sponsor will give Alibaba overseas exposure of the likes they would be hard-pressed to find elsewhere, particularly in their home region of Asia, where the next three Olympics will be held (PyeongChang, Tokyo and Beijing).

According to Bloomberg, Alibaba had to fight for this sponsorship. IOC TOP sponsors are given exclusive rights to market their products and services within their industry. Alibaba is the official “Cloud Services” and “E-Commerce Platform Services” and it is assumed that big cloud service providers (Amazon? Microsoft) were also in the mix.

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Why The Rio Olympics Will be a Success: The Olympic Values and the 2000 “Celebrate Humanity” Campaign

 

Celebrate Humanity logo.jpgWhy do we love the Olympics? Why will the Rio Olympics succeed despite the political, environmental, security and health issues hanging over the Games like a black cloud on the verge of bursting?

Because we love what The Olympics make us feel, what the five colored rings represent: hope, dreams and inspiration, friendship and fair play, and the joy we have in making an effort.

After the 1996 Olympics Games in Atlanta, considered one of those most commercially blatant Olympics in the modern age, and the bid-rigging scandals of the Salt Lake City Games, the International Olympic Committee believed they had to reassert and protect the brand by reminding the world what the true value of the Olympics were. Thus was born the Celebrate Humanity campaign.

Enrolling TBWA, Chiat Day and their legendary worldwide creative director, Lee Clow, the man who developed the commercial that launched the Macintosh (“Think Different”), the IOC launched a series of public service announcements on television that dominated the airwaves leading up to the 2000 Sydney Games.

With the unmistakable voice of Robin Williams bringing both joy, tenderness and strength to the images, the Celebrate Humanity ads were everywhere – on your TV, radio, on your in-flight screen, in your magazines. Incredibly, broadcasters were even asking the IOC how much they had to pay to air the spots, according to Michael Payne, who tells this story of the Olympic brand in his book, Olympic Turnaround.

The campaign included seven short films that represent the Olympic values, symbolizing them, for example, in the 400-meter sprinter, Derek Redmond of Great Britain who pulled a hamstring during the competition at the 1992 Barcelona Olympics, but gamely limped onto the finish line, or the Nigerian women’s 4×100-meter relay team who celebrate their bronze medal effort after first thinking they had finished fourth.

Watch them and be inspired.

Courage

Strength is measured in pounds. Speed is measured in seconds. Courage…   You can’t measure courage.

Bronze

Just a reminder: At the Olympic Games, you don’t have to come in first to win.

Smile

When you smile, I smile, that’s the deal. I’ll not walk past you, and not look you in the eyes, and not acknowledge you. Instead we’ll pass each other and say hello. Not with our words–they’re not the same–but with our faces. I meet you and see there is good in your eyes. There’s passion in your heart and there’s a friendly hello in your smile, and for the first time we can relate and appreciate each other. That’s all it takes. That’s where it starts. Because I know that you will smile and I will smile. And all the rest is easy.

Adversary

You are my adversary, but you are not my enemy. For your resistance gives me strength, your will gives me courage, your spirit ennobles me. And though I aim to defeat you, should I succeed, I will not humiliate you. Instead, I will honor you. For without you, I am a lesser man.

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Visa: Coming out of No Where to Nip AMEX at the Tape

This is a wonderful commercial from Olympic global sponsor, VISA, featuring 15 Olympians making their way to Rio. Go to this link to confirm who the athletes are.

There was a time when Visa, the credit card company, was considered an after-thought in high-end travel and entertainment transactions compared to American Express. AMEX had the global brand cache that Visa craved, even though Visa was more readily accepted in three times more locations than AMEX.

There was a time when the IOC was barely afloat financially. The Olympics have been a powerful marketing opportunity for companies big and small from the 1950s to the 1980s, but the rights to market their products using the five rings were usually up to the local National Olympic committees (NOC) who sold the rights.

The International Olympic Committee were concerned not only regarding their financial situation, but also of the ability to control the Olympic brand if they were dependent on the local NOCs, who were perceived by the IOC to prioritize money over brand integrity. For example, the IOC did not like that a tobacco company was employing the Olympic brand in selling cigarettes during the 1964 Tokyo Olympics.

The IOC, motivated by the financial success of the 1984 Los Angeles Olympics, as well as the ability of USOC chairman, Peter Ueberroth, to sign up corporate sponsors, decided it was time to create a global Olympic sponsorship program that would make IOC the sole negotiator for marketing rights at all Olympiads. This would prove to be a challenge because NOCs, regardless of whether they had marketing chops or not, were resistant to give up power to the global authority, the IOC. On top of that, countries like the US, were concerned that the significant number of sponsors were American corporations, which would mean that American companies would inevitably end up funding athletes in countries like the Soviet Union (this at a time before the fall of the Wall, and the emergence of Glasnost).

Olympic turnaroundOver the course of countless negotiations, the IOC eventually banged out an agreement that would satisfy NOC small and large alike. Thus was born the TOP Program (The Olympic Partner), IOC’s designation for its global sponsors, who have exclusivity within their given industry to market their products and services at a given Olympics. But according to Michael Payne, who wrote the brilliant marketing book called Olympic Turnaround: How the Olympic Games Stepped Back from the Brink of Extinction to Become the World’s Best Known Brand And a Multi-Billion Dollar Global Franchise, very few corporations, initially, were willing to bite.

Coca Cola, Kodak and FedEx signed up, but for a while, those were the only corporations willing to take on the a most serious financial commitment to be the exclusive global sponsors at the 1988 Winter and Summer Olympics. Then IOC leader, Juan Antonio Samaranch appealed to the chairman of AMEX, James Robinson, to no avail. AMEX did not think they had any competitor willing to ante up, so they were willing to wait out the IOC for a better deal.

But then, circumstances colluded to bring Visa to the IOC. According to Payne, Visa had a change in marketing heads. And the new marketing head saw an opportunity to use the Olympic brand to make their customers aware of how far and wide Visa was accepted, and snatch market share from AMEX. By the time all the analysis was said and done, the line that convinced the VISA board to foot a US$14.5 million bill for TOP status was this: Visa was “going to stick the blade into the ribs of American Express”.

Was it worth the gamble? According to Payne, who was a member of the team that helped build the TOP program, the answer was yes.

For Visa, the payoff was dramatic. Global sales volume for the first three years of its Olympic partnership increased 18 percent against its own forecast of 12 per cent. Results from direct response campaigns and other promotions were 17 per cent higher when Olympic imagery was used. Card volume increased by 21 per cent during periods of Olympic promotion. Consumers who were aware of Visa’s Olympic sponsorship had dramatically better views of Visa, doubling their perception of Visa as a good corporate citizen: a 50 per cent increase in attitudes of overall best card and used for international travel.

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NBC’s Gazzillion Dollar Olympic Investment: Is the Sky Falling or Is the Sky the Limit?

NBC Rio logo

The National Broadcasting Company (NBC) aired the 1964 Tokyo Olympics Games in America, the first time events were broadcast live via satellite. With a 13-hour time difference between New York and Tokyo, the opening ceremonies of the Games on October 10 appeared on American televisions in the middle of the night. After that, NBC offered about an hour of highlights after prime time, fearful of eating into the ratings of their lucrative evening programming.

NBC didn’t get high marks for their coverage, and eventually lost the Games to ABC, which became the network of the Olympics over the late 60s and 1970s. Thanks to ABC’s coverage, the Olympics emerged as a premier marketing opportunity for sponsors and broadcasters. In America, the three networks fought furiously for broadcast rights.

NBC currently owns US broadcasting rights through 2032, having bid an incredible $7.65 billion dollars for the Summer and Winter Games through that period. With so much riding on the Games, not only for NBC, but obviously also for Brazil, the IOC and the athletes, it’s no surprise that commentators around the world are casting doom and gloom on the upcoming Rio Olympics. A doctor in Canada has even called for the postponement of the Games until the zika virus threat is deemed less of a risk.

It’s also possible that the entire track and field team from the Soviet Union will be banned from participating in the Rio Olympics due to state-sponsored doping. Michael Colangelo of the blog, The Fields of Green, recently wrote that the lack of Russian competition will strike a great blow on the success of the Rio Olympics, particularly on the viewer ratings of NBC. “The problem is that as doping seems to become more prolific — with Russia essentially running a doping program at a national level — bans and bad news could affect the television ratings this year and beyond.”

Colangelo went on to write, “It’s a balancing act and the only loser right now is NBC. As the Olympics get closer, the IOC and its partners will have to work to make sure that all parties’ investment in the games is worthwhile. That seems close to impossible right now.”

That was actually a concern in 1984. As you may recall, the United States and over 60 other countries boycotted the 1980 Moscow Olympics, primarily due to the Soviet Union’s invasion of Afghanistan. Four years later, 15 nations led by the Soviet Union boycotted the Los Angeles Olympics. Michael Payne, who wrote the fascinating book called “Olympic Turnaround“, said that the American Broadcasting Company paid a then-record $225 million for rights for the Summer Games in Los Angeles and the Winter Games in Sarajevo, and that ABC bean counters started shouting that the sky was falling when the boycott was announced.

Roone Arledge
Roone Arledge

 

And then stepped in ABC Sports President and Olympic broadcasting legend, Roone Arledge. Like Henry V in Shakespeare’s eponymous classic play, Arledge faced down the naysayers, according to Payne, and stated with conviction that the Los Angeles Games would be a moment of triumph.

By early 1984, ABC’s financial leaders were running scared about a potential ratings collapse due to the Soviet-led boycott, and attempted to renegotiate terms. Arledge argued that the Soviets had done them all a favor, as the boycott would only allow Americans to win even more gold medals. “They would not lose viewers, they would gain them.”

Arledge was right, ABC’s coverage of Los Angeles set new ratings records. From Los Angeles in 1984 onwards the Olympic Games began to have a dramatic effect on the US advertising market. More than half of the advertising available for all sports for all networks for the entire yea was spent on the Olympics over two weeks. “We’d not only captured the market, we’d suck it dry,” Roone Arledge observed.

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McDonald’s Guerilla Marketing at the 1996 Atlanta Olympic Games

 

citi field not so clean venue
The home field of my New York Mets, CitiField, displays over 20 sponsors in this particular view. You wouldn’t see any ads in an Olympics venue.

For the International Olympic Committee, the “Clean Venue” policy has been inviolate. No advertisements or hint of commerce is allowed to be seen on or within the Olympic stadium. Not even the top global sponsors are allowed to show their logos in the stadium despite paying millions to market using the Olympic brand. They do so, somewhat ironically, because the Olympic brand, with the clean venue as a symbol, represents ideals beyond consumerism.

Olympic turnaroundAs Steve Jones of head of Coca Cola’s Marketing in the 1990s put it, “A clean field of play is an Olympic equity. One of your core assets. The field of play is an important branding space that you own. Own every inch of it! Sharing your branding space dilutes the Olympic brand. Don’t compromise your greatest opportunity to build brand power. There is no valid loss of revenue argument when the risk is loss of brand equity.”

Thus, the IOC aggressively protects the Olympic brand, and can at times seem obsessive. Michael Payne, author of the great sports marketing book, Olympic Turnaround, wrote about how McDonalds, a TOP Olympic sponsor, perhaps somewhat intentionally, snuck their logo into the eyesight of thousands, if not millions, during the Opening Ceremonies of the 1996 Atlanta Summer Games. Payne, who was a member of the IOC’s marketing team, got a phone call just as the ceremonies were under way.

“Have you seen the broadcast image of the athletes coming over the ramp?” screamed the brand protection manager. “What are we supposed to do about the McDonald’s sign?”

I ran around the stadium to see the problem myself. There, as the athletes marched over the ramp, in the distance was a large elevated McDonald’s neon sign. It provided a perfect backdrop for each nation as they came into the stadium. The sign might have been in the distance, located by the temporary McDonald’s restaurant at the Olympic Park, but on television it looked like it was attached to the main stadium. The sign had to be switched off – and fast.

The McDonald’s restaurant was near the Olympic sponsor hospitality village. I called the IOC manager at the village, and told her to get over to the McDonald’s restaurant and find someone to turn off the lights. She got to the restaurant, by the time the athlete parade had reached the letter c, and Cambodia was stumbling down the ramp. She found it closed and locked up. Understandably, all members of staff were in the stadium watching the ceremonies.

“Then break in,” I yelled to the IOC manager – by now we were up to Denmark in the athletes’ parade, and there was no way for the television cameras to avoid the neon advertising sign. “They will arrest me”, she pleaded.

“They will arrest all of us if we do not get that sign switched off now.” so an IOC manager proceeded to break into a partner’s restaurant to get their sign switched off.”

There was a break in, the logo went dark, and the IOC apologized to McDonald’s for the break in, although it’s unclear how the lights of the logo were left on.

Now, I’m sure this happened. But I have looked closely at the video of the 1996 opening ceremonies in Atlanta, and I just don’t see the McDonald’s sign. Admittedly, this youtube is not a high resolution video.

Fortunately, i was saved by a reader who provided me with a photo of the shining Mickey D logo. Thank you tylerkochman!

McDonalds at 1996 Atlanta Games
Click on photo to go to source, and see photo 45 in the gallery.
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Olympia Cigarettes: How the 1964 Tokyo Olympics Led to Increased Cases of Lung Cancer in Japan Today

Tokyo 64 Cigarettes
Magazine ad for Tokyo64 Cigarettes.

Ah, the Olympics – an international event that celebrates Man’s desire to achieve new heights, to hone the body and mind to a point close to perfection, for the simple love of competition and achievement.

And yet, what was one of the most successful product promotions related to the Olympics? That’s right. Cigarettes.

The Olympic Games, including the logo and its five interlocking rings, have been one of the powerful brands in the history of marketing. After all, what company or organization would not want to be affiliated with words like world peace, excellence, doing your best, comradery, teamwork, fair play. But it really wasn’t until the 1980s when the International Olympic Committee began taking control of its brand.Olympia cigarettes

Michael Payne is the author of a fascinating book on the marketing of the Olympics, called “Olympic Turnaround“. He wrote how cigarettes, game shows and hygiene products for example were being marketed via the Olympic brand, which created tension in the IOC as it was felt such products did not appropriately represent Olympic values. One of the more remarkable examples Payne cites is from the 1964 Tokyo Olympics.

The tension between the Olympic values and commercial interests is long standing. One of the most successful licensed Olympic products ever produced, for example, was “Olympias”, a brand of cigarette. Produced from a mixture of Turkish and Greek tobacco, it was designed to generate funds to support the organization of the 1964 Olympic Games in Tokyo. Olympias generated over $1 million in revenues for the Organizing Committee.

Payne went on to provide another example in 1964, a clever promotion using the Olympic brand to further increase the spread of cigarette consumption.

The marriage between cigarettes and the Olympics was a popular promotional theme at the 1964 Games. A popular Japanese cigarette brand, “Peace”, ran a promotion where each package was sold with a numbered premium ticket. This entitled anyone drawing a winning ticket to claim a prize of a further 365 packs. Even back in the 1960s, marketers realized that the Olympic rings could draw consumers’ attention to a product. Every packet of “Peace” cigarettes, carried the Olympic emblem.

Peace Cigarettes

Did these campaigns have an impact? Below is a chart showing smoking prevalence among Japanese men and women. Look at the mid 1960s and you can see leaps in consumption between 1963 and 1965. In fact, it appears that smoking reached its highest rates, almost Olympian heights, around those times. And now the Japanese are paying for it as mortality rates due to lung cancer have peaked in the past 20 years. Fortunately, smoking consumption among women has stayed flat over the decades, and thus so has their risk to lung cancer.

cigarette consumption and lung cancer mortality rates
Age-standardized lung cancer mortality and smoking prevalence, Japan, 1950-2010. Source: World Health Organization

No gold medals here.

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