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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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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.