The Olympic Delivery Authority was formed to stop those who do not pay for advertising or sponsorship from appearing to be associated with the games. This doesn’t always occur inadvertently. The ODA has employed 270 ‘trading standards officers’ to stamp out ambush-marketing wherever it occurs.
Ambush marketing is marketing that takes place at an event, when the beneficiaries have not paid to be part of it. It happens. At the FIFA World Cup in 2010 in South Africa, brewer Bavaria had women dressed in orange mini-dresses bearing its logo in the stadiums, despite Budweiser having paid to be the authorised beer. During the season finale of Australian television show The Block, Energy Watch’s CEO Danny Wallis wore an Energy Watch T-shirt as he bid on one of the houses on the show, gaining free advertising in the process.
In London, Olympic authorities can issue fines, injunctions, and even criminal sanctions against those who try to navigate ambush-marketing laws. The provisions around the Olympic brand in London have been described by lawyers as the toughest yet. And many small businesses and community organisations may fall foul of the rules. Over at our sister site, Crikey, Lauren Gawne outlines how the use of the words ‘2012’, ‘London’, ‘summer’, ‘medals’ and ‘sponsors’ are strictly prohibited:
“… they’re sending out over 300 uniformed officers in London and other Olympic venue cities, who will be able to issue fines of up to £20,000 ($30,000). They are also very specific about how you can use these words if you are not raising money. If the event is entirely non-profit you still can’t say “Village Olympic Fete”, instead you must put it in a way that gives no impression that the London 2012 organisers endorse your event, for example “Our Village Celebrates the Olympics Fete” (quite a mouthful!).”
Heavy-handed? Sure. It’s never a good idea to antagonise those who may be your biggest supporters. But it points to the crucial importance of the Olympic brand. The organisers will go to great lengths to ensure they’re the only ones who control their brand, and by extension, the lucrative opportunities that come from association with it.
Perhaps the biggest lesson to be gleaned from the Olympics is one of avoiding their greatest failure.
While it’s arguable the point of the Olympics (at least for sporting fans) isn’t just to make a profit, the event rarely recoups the investment that goes into it. Of course, some companies do make money from the event. But taken as a whole, the cost of the Games has in the past has usually been greater than its total economic benefit.
In Sydney, before the 2000 Olympics, most studies expected an economic boost resulting from the event of $5.6 billion. But instead, recent studies have found the games actually reduced Australian household consumption by $2.1 billion.
Academics John Madden and James Giesecke explained in The Conversation yesterday why the forecasts didn’t pan out as expected:
“Much of the difference comes from the advantage of hindsight.
In the pre-Games modelling, it was assumed that Games expenditure would stimulate the labour market and lower unemployment. The modelling also incorporated tourism forecasts which predicted that the Games, by showcasing Sydney, would leave a legacy of a large boost in overseas tourism to Australia. As it turned out, the Games occurred during a period of low unemployment in Australia, meaning that Olympics activities – like venue construction, event organisation and sports tourism – merely acted to displace employment in other economic activities, instead of boosting employment.
Furthermore, the modelling we undertook after the Games revealed no evidence that the Sydney Games had left a tourism legacy. Research by us and others indicates that hosting the Games in well-known tourism destinations does not have a strong advertising effect. With the Sydney Olympics failing to increase employment or leave a large tourism legacy, there are few other avenues for the Games to generate a net economic benefit.”
The lesson? Economic modelling of complex investments, like the Olympics, is rarely accurate. It’s only prudent to be sceptical.
This article first appeared on Leading Company.
Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.
