The Summer Olympics is among the world’s favorite sporting event. The popularity of this event means that the sport has a global audience. Apart from the sporting aspect of the Games, the Olympics are also seen as an avenue by sponsors to market their products.
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With the next Olympics scheduled for the summer of 2012 in London, preparations are underway. The body tasked with this responsibility is the London Organizing Committee for the Olympic Games. This report examines the marketing practices that the organisation is using to raise its profile, as well as the technological challenges and opportunities at its disposal.
Every four years, in recent decades, thousands of athletes all over the globe, with a similar number of coaches and officials, and accredited media representatives and hundreds of thousands of spectators have gathered for more than two weeks to participate in, report on and watch a sporting event which is in turn viewed on television, listened to on the radio, read about in the print media and followed on the Internet by billion of people around the world.
Each Olympic Games has cost enormous sums of money to stage, funded by the taxpayers, sponsors, and television companies and their advertisers. Sporting records have invariably been broken, and national and international heroes created. It is the world’s biggest peace-time event: the Summer Olympic Games (Girginov & Parry, 2005).
This report critically examines the marketing practices of the organizations tasked with staging the event, the London Organizing Committee for the Olympic Games (LOCOG). The report will, in particular, evaluate the effectiveness of the marketing practices adopted by the organization, and the use of new technology for future competitive advantage.
Brief history of the modern Olympic Games
The history of the Olympic Games begins at least 3000 years ago in ancient Greece. In their ancient form, while they celebrated physical excellence, the Games served a primarily religious purpose. In their modern form, while still ostensibly about physical excellence, they also play a cultural and economic, and often political, role.
The history and global significance of the Olympic Games, in sporting, cultural, economic and political terms, therefore, justifies their serious consideration as an object of academic enquiry (Veal, 2007). There is a widespread sense of public ownership of the Olympic Games, which does to extend to other sporting events such the World Cup.
The relationship between the media and the Olympic Games
For some 25 years, newspapers enjoyed a monopoly for coverage of the Olympic Games. Interestingly, the arrival of new media forms has always been perceived as a threat and usually had to face strong opposition. In 1920, the first radio station, KDKA, went on air in Pittsburg, USA. KDKA is also accredited with broadcasting the first ever-sporting event, which was a boxing match in 1921 (Smith, 2000).
Broadcasting services in Great Britain began in 1922 with the establishment of the British Broadcasting Corporation. Sports commentary, however, was not allowed until 1925. Radio commentaries were covering the Olympic Games in Paris (1924), Amsterdam (1928), and Los Angeles (1932), but due to technical limitations, this medium remained local and regional until 1936 (Findling & Pelle, 2004).
By the time that the radio made its genuine debut as an international communication medium at the 1936 Berlin Olympic Games, television had already made its appearance. The first regular television services began in Germany in 1935, followed by Britain in 1936, France in 1937, the former USSR in 1938 and the United States in 1939.
However, it was not television, but the cinema, which was responsible for making the first moving pictures of an Olympic Games: in 1900 in Paris and a special feature on the Olympics in 1912, in Stockholm. These developments in cinematography had an impact on the TV coverage of the Games, which began in 1936, in Berlin (Dorling Kindersley Publsihing Inc., 2000).
Over the years, the relationship between the Olympics and the media has evolved into three intertwined symbolic associations- economic, promotional, and passion. The economic association is based on the economic interests of the two companies. TV companies pay fees for rights, but at the same time derive profit because of the advertising revenue from sponsors (Shilbury, 2003).
The promotional association suggests that sport is a major source of revenue and program content. It is, therefore, in the best interest of other media to sustain and promote a positive image of the Olympics. The passion association stems from the media dual responsibility to inform, analyze and comment, and to be a counter-authority.
Despite their economic interest in sport, it is the nature of the media to keep a distance from it, to maintain their credibility, and to serve the truth and their audience. The International Olympics Committee grants TV rights to air Olympic Games based on exclusivity per country or region, and free coverage to the largest possible audience (Preuss, 2004).
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The interaction between the Olympics and the mass media resulted in a transformation of the Games from being merely a sporting competition for aristocratic elite, to a special genre appealing to millions.
When the organizers of the 1956 Melbourne Olympic Games demanded remuneration for the right to televise the competitions, this unprecedented decision was met with a massive outcry from the networks (Girginov & Parry, 2005). They argued that the Olympic Games were a news event, similarly to the print media; television should also have free and open access.
The organizers insisted that the Olympics were an entertainment event and, therefore, subject to a rights fee, before contests could be included in television programming. This episode proved critical for the development of the Olympic Games as a media event (Mullin, 2007).
The Olympics, as a genre of media experience, has a number of characteristics (Rogan & Rogan, 2011). First, they are televised and rely on the impact of visual images. Second, the Games interrupt daily routines and at times virtually bring the life in a country to a halt. Third, the Olympics are monopolistic in the sense that all channels focus on the event, and it is very close to being watched at nearly all times (Girginov & Parry, 2005).
In addition, the Olympics competitions are live and unfolding. The IOC and the host city organize them in a location outside the media. The Games are also not spontaneous but pre-planned, announced and advertised in advance.
In particular, the Olympics have unusual and unprecedented audiences who are drawn to watch television individually, as a family, a group of strangers in front of a street screen, as a community in the pub, or a virtual community on the Internet (Smith, 2000).
The above characteristics of the Olympic Games as a media event portray them as a social construct, which is achieved through the contribution of three main actors: the IOC and the host city, TV networks, and the global TV audiences (Dorling Kindersley Publsihing Inc., 2000).
It is important to note that the social construction of the Games has economic consequences, one of which involves the transformation of the audience from sport followers to a commodity with an economic value expressed in terms of its size and composition.
Subsequently, audience demographic reports and media usage patterns become crucial for the commercial success of the media and of the Olympic Games (Girginov & Parry, 2005).
Millions of dollars are paid for broadcasting rights, but broadcasters charge their advertisers tens of thousands of dollars per second of airtime. Such profits are, however, contingent upon the delivery of certain viewing figure levels and failure to achieve these could result in huge losses for the media companies.
For instance, NBC had to refund some US $ 90 million to its advertisers as compensation for the low ratings achieved by their coverage of the Barcelona Games of 1992 (Findling & Pelle, 2004).
Marketing through the Olympics
The above discussion of the integration of the media in the Olympic Games lays a foundation for the discussion that is going to follow about the marketing practices for LOCOG.
This is because the kind of marketing strategy that is adopted by the body is typical of any sport marketing approach, which is largely depended on the mass media. Sport marketing can be approached through two different perspectives: marketing of sport and marketing through sport.
On the other hand, marketing through sport is typical of a scenario where large corporations use sporting as an avenue to promote and advertise their products, usually to specifically identifiable demographic markets known to follow a particular sport. The perspective of sport marketing that is going to be given prominence in this report is that of marketing through sport (Jackson & Andrews, 2005).
Technological challenges and opportunities facing LOCOG
The victorious bid team made some big promises in Singapore and wasted little time coming out of the blocks quickly. Sebastian Coe, chairperson of the LOCOG announced a first one hundred pays plan.
One of the most important initial moves was the separation of the body responsible for building the infrastructure for the games- the Olympic Deliverance Authority- from the one responsible for the commercial and operational side of making the Games happen- the London Organizing and Committee of the Olympic and Paralympics Games (Great Britain Parliament, 2009).
Effectively, this separated the day-to-day public purse commitments to regenerate East London from the revenue generation and Games delivery private sector responsibilities. This has proven to be a significant and successful move. While both organizations are joined at the level of the Olympics Board, each is free to develop the culture and approach that match their very different immediate priorities (Mullin, 2007).
London has hosted Olympic Games twice in the past: in 1908 and 1948. Indeed, it is the only city to do so thrice. This implies that the LOCOG has a point of references to refer. It is able to correct its past mistakes, and improve its successes.
However, the fact that London has hosted the Games in the past and, hence, can borrow a lot form the past is limited by the dynamic nature of technology, which is a key factor in organizing and staging the event. One of the central challenges for London 2012 organizers has been to build a plan for the Games against a staggering technological pace of change (Rosner & Shropshire, 2010).
Coe and his team had no idea in 2005 when the bid was won what technologies would be contemporary in 2012 by 2012, and which would still be a figment of fanciful imaginations. The technology for London 2012 represents both a challenge and an opportunity for the Organizing Committee and its partners.
The biggest challenge that is facing the LOCOG and its technology partners, which include BT, Atos Origin and Cisco Systems, is to deliver information around the world in real time (Rogan & Rogan, 2011).
Internet development is changing and evolving at such a pace that even short time frame comparisons offer little guidance. For instance, the 1998 Winter Games in Nagano generated one terabit of data, or five times as the preceding Lillehammer Games. This amount of data can now be purchased for 60 British pounds on eBay (Mullin, 2007).
This implies that the LOCOG and its technology partners are faced with the technological challenge of handling vast amounts of data. In addition, the lure for sponsors to grasp the moment to display their technology on the world’s biggest stage makes it worth the risk in order to create the ultimate corporate case study (Shilbury, 2003).
BT, one of the main technology partners with LOCOG has embraced the challenge of delivering for London 2012. The scale of the media scrutiny is, vast and failure is not an option for both LOCOG and its technology partners.
If BT communications lines go down in the middle of yet another World Record for Usain Bolt in the Men’s 100 Meter Final, or in the final strokes of Greg Searle’s gold medal 20 years on from his first, BT and LOCOG will be culpable in the eyes of the global public.
London clearly signaled its desire to embrace new technology in all its forms with the early launch of its contemporary logo. The early message that the London 2012 Olympic Games would be a ‘new media’ Games was initially greeted with skepticism.
However, LOCOG insisted that it could not be sure how the action would be distributed come 2012, that alternative methods of distribution to the TV screen or internet would be necessary and that the logo would need to work in all new media environments.
These initial aspirations have been made a reality by the new media. For instance, the BBC Trust has recently approved plans to distribute BBC New through mobile phone applications. However, this, move is regarded as surrounded with controversy because it puts the BBC in direct competition with commercial broadcasters; the new media market (Mullin, 2007).
Marketing practices used by LOCOG
There is a unique breadth of skills, which are required in an organization such as LOCOG to deliver the Olympic Games. Effectively, it is parts sports body, part business, part political entity and part project management organisation. In its business approach, LOCOG has to embrace marketing practices that ensure that its books stay balanced. This has been done through a number of ways, one of them being sponsorship.
As a discipline, sponsorship has traditionally been rather uncomplicated. Rights holders such as LOCOG have a long tradition of selling attachment to their sporting event based on market value of their assets. The assets include advertising hoardings, tickets, television billboards, and corporate hospitality (Preuss, 2004).
Nevertheless, sponsorship in the Olympics is quite different from sponsorship in other games such as World Cup. This is because there is no advertising inventory to bundle into the organizers sponsorship deals since the Games would unusually be shown on non-commercial terrestrial television in the domestic UK market.
In addition, part of the equity in the Olympic Games brand is that the Games remain the only global sports property to continue to avoid any commercial messaging within the venues themselves. While this is part of the appeal and difference of the Olympic Games, and arguably valuable legacy of the obsession with amateur deals, it makes life harder for Organizing Committees (Jackson & Andrews, 2005).
Another marketing strategy that is being used by LOCOG is merchandising. A short visit to the Adidas store in Oxford Street demonstrates that this phenomenon has gone full swing. Aisles are often full of the very tourists Britain aims to lure come Games-time.
This is an area, which the Beijing Games failed to maximize, probably because the implications of a scale merchandising operation were too explicitly commercial in a communist country. Certainly, the sponsor village was hidden away in the outskirts of the Olympic Park, in Beijing. In contrast, products could already be found on the shelves in London as early as of 2010 (Rogan & Rogan, 2011).
Following the above marketing strategies coupled up with ticketing, LOCOG now has the vast majority of its revenue commitments filled. This puts it in an admirable position since it is able to consider supplier deals, which shave cost from the accounts, as well as drive revenue. Traditionally, Olympic Organizing Committees have been criticized for fire sales at the end of their tenure.
For instance, Vancouver’s final; sponsor signed up a matter of weeks before the event. This is far less likely concerning London 2012. Instead, there are expectations of creative supplier barter deals, which minimize significant remaining cost liabilities for the organizers and maximize the impact of the Games (Great Britain Parliament, 2009).
Recommendations for strategic responses to the above discussions
There is no doubt that the LOCOG is enthroned with a big task of organizing and staging the London 2012 games. One of major challenges discussed earlier that the organisation is facing is the dynamic nature of the technology. If the organisation has to ensure that its promise of staging an Olympics that has never being witnessed, it has to be at par with the technological advancements of the day.
This can be achieved by collaborating with technology companies that are able to deliver real time events to the global audience, hence, ensuring that consumer get real value for their money (Rosner & Shropshire, 2010).
Given the global reach of the event enhanced by the new media, there is no doubt that marketers are bound to take advantage of the event and use it to market their product even if they are not official sponsors (Great Britain Parliament, 2008). This phenomenon is known as ambush marketing. As such, LOCOG should put in place the necessary measure and legislation to deal with such cases.
This is because such behaviors deprive the real sponsors the exclusive rights to market the event, which beats the logic of paying the rights fee. Fortunately, the organisation did take the requisite measures as seen with the creating of the Olympic Rights Association to oversee the use of the Olympic Brand (Great Britain Parliament, 2008).
In conclusion, this report has a brief history of the modern Olympic Games and the role of the media in the Games. The report dealt in depth with the marketing practices that LOCOG, which is organizing for the Olympics in 2012, is using. The report saw that sponsoring and merchandising are some of the key strategies embraced by the organisation.
The report has also examined the technological challenges and opportunities faced by the company. The rise of the new media is posing a major threat and opportunity for the organisation, but this can be remedied by choosing the right technology partners.
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