Wednesday, February 01, 2006

Manulife's Sponsorship of Turin Games a Coup

Financial Post, Duncan Mavin, 1 February 2006

When it comes to the global business marketplace, Manulife Financial Corp. can officially claim to be Canada's only competitor with Olympic credentials.

Manulife is the lone Canadian among the worldwide sponsors of the Olympic Games, part of an exclusive line-up of 10 international megabrands including Coca-Cola, GE, Visa and McDonald's. It's an impressive coup that will thrust the Manulife brand into the biggest possible advertising arena when the winter version of the Games kicks off in Turin this month.

Manulife is the fifth-biggest insurer in the world, with operations in 19 countries, but the worldwide Olympic link-up shows the "clout" of the Manulife brand, said Tim Dewhirst, associate professor of management and marketing at the University of Saskatchewan.

Prof. Dewhirst said the Olympic sponsorship deal gives Manulife a unique opportunity to reach an even greater audience of potential consumers.

That view is backed up by a recent report from Initiative Research that indicated live international sporting championships continue to provide access to global television viewers even as digital video recording and downloadable programming are squeezing audiences for other programming. Indeed, Sarah Ivey, executive vice-president at Initiative Research in Toronto, said that means, "The amount of Olympic investment is better than ever."

Randy Scotland, vice-president of communications at the Association of Canadian Advertisers, said high-profile, global sporting events get companies "pretty excited." With the Winter Olympics, the Commonwealth Games in Melbourne, Australia, in May, and the soccer World Cup in Germany in June, companies could be spoilt for choice in 2006. "But the Olympics is at the top of the heap," Mr. Scotland said.

Nevertheless, some observers are reserving judgment about the value of Manulife's sponsorship deal.

"Being a sponsor of the Olympics gives you access to some eyeballs," said Ken Wong, marketing professor at Queen's University Business School in Kingston, Ont. "But whether they are the right eyeballs, and whether you impress them, is a whole different story."

Prof. Wong pointed out that while it's easy to see the benefit of linking up with the fittest people on the planet for fast-food merchant McDonald's, it's not so clear what the branding opportunities are for an insurance company such as Manulife. "Perhaps they are just undertaking to show their brand to the rest of the world," he said.

Prof. Wong added that global exposure will only be effective if the company has the products and infrastructure to back up an international marketing campaign.

"In marketing, there is nothing worse than making a promise you can't keep," he said. "If you develop the brand and can't back it up, it's all for nothing."

Marc Porter, a manager for Performance Research, a U.S.-based sports marketing research firm, also speculated about the cost-benefit of the sponsorship deal.

The details of Olympic sponsorship agreements are murky, usually a combination of cash and 'value-in-kind'. For example, as part of McDonald's sponsorship, the company reportedly fed more than 300,000 athletes, coaches, officials and spectators at the 2004 Games in Athens. Although Manulife does not give out specific details regarding the sponsorship agreement, as the official insurer of the Olympics, Manulife could be taking on a potentially significant insurance bill.

Mr. Porter warned that such costly sponsorship deals are usually ineffective unless they result from a deliberate and well-thought-out long-term plan to target specific events that will enhance the brand. He said previous Olympic sponsors have found the huge cost worthwhile only when it's part of "a really good plan going in."

"A lot of companies think if they just associate their name with the rings, it's automatically positive," Mr. Porter said. "But they really have to put a lot of money into the proper message."

Manulife stumbled on to the sponsorship package as part of the multi-billion-dollar acquisition of U.S. insurer John Hancock Financial Services Inc. almost two years ago.

Boston-based John Hancock signed the Olympic deal in 1994, reportedly paying upwards of US$50-million for the privilege.

However, Olympic sponsorship has not been without controversy for John Hancock. In 1998, for instance, the company objected to bribery scandals surrounding the International Olympic Committee and threatened to withdraw its sponsorship. The IOC was forced to implement an ethics clause that allows any sponsor to pull out in the case of a committee-related scandal.

And in 2000, a planned television ad produced for the Sydney Olympics showed a lesbian couple waiting at an airport for their Asian adopted child. After airing an early version of the ad, the company was forced to recut it without the explicit reference that the couple were lesbian.

Nevertheless, a company spokesman said John Hancock's Olympic program fits in with a history of marketing opportunities through a variety of initiatives including sports.

"We have developed hospitality and marketing programs designed to benefit sales intermediaries, client and consumer groups, employees and community groups," the spokesman said. "The company activates these hospitality programs during the Games ... [to] allow these groups to touch the magic of the Games globally and at the local level."

But Mr. Porter said Canadian companies that choose to sponsor the national team may have a more effective marketing strategy because they can be associated with patriotism and the success of Canadian athletes.

Several Canadian companies, including Bell Canada, GM Canada, RBC Financial, the Hudson's Bay Co., Petro-Canada and Rona, have bought rights to become official sponsors of the Canadian Olympic team.

Meanwhile, the Manulife deal is set to expire in 2008, before the Games land on home turf in Vancouver in 2010. When contacted last week, the company would not say whether it intends to renew its worldwide sponsorship agreement before the Vancouver games.