Tokyo Olympics 2020 Postponed! How Are Marketers Reallocating Budgets?

April 15, 2020

Tokyo Olympics has been postponed to 2021 due to the Coronavirus outbreak, the deadly virus that has infected around 2 million people worldwide. This is the first time the event has been canceled during peacetime, since the beginning of the Modern Olympic Games in the late 18th Century. Previously, the Olympics games have been canceled three times due to World War I and World War II.

Olympics Sponsorship

The Organising Committees for the Tokyo Olympics Games Tokyo released its latest Budget, Version 4 including the estimated revenue. It is no surprise that the biggest revenue source is sponsorship. Sponsorship enjoys a combined revenue of USD 3.8 billion out of the total USD 5.9 Billion. 

There are two ways of sponsorship:

  • TOP Sponsorship – Are the brands part of the Olympic Partners (TOP) program, which is the highest level of Olympic sponsorship. The TOP brands are granted exclusive marketing rights. 
  • Local Sponsorship – Brands in non-competing categories to the TOP sponsors are granted Olympic marketing rights within the NOC country or territory only.
Anticipated Olympic Revenues

What does Tokyo Olympics Cancellation mean for NBC Sports? 

NBC won TV Rights to 4 Olympics for $4.38 billion and spent around $1.4 billion on broadcasting rights for Tokyo Olympics 2020. The infographic below shows the historical record of global viewership. NBC Sports’ parent company Comcast recently said that it had booked $1.25 billion in national ad time. 

Olympics Viewership

The safety net for NBC is that most of the TOP brands namely; Coca Cola, P&G, Toyota, Samsung, General Motors, Alibaba Group, Airbnb, Dow Chemicals, Panasonic, VISA, Intel, Bridgestone, Omega, and Atos will continue to remain in business in 2021 when the Olympic finally takes place. Technically, NBC can simply roll over the spending to 2021. And it will still be one of the biggest marketing platforms. A delayed Olympics is still Olympics nonetheless.

How can Marketers reallocate their budgets?

The Coronavirus pandemic has changed the way we live and do business. Global economies around the world have been brought to grinding halt, tilting the world to an economic recession. Massive disruption in supply chains, sector-wide shutdown, reduced consumption, and overall economic slowdown is likely to cost the global economy $2.7 Trillion.

Marketing is a function of Business. When Business functions are facing the burnt of this pandemic, Marketing is no exception. There are different mediums of advertising, which we have covered extensively for the South Asian Segment in the US.

We have also seen a staggering decline in both traditional and digital advertising due to the pandemic. With a reassuring pattern for Digital Ad spends to recover faster.

Within the context of upheaval and disruption due to COVID-19, the dark alchemy of fear and uncertainty is shrouding many business and marketing decisions. Brands who are seen to be blatantly taking advantage of the pandemic for a self-serving purpose can backfire. In a survey by Kantar,  74% of the consumers think companies should not exploit the situation. At the same time, only Just 8% of consumers think brands should stop advertising. 

Why should brands consider cause-related marketing? 

Cause-related marketing is a mutually beneficial collaboration between a for-profit brand and a nonprofit organization with shared value. They can also be used to refer to marketing programs by for-profit brands based around a social cause. It is a win-win for both the for-profit brand and nonprofit organization. 

Brands benefit from their story of “impact-orientation” making consumers feel good about their purchase due to the brand promise that is benefiting a social cause. And the non-profit benefits from the aid channelized by the brand. Here are some successful brand stories:

  • One for One® movement by TOMS, a retail shoe company based in Los Angeles, United States.  For every pair of TOMS shoes purchased, it donated a pair of shoes to a child in need usually in the developing countries. TOMS has donated over 35 million pairs of shoes in 70 countries. 
  • 1 pack = 1 Vaccine by UNICEF and Pampers. Procter & Gamble’s biggest brand, Pampers, which makes diapers for babies and the United Nations Children’s Fund partnership to eliminate maternal and neonatal tetanus (MNT) in developing nations. Pampers has successfully donated 300 million tetanus vaccines, that have protected 100 million women and their babies around the world.
  • #UnpackThatChallenge by JanSport and World Central Kitchen. JanSport, the backpacking company based in Seattle, United States partners with the World Central Kitchen, a not-for-profit that provides meals during natural disasters. JanSport pledged to donate 10,000 packs of food to help underprivileged students who are not able to get free meals with school closures by launching the #UnpackThatChallenge on the social media platform, TikTok. 
  • Project Clara by Microsoft and the Centre for Disease Control and Microsoft. Clara, Artificial Intelligence enabled Chatbot that talks to potential coronavirus patients’ natural language to screen whether or not they are suffering from symptoms of COVID-19. 

What does it take for cause-related marketing to work?

Taking the case study of Pampers and UNICEF, Oxford’s Said Business School published a Harvard Business Review article that identifies four key factors.

Strong not-for-profit brand name: First and foremost, identifying a strong not-for-profit that aligns with your brand’s core value is key. Evaluate the core value of the not-for-profit brand name and see how strongly it resonates with your brand.

Shared experience: The marketing campaign and effort should be centered around a shared experience between the potential consumers of your goods and services and the recipients of the donation.

Aligned Messaging: The message for both the brands should be aligned so that is able to make a clear connection between cause, consumer choice, and beneficiary. Pick a cause that is relevant to your brand values. 

Accountability: Let the consumers know where is the extra cent or dollar going, where, when and how many people have it benefited? 

A pandemic is a human crisis, brands must tread with the utmost care and empathize with the consumer’s mindset. Cause-related marketing will help brands cultivate loyalty among the key customers and raise awareness for the cause. Everyone wants to leave a meaningful impact and be more responsible but consumers should also be able to benefit from the brand in their own households.

The long-term implications of the outbreak may not sound optimistic. If brands choose to “go dark” till the pandemic is over, brand recall value will drop tremendously low. Taking China as an example, there is evidence that recovery is quick. So, brands should continue with their brand-building exercise.