Under the Influence with Terry O'Reilly - S3E06 - Marketing The Olympics

Episode Date: February 9, 2014

Just in time for the Sochi Olympics, we take the opportunity to look at the big-money world of Olympic advertising. From the very first Olympic sponsors in 1896, we'll track the ever increasing presence of advertising in the Games - from the marketing milestones to the resulting controversies - including the year the IOC approved Olympic cigarettes! We'll also analyze how the IOC deals with the tension between keeping the Olympic ideals in place while needing more and more advertising revenue every four years. Hosted on Acast. See acast.com/privacy for more information.

Hi, it's Terry O'Reilly. As you may know, we've been producing a lot of bonus episodes while under the influences on hiatus. They're called the Beatleology Interviews, where I talk to people who knew the Beatles, work with them, love them, and the authors who write about them. Well, the Beatleology Interviews have become a hit, so we are spinning it out to be a standalone podcast series. You've already heard conversations with people like actors Mark Hamill, Malcolm McDowell, and Beatles confidant Astrid Kershaw. But coming up, I talk to May Pang, who dated John Lennon in the mid-70s. I talk to double fantasy guitarist Earl Slick, Apple Records creative director John Kosh. I'll be talking to Jan Hayworth,

who designed the Sgt. Pepper album cover. Very cool. And I'll talk to singer Dion, who is one of only five people still alive who were on the Sgt. Pepper cover. And two of those people were Beatles. The stories they tell are amazing. So thank you for making this series such a success. And please, do me a favor, follow the Beatleology interviews on your podcast app. You don't even have to be a huge Beatles fan, you just have to love storytelling.

Subscribe now, and don't miss a single beat. From the Under the Influence digital box set, this episode is from Season 3, 2014. You're so king in it. You're going to love it in an instant. Your teeth look whiter than noon, noon, noon. You're not you when you're hungry. You're in good hands with all things. You're under the influence with Terry O'Reilly. At the 1948 Olympics in London, England,

John Copley stood at the winner's podium. He had competed for Great Britain and had won a silver medal. These Olympics weren't just prestigious, they were symbolic, as these were the first games since 1936. The conflict and destruction of World War II had interrupted the international event for 12 years. So, as John Copley waited for his medal, it was an extra special moment. Not only was he winning a medal in his home country, John Copley was also 73 years old,

making him the oldest Olympic medalist in history at that time. He won his medal competing in the Mixed Paintings, Engravings, and Etchings category. Yes, John Copley had won a silver medal for a piece of art he created titled Polo Players. Starting with the 1912 Olympics, art was a competitive category.

The founder of the modern Olympics, Pierre de Coubertin, wanted participants to compete in sport rather than war. He also wanted Olympic competitors to participate with both mind and body, and therefore wanted to combine both art and sport at the Games. The art competitions were divided into five categories. Literature, music, painting, sculpture, and architecture. How does one compete in architecture? I think you have to run with a drafting table.

Anyway, there were rules. Every piece of art had to have a sport theme, which probably put a crimp in the architecture category. Whoa, whoa, whoa, not so fast. It says here that Dutch architect Jan Wils won a gold medal in 1928 for designing the Olympic Stadium that was used in the 1928 Amsterdam Games. Hmm, well that's one way to do it. There was also stiff competition. By 1928, judges had to adjudicate over 1,000 entries in the painting and sculpture categories alone.

The competitors didn't have to create the works on the spot, they just had to submit them, providing they were new, previously unseen works. But all good things must come to an end. The 1948 Games were the last to have art competitions. The reason? Most of the artists were professionals, meaning they sold art to make a living.

And the Olympic Charter now mandated that only amateurs could compete. So art was no more. The Olympics have come a long way. So has Olympic marketing. From the first ad at the first Olympics in 1896 to the $100 million advertising contracts of the 2014 Games, sponsorship money has always been a contentious issue.

On one hand, the Olympics are one of the most expensive events to stage in the world. On the other hand, sponsorship money makes it possible. But there's a price to pay when there's a price to pay. And how marketing has evolved at the Olympics is a fascinating story. You're under the influence. The modern Olympics, as we know it, began in 1896.

The aforementioned Pierre de Coubertin had a plan to unite the world and founded the IOC, which stood for the International Olympic Committee. Inspired by the ancient Olympic Games in Greece 1,500 years before, de Coubertin and the IOC decided

to hold the first modern Games in Athens. On April 6, 1896, 241 male athletes from 14 nations, there were no women, participated in 43 events. Since the games were brand new and not well publicized, contestants were not chosen by their countries. Instead, they came individually and at their own expense. Some of the contestants were even tourists who happened to be in the area. And representing Canada in the long jump, Terry O'Reilly, who is in town for a marketing conference,

and in the shot put, Keith Oman, visiting from the Danforth area of Toronto. While the first modern Olympics was getting off the ground, the first Olympic advertising was as well. Several companies bought ads in the first official souvenir program, including Kodak, who would continue to be a sponsor for many years to come. Four Olympics later, the 1912 Games were held in Stockholm, Sweden. Stockholm won the Olympic bid primarily because, well, they were the only city to make a bid.

Yay, Sweden! 2,408 athletes, including 48 women, competed in 102 events. At the Stockholm Olympics, 10 different companies paid for the right to advertise at the Games. The Granberg Industrial Art Company, for example, paid $3,600 for the right to use photographs of the competitions for commercial purposes. Another company paid to install their weight scales for the recreational use of the spectators. This early sponsorship money contributed to almost 5% of the total revenue at the games. Clearly, the concept of sports sponsorship was emerging, as companies were eager to get their logos in front of large sporting audiences. One other important marketing opportunity

became highly prized during the Stockholm Games. It was the first time companies were given the right to use Olympic symbols on commercial merchandise. The 1924 Summer Olympics were held in Paris. They were the first to be broadcast live on the newfangled medium called radio. The Olympic Village was also created for these games, and the motto of Faster, Higher, Stronger

was used for the first time, a phrase that was coined by a Dominican priest. Hey, hey, hey! The 1928 Olympics were held in Amsterdam and are important in the history of the Games for several reasons. The Olympic flame was lit here for the first time ever and the parade of nations began, starting with Greece and ending with the host nation, a tradition that continues to this day. There were important marketing firsts as well.

Balance sheets from these games indicate revenue from advertisements on access routes and kiosks close to the stadium. It was also the year Coke came on board as a sponsor. This would mark the beginning of the longest continuous relationship between an advertiser and the Olympic Games in history, a relationship that is contracted to the year 2020. In 1928, Coke not only provided soft drinks, it sold them through restaurants and kiosks they were allowed to operate during the Olympics. That was a significant development in the parameters of Olympic sponsorship. Advertisers were now allowed to make money on the Olympic grounds.

In the name of the President of the United States, I proclaim open the Olympic Games of Los Angeles celebrating the 10th Olympiad of the modern era. The effect of growing U.S. sponsorship revenues is evident during the 1932 Olympics in Los Angeles. A local company called the Helms Bakery paid for the right to produce an Olympic-themed product

called Helms Olympic Bread. The success of this product convinced the IOC to investigate further commercial possibilities. These games were also the first to ever post a profit. But it was the next Olympics held in Berlin in 1936 that would see the introduction of a technology that would not only transform Olympic audiences, but also impact Olympic marketing revenue for all time.

The IOC chose Berlin to host two years before Adolf Hitler came to power. As a result, with the Nazis now in place, the 1936 Olympics became very controversial, with many Jewish athletes eventually boycotting. The Olympic torch was first introduced during these Games. But the 1936 Olympics offered an even bigger technological milestone. They were the first to ever be televised. The opening ceremony of the Games was shown live on closed-circuit television in halls and cinemas in and around Berlin.

Over 100 hours of competition was watched by 162,000 viewers. That seminal moment would impact the Olympics for all time, as we'll soon see. It would also transform the world of sports from that moment forward. The very next year, the BBC began televising the Oxford-Cambridge boat race. In 1939, NBC televised a Columbia-Princeton basketball game. Suddenly, advertisers had the ability to reach thousands of people that went far beyond the stadium.

As author Joseph Puig stated in his analysis of Olympic marketing, television turned sport into spectacle for mass consumption, and the Olympic Games would never again be solely a sporting event. But the momentum the Olympics was now enjoying would soon come to a complete and utter stop. This morning, the British ambassador in Berlin handed the German government a final note stating that unless we heard from them by 11 o'clock that they were prepared at once

to withdraw their troops from Poland, a state of war would exist between us. As British Prime Minister Neville Chamberlain declared war on Germany in 1939, the Olympic Games, that international gathering of peaceful nations, were cancelled and would not resume again until 1948. I proclaim open the Olympic Games of London, celebrating as the 14th Olympiad of the modern era. A record 49 nations competed at the 1948 London Games. The Olympic competitions were televised by the BBC, and these

games were the first to set a price for television broadcast rights. It's reported that the BBC paid the equivalent of $3,000 for those rights, airing over 60 hours of programming watched by over 500,000 viewers.

And we'll be right back. If you're enjoying this episode, why not dip into our archives, available wherever you download your pods. Go to terryoreilly.ca for a master episode list. Throughout the 1950s, the Olympic Games picked up momentum and advertisers. At the 1952 Helsinki Games, 25 companies advertised. At the 1956 Melbourne Games, 112 companies sponsored the event. The Rome Olympics of 1960 saw a young Cassius Clay win a gold medal in boxing, the future king of Greece won a gold in sailing, and it was the last time South Africa would be invited until they abolished apartheid in 1992.

These were the first summer games to be broadcast live via satellite to 18 European countries, with the tapes being shipped to North America a few hours later. The cost of TV broadcasting rights was starting to make its climb, as CBS paid the equivalent of almost $400,000 to secure them. It also marked the first time the games were broadcast in Canada on CBC TV. The Rome Games were also the first to offer sponsorship by modern day definitions, as companies were now permitted to use such designations as official supplier and official sponsor. Those two words would become very lucrative for the Olympics in years to come.

Tokyo is dressed in her holiday best for the opening of the 18th Modern Olympics, the first to be held in the Far East. The 1964 Games in Tokyo were the first to be broadcast internationally, without the need for tapes to be flown overseas as they were in the 1960 Olympics. At this point in Olympic sponsorship, there was no exclusivity, so competing brands were allowed to advertise at the same event. But even with more and more advertisers coming on board, the local Olympic committee still needed more revenue.

That led to a decision to actually license a brand of cigarettes called Olympias. The cigarettes ended up being one of the most successful Olympic products ever, generating over $1 million in revenue. And that was big money in 1964. Four years later, at the Winter Games at Grenoble, the organizers again licensed two brands of cigarettes to use the Olympic logo. That decision prompted then-IOC President Avery Brundage

to write IOC members to complain about the, quote, rampant commercialism beginning to encompass the Olympics. His stand would be a line in the sand that emphasized the inherent tension within the Olympics, the tension that existed between needing revenue to stage the Games and inviting corporate sponsorship that didn't undermine the overall Olympic ideal. IOC President Brundage used his influence to try and keep commercialism at bay for the next 12 years.

During the 1968 Summer Games in Mexico City, another marketing controversy revealed itself. The Adidas and Puma shoe companies were owned by feuding brothers, Adolf and Rudolf Dassler. Their sibling rivalry exploded into a full-fledged war during these games. The shoe companies furiously tried to outbid each other to induce track athletes to wear their brands. As author Joseph Turini details in his book titled The End of Amateurism in American Track and Field, the competing footwear companies offered cold, hard cash

to athletes to switch brands, usually in the form of thousands of dollars stuffed into their shoes. The shoe companies blatantly ignored Olympic amateur regulations and distributed over $100,000 in cash and over $350,000 in shoes and equipment.

The bribes created a public scandal. Yet, most athletes were unrepentant. They felt they were providing publicity for the shoe companies and should be rewarded. The Olympic Committee realized it would be impossible to police the situation, so they mandated that only all-white, non-branded shoes could be worn in competition. Athletes immediately protested, stating they wanted to wear the shoes

they had trained in. Black athletes protested at having to wear all-white shoes. The shoe companies simply ignored the mandate, brand wars at the Olympics escalated, and sport apparel sponsorships would expand exponentially into the 1980s. I declare open the Olympic Games of 1976, celebrating the 21st Olympiad of the modern era.

By the time the Queen opened the 1976 Olympics in Montreal, IOC President Avery Brundage had retired. His stand against commercialism now a thing of the past, the Games looked to maximize television broadcast rights and explore lucrative advertising opportunities. 628 advertisers participated in the 1976 Games and an estimated half billion people watched on TV. Yet, the Games left Montreal with such a big debt,

it took three decades to pay it off. It was a lesson not lost on the 1984 Los Angeles Games, as it would turn the marketing of the Olympics upside down. We know how life goes. New father, new routines, new locations. What matters is that you have something there to adapt with you, whether you need a challenge or rest. And Peloton has everything you need, whenever you need it. Find your push. Find your power. Peloton. Visit Peloton at onepeloton.ca Ladies and gentlemen, welcome to the opening ceremonies of the Games of the 23rd Olympiad at Los Angeles.

It was in the city of marketing dreams that the IOC realized the full potential of marketing a mega event like the Olympics. The Los Angeles Organizing Committee realized that real revenue success didn't lie in attracting ever larger numbers of advertisers, but that the exact opposite strategy was the key. So they reduced the number of advertisers

from hundreds down to 35, but greatly increased the amount each paid. For that steep price, they offered one more important carrot. Exclusivity. Even though advertisers were paying more than they had ever paid before, category exclusivity and the massive international television audiences the New Deal provided made it a bargain. The strategy was so successful, the LA Games posted a huge profit.

That success led the IOC to create a global sponsorship program known as TOP, which stood for the Olympic Partners. It gave a small select group of advertisers the rights to use Olympic symbols worldwide in return for lucrative fees. The first time the top program was successfully implemented was at the Calgary Winter Games in 1988. By then, over 80% of Olympic sponsorship support was coming from North American advertisers.

Tonight, a record 197 countries have come to Atlanta for the Centennial Olympic Games. At the Atlanta Olympics, 10 companies signed up as top sponsors, spending $40 million each for the privilege. While many of the sponsorships were a good fit with the Olympics, the cost of staging the Games soared to $1.8 billion. Using the 1984 Los Angeles corporate model, Atlanta organizers looked to more and more sponsors for more revenue. That led to some interesting sponsorships. For example, Jeopardy became the official Olympic game show. There was an official Olympic onion sauce and an official toilet seat cover. When the Atlanta Organizing Committee announced

it was granting a license to the, quote, official feminine hygiene product, the IOC stepped in and said enough. The image of the games was being tainted. Not long after, it was discovered that some IOC members had accepted bribes to vote for Salt Lake City in 2002. And the problem of doping was never far from the headlines. The Olympics desperately needed to rebrand itself.

One of the ways it did that was to look to advertising. So, the IOC hired top creative advertising agency Chiat Day to create a series of messages to help promote Olympic values. The resulting commercials featured very moving and memorable images from past Olympics. Robin Williams

supplied the voiceover. To be a giant. This has forever been our passion. This desire to be a giant. Not has forever been our passion. This desire to be a giant. Not to stand on one's shoulders, or to have one for a friend, though these may be fortunate things,

but to be one. The commercial ended with the line, Celebrate Humanity. Media companies around the world embraced the message. CNN ran it 30 times a day for 8 months leading up to the Games. 30 airlines showed it as part of their in-flight programming. It appeared in cinemas across three continents, all at no charge, generating an estimated $120 million in free advertising.

But changing a perception is a process, not an event. So the IOC restructured their sponsorship strategies, put stricter guidelines in place, overhauled many of their practices, and the advertising campaign did its bit to help resuscitate the Olympic image. I declare open the Games of London, celebrating the 30th Olympiad of the modern image. I declare open the Games of London, celebrating the 30th Olympiad of the modern era.

In 2004, the BBC estimated that it now cost $10 billion to host the Olympic Games. By the time the Olympics arrived in London, England in 2012, that figure had risen to $14.5 billion. NBC paid $1.2 billion for the broadcast rights to the London Olympics. But even with those enormous windfalls, the London Olympics needed billions more in sponsorship money. Adidas paid over $172 million to be one of the lead sponsors.

With the help of Montreal advertising agency Sid Lee, Adidas arguably became the most visible sponsor at the Games. Britain's most successful athletes in over 104 years sported Adidas uniforms. TV commercials blitzed screens and posters adorned buses and billboards. Viral videos attracted millions of views on YouTube. Samsung, the official and exclusive worldwide partner for wireless

communications equipment, gave out 2,500 free phones to the athletes, who then used them in the opening and closing ceremonies to take pictures and videos in front of millions of viewers worldwide. In one of the funniest moments, the London Symphony Orchestra started playing Chariots of Fire.

As the familiar repetitive organ note began, we see that it's comedian Rowan Atkinson, a la Mr. Bean, sitting in with the orchestra playing the note with one finger. In true Mr. Bean fashion, he becomes bored and pulls out his Samsung phone. He checks emails,

becomes completely distracted, and starts taking selfies. It was a virtuoso performance starring Samsung. BMW supplied the cars, Coke the sodas, McDonald's was the only restaurant allowed to sell french fries on the grounds, all ATM machines were changed to Visa and Omega provided all official timing. And even though the worldwide sponsorship partners paid over $100 million each to participate, with the next tiers paying $40 million each, all this sponsorship revenue still only covered 40% of the cost of staging the Olympic Games.

While it is one of the great honors to host the world for the Olympics, it comes with a great price tag. And faster, higher, stronger has no option but to become pricier, steeper, costlier. The Olympic Games were founded on the principle of uniting the world peacefully through sport. And one underlying and perhaps ironic aspect of that principle is tension. The tension as nations compete against nations, as athlete competes against athlete, and the tension as the need for sponsorship money competes against the Olympic ideal the cost of mounting an Olympic event is staggering the 1928 games cost $25,000 the 2012

London games cost 14.5 billion every host country feels the pressure to put on a world-stopping show. And to pull it off, they need massive revenue intake. And that is why advertisers will have a larger and greater presence in the Olympics as time marches on. Governments can no longer foot the bill. Ticket sales provide only a small portion of the revenue. And even though Comcast just bid $4.4 billion for the broadcast rights to the next four Olympics, it's still not enough to pay the bill. I predict we'll see sponsorship money

tip over the 50% mark by 2018. There's no other way to pay for the Olympics unless we all agree to scale down our expectations. But that won't happen. The Olympics demand spectacle, spectacle demand sponsors, and sponsors demand international audiences. And one thing is for certain. The cost of the Sochi Olympics will set a new world record when you're under the influence.

I'm Terry O'Reilly. This is the Olympic Sponsorship Committee calling. We're proud to offer Under the Influence the title of official marketing radio show of the Sochi Olympics. Congratulations. The invoice for $40 million will be forwarded to your attention shortly.

Again, a hearty congratulations. Under the Influence was produced at Pirate Toronto.. Again, a hearty congratulations. Under the Influence was produced at Pirate Toronto. Sound engineer, Keith Oman. Theme music by Ari Posner and Ian Lefevre. Series coordinator, Debbie O'Reilly. Research, Lama Balagi. By the way, I know you've been dreaming of wearing an Under the Influence t-shirt.

Or maybe I was dreaming that. But anyway, we have them for sale on our shop page. And if you listen to the show while sipping a tea or a coffee, have we got the mug for you. Go to terryoreilly.ca slash shop. See you next week.