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 U.S. multinationals including Mondelez International Inc, General
Mills, Under Armour, and Gatorade, a unit of PepsiCo Inc, told
Reuters they have applied to the U.S. Olympic Committee (USOC),
seeking a waiver that will allow them to compete with official Games
sponsors during the Olympics in August and the Paralympics in
September.
Others that have applied include Austrian energy drink maker Red
Bull, camera maker GoPro Inc, footwear brands Asics Corp, Skechers
USA Inc, Brooks Running, swimsuit company Speedo, and Johnson &
Johnson for a charitable campaign, the companies told Reuters.
The applications underline how the Rio Games are set to herald a
radical change for advertisers, even if viewers may not notice much
difference as U.S. household names such as two-time gold medalist
gymnast Gabby Douglas appear in commercials for everything from
banks to cereal.
Thanks to a rule change by the International Olympic Committee (IOC)
after years of lobbying by athletes, official Olympic sponsors will
have to share the big names with brands that have paid nothing to
the IOC or a National Olympic Committee such as the USOC.
Companies running these campaigns will have to operate under
detailed restrictions aimed at retaining some exclusivity for
official sponsors such as Coca-Cola, Visa and McDonald's Corp.
Still, the change to the IOC's "Rule 40" could have a big impact on
the multi-billion-dollar marketing engine that drives the Games,
said Frank Ryan, head of intellectual property at DLA Piper, a law
firm that has worked on sponsorship deals with the IOC and the USOC.
"If 'Rule 40' isn't policed properly, top sponsors will use it to
argue for better pricing for top sponsorship deals," Ryan said.
Athletes had long argued that the old rule deprived them of
commercial attention and income during their most marketable
moments. Whether on TV, online or on billboards, only ads from
official sponsors could feature Olympic athletes during the games.
Athletes would face sanctions for any violations.
Under the new rules, the USOC is banning unofficial sponsors from
using words such as Olympics, and even "summer", "victory", and
"effort" in some contexts. But the average consumer still might not
notice much difference between official and unofficial ads, said
David Abrutyn, executive vice president international sports
marketing at Bruin Sports Capital.
"When you see Michael Phelps' face in an ad, you automatically think
of the Olympics, even if there's no mention of it or any rings,"
Abrutyn said, referring to the 22-time U.S. Olympic medalist, who
has 18 golds.
In March, Under Armour released a commercial showing Phelps swimming
to a song called "The Last Goodbye" and then facing a flash of
cameras -- images that evoke his Olympic successes. Phelps is aiming
to qualify for Rio in what would be his fifth and potentially final
Games.
Under Armour will follow the new rules carefully and expects other
non-official brands to do the same, Peter Murray, vice president of
global sports marketing for the firm, said in an interview. He added
that Under Armour will be sponsoring 250 Olympic hopefuls.
The USOC says a team of marketing staff will closely monitor
commercials for any rule breaches. For companies without waivers or
which end up breaking the rules, it says its lawyers will be armed
with letters threatening legal action. It can also bar athletes from
competing.
But even though brands have to submit their plans to advertise on
social media in advance, it could be difficult to keep tabs on all
the activity in real time during the Games.
"Social media is the spot where there's the most opportunity for
ambush marketing and commercialization that would be an irritant to
a top sponsor," Ryan, the DLA Piper attorney, said.
BRAND POLICE
Lisa Baird, chief marketing officer for the USOC, said in a
statement that the new rule allows athletes "to continue their
long-term promotional relationships with brands, and helps to
curtail ambush of our partners."
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Baird added, "It's a new process, but a process we believe is fair
to all parties."
Official sponsorship deals with the U.S. Olympic team can cost a
sponsor about $40 million for a summer Games, according to sources
who declined to be identified because terms of sponsor deals are not
made public. Much of that goes to buying ad time from U.S. Olympic
broadcaster NBC, a unit of Comcast <CMCSA.O>. NBC declined to
comment on the matter.
In addition, the IOC has agreements with a set of 11 "Top Sponsors"
with special privileges - including Proctor and Gamble Co and
Samsung Electronics Co Ltd - that pay even more for global
sponsorship rights.
Seventeen official USOC sponsors have their sponsorship agreements
up for renewal after Rio, according to the USOC.
The criteria to receive approval from the USOC under the new
advertising rules are strict.
Non-official advertisers are allowed to mention that their athletes
are Olympians because the information is biographic, according to
documents posted on the USOC's website. But the USOC says the
applications are more likely to be approved if the Olympic reference
"is balanced with non-Olympic achievements."
Brands had to submit a schedule for their media campaigns with the
rule that the advertising had to be up and running by March 27. That
gives the USOC enough time to approve, refuse or ask for changes on
the submitted advertising before the Olympics start.
Brant Feldman, a sports agent with American Group Management who
works with Olympians, estimates that hundreds of brands have applied
for the waivers.
NBC is already seeing a boost in ad spending from non-official
sponsors thanks to the rule change, according to Seth Winter,
executive vice president of advertising sales at NBC Sports Group.
Wheaties, a General Mills brand that competes with official U.S.
sponsor Kellogg's Co, said swimmer Missy Franklin and sprinter
Allyson Felix, two former gold medalists expected to compete in Rio,
would be part of "Team Wheaties." A General Mills spokesman said it
had received approval from the USOC for its campaign.
Official sponsors are sure to be vigilant to prevent non-official
brands from "ambushing" them. Tina Davis, head of corporate
sponsorships at Citigroup Inc <C.N>, said she is counting on the
USOC to make sure the new rules don't erode the rights of official
Olympic partners like her company.
"This is the first year so I'm sure there will be lessons learned,"
she said.
(This version of the story corrects gold medal tally to 18 in
paragraph 11)
(Reporting by Liana B. Baker; editing by Stuart Grudgings)
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