Michael Payne has been at the forefront of the sports marketing industry for over thirty years – having lead the global marketing effort for the Olympic Movement for more than two decades as the IOC’s first Marketing and Broadcast Rights Director, generating more than US$15 billion in broadcast and marketing revenues.
On leaving the IOC, Michael founded his own strategic consultancy advising many of the world’s leading sports groups and companies. He has also acted as special advisor to Bernie Ecclestone, pioneering the effort to bring F1 to Russia for the first time.
Probably the first and biggest mistake is to initially call it sponsorship because the term comes with so many preconceptions.
Many of the most successful Olympic activation programmes have been where the company doesn’t view the partnership as sponsorship but as a marketing tool. When people have been able to look at it from a broader perspective, and the CEO can view it as, for example, a catalyst for change, then it goes to a wholly new dimension. In terms of challenges, the largest from a corporate standpoint is to make sure the leadership of the company has really taken the time to understand this asset they’ve acquired.
When we developed the partner programme in the 80s, it was a very hard sell initially because all sponsorship was defined by signage and exposure, and to offer anything without any identification of media exposure, the immediate reaction from sponsors and advertisers was ‘What am I getting?’. So in the Olympic days when money was tight, people were asking ‘When are you going to introduce stadium advertising?’ and Coca Cola and others were pushing hard for it – and it was only later when you really began to analyse the Olympic brand and what made it special that the IOC came to the conclusion, from a marketing standpoint, that to introduce advertising into the venue would fundamentally change how the Olympics looked, what their brand was and what made them special.
I’d like to say there was some master strategic plan initially, but it was probably more inbuilt conservativism. If you were to go and break it down now, if you introduced advertising into the venue you would immediately undermine the advertising sales proposition of the broadcaster to go out and sell advertising because he has already got an incumbent set of messages. It wasn’t for nothing that NBC has paid billions – it was because it was unencumbered. If you had encumbered it, you would have got at least US$500m less and you wouldn’t have made it up through venue advertising.
So if you were to look at the totality of all the different revenue sources and employ a high powered consultant to analyse the thing, they would probably build a business model like this, they would probably come up with this model, which we sort of stumbled upon. It’s critically important for property owners what the public cares about, what is different, and you undermine that at your peril. Does anyone care much about doping in football? Not really. But you get one person with the wrong cold medicine at the Olympics and the poor girl’s up there on the front page along with murderers and rapists and everything else. And you take the issue of corruption – and we had the major crisis on the selection of Salt Lake and a scandal which very nearly collapsed the organisation: when all was said and done, people realised the sums of money really were not very important. The Olympics weren’t unique in what was going on there, it happens elsewhere. Does anyone care? Does it get one column inch of newspaper coverage. No. The tolerance levels in soccer or horseracing, well, it’s business as usual, so you realise this needn’t necessarily be all bad – providing you return to the understanding that the public’s putting you on that pedestal, so you’d better live to that standard, or lose their confidence and trust and become a commodity just like any other sports event. And that’s the day the shine of the Olympic medal and spirit will be significantly tarnished. So you start to look at what’s going on, and you begin to realise, maybe this is actually one of your strengths, because people care so much that the tolerance level is tiny for the slightest indiscretion.
Signage lets you be very lazy, it lets you just sit in front of the TV and count the minutes as opposed to really thinking ‘How do I make this work?’. That’s not to say that in sponsorship the role of exposure isn’t important. In F1 and other properties it’s a key way to give companies immediate recognition and credit. But some companies, like Coca Cola, don’t necessarily need more exposure.
Everyone expected it would be Coca Cola to set the standard in Olympic sponsorship, because they had a long heritage, but the companies who rewrote the sponsorship rulebook were Visa and 3M, precisely because they came in with no preconceived ideas. They had no, repeat no sponsorship experience whatsoever and approached it completely differently – and they really opened the eyes of the industry as a whole. And obviously with no signage they had to think how to make this work, business to business, through retail, with trade, across the full gambit and spectrum of normal day to day marketing. And Coca Cola probably went back to the drawing board afterwards and said we’ve been missing a trick here.
Did anyone even consider selling sponsorship on the basis of being a catalyst for re-structuring businesses, and breaking down inter-organisational silos?
The CEO of Visa shared with me that he used the Olympics as a benchmarking exercise for member banks and would work more closely with those banks which proved themselves to be most flexible and innovative in their management of the Olympic relationship.
With 3M, you had a very diverse company with more than 40,000 different products and 11 different product divisions that might as well have been totally different companies, there was so little synergy between them – stationery and health care, for example – and for the CEO managing these 11 divisions, the Olympics gave him a tool to bring them all together.
Did anyone even consider selling sponsorship on the basis of being a catalyst for re-structuring businesses, and breaking down inter-organisational silos? Of course not, but that’s just another dimension of Olympic partnership which transcends the common understanding of sponsorship.