BC Business
It seemed like a shoe-in for Olympic sponsorship. The smart money was on Roots Canada for getting their grip on 2010. Given its well-established relationship with the Canadian Olympic team, it was the darling choice for official Olympic tailor and for the lucrative licensing rights to manufacture clothing for our athletes and the public, with royalties spinning back to the Vancouver Olympic Committee.
What wasn’t to like about the clothing company’s prospects? Roots’ signature ‘poor boy’ hat had been a huge hit among athletes, viewers and a couple of well-known British princes. If the 1998 Winter Games in Nagano, Japan, provided the catwalk, Canadian athletes were the good-looking models and Roots was the astute clothier at the side of the stage, quietly rubbing his hands together. This time around Roots was bidding for Olympic rights against the likes of the Hudson Bay Co. and yoga capitalist Chip Wilson, marketing genius and the man behind Lululemon Athletica. Surely HBC was too cumbersome and stodgy, a kind, old gentleman but not nearly hip enough for the modern Olympics? The department store’s Olympic day had come and gone in the 1960s when the firm ended a partnership dating back 30 years during which they adorned our athletes in The Bay’s trademark red, yellow and green. And Lululemon? No doubt an impressive new kid on the block, cheeky and with plenty of cachet but without the depth and experience necessary to pull off an Olympic-calibre licensing contract. Roots was confident for good reason. In January, Rich Patterson, the company’s marketing manager for Western Canada, was the keynote speaker at a gathering of the B.C. chapter of the American Marketing Association. His speech, entitled “How to Play The Games” was long on generalities about Roots’ lucrative sponsorship of the Canadian Olympic team but rather short on details about how to position your company for a successful bid. No surprise. After all, Roots had only just submitted its bid to the Vancouver Olympic Committee (VANOC) and Patterson wasn’t about to give away anything that might compromise its position. So in early March when VANOC announced that HBC, the iconic granddaddy of Canadian retailing, would be the official clothing sponsor for the next four Olympic games at a hefty $100-million price tag, observers were stunned that Roots had been dropped. And it’s not as though the incumbent had taken anything for granted. As a hedge against complacency, Roots had retained Vancouver-based Altius Sport Marketing, a division of Cossette Communications Marketing, to help shape its bid. Roots Canada co-founder Michael Budman, chief architect of the clothing company’s successful Olympic run of recent years, bristles at the suggestion of defeat. “When you’re dealing with someone else’s brand you have to realize that they can make decisions that aren’t necessarily in your company’s best interest,” Budman says. “Roots has had the greatest commercial success in the history of the Olympics and I believe our bid was first-class. Still, we hope to work with VANOC in the future. We love the Olympic team and the door is always open with us.” Roots continues its sponsorship of the U.S. Olympic team and Budman says the firm harbours no ill feelings towards VANOC. Equally diplomatic but audibly disappointed, Altius executive VP Loring Phinney offers only that, “We wish HBC all the best.” As for Lululemon, this upstart says it was blindsided by the awarding of a four-Games ponsorship to HBC (see What are we bidding for?). “We just were not willing to play at that level. I don’t think anybody could have competed with HBC,” says Lululemon brand manager Eric Petersen. He calls the bid process a “very good internal exercise” that forced the accounting, design and marketing departments at Lululemon to cooperate on a single goal. “We learned a lot from the experience,” Petersen says. Rest assured, corporate competition in the boardrooms of Canada will be every bit as fierce as the action between athletes in 2010. The five rings and torch of the Olympic Games conjure up emotions and images so powerful that they resonate equally with a fisherman from Port Hardy as a day trader on Howe Street. It doesn’t matter if you speak English or Yiddish, the Olympic rings know your language. The symbol is an icon of human virtue and achievement, but business sees more than those qualities when it gazes upon the rings – it sees dollar signs, profits and heady possibilities for expansion. VANOC is the guardian of the Olympic symbol in Canada to the 2012 Games and is responsible for parlaying the brand into corporate partnerships to help pay for the bloated sporting extravaganza the modern Olympics has become. If the last six months are any indication, business is willing to pay a king’s ransom for exclusive marketing rights to the rings and torch, as well as the use of a rather extensive list of trademarked names including Vancouver 2010, Whistler 2010 and 2010 (yes, it appears you can trademark a number). Last October Bell Canada set a lofty standard when it bid on and won a sponsorship contract worth $200 million to VANOC. Since then, RBC at $110 million, Rona at $68 million, as well as HBC at $100 million have also weighed in with deals comparably lucrative to VANOC. These bulging contracts have exceeded even the most optimistic predictions for corporate sponsorship made after Vancouver was awarded the Winter Games in 2003. The Bell deal alone is double what VANOC originally hoped to net from all top-flight sponsors combined. Hence, to say that VANOC and its 80-person staff is busy chasing corporate dollars is an understatement. These days getting a media phone call past reception to executives Dave Cobb, VP of marketing, or president John Furlong, is like trying to get through to the Vatican. They are the stewards of the world’s most powerful brand. The Games are just five years away and now is the time for business to position itself to take advantage of marketing opportunities. However, VANOC isn’t the only portal to the Olympics. Smaller firms are dreaming up other ways to get a piece of the pie, be it knitting a sweater for Olympic broadcasters or sponsoring an athlete. Is there room in the Olympic family for minor-leaguers or do you have to be a marquee heavy-hitter like RBC or Bell? Do Olympic ideals truly speak to your target market? If you win the right to use an Olympic logo how will you incorporate the five rings into your marketing strategy? Here’s a primer on how best to put the rings and torch to work. MAKE FRIENDS IN HIGH PLACES While the Olympic torch shines, marketing consultants are making hay. Altius Sport Marketing was created two years ago to capitalize on Olympic excitement, provide consulting services to firms angling for Olympic partnerships and take a little of the mystery out of the bidding process. “It’s been an absolute free-for-all,” says Loring Phinney about the hype over sponsorship contracts signed so far. But is it for everybody? Not necessarily. If a company’s target market is 18- to 35-year-old males then perhaps its money would be best spent associating with a hockey team or league. That’s not to say that the Olympics wouldn’t speak to your target, but you’d be throwing bags of money at a large, amorphous market, not all of which fits into the male, we-love-beer-and-chicks demographic. Phinney and his team have had to steer a few companies with Olympic dreams into more realistic directions. For example, if you’re brewing beer or selling cigarettes, you’d best look elsewhere for marketing opportunities – doping scandals aside, the Olympic movement, at least in theory, is about purity and won’t hold hands with purveyors of spirits and tobacco. Or if you’re a small furniture manufacturer based in North Vancouver and interested in getting your product into Olympic venues, consider these key questions: do you have the capacity to fulfill such a contract and pockets deep enough to pay cash for marketing rights? Not likely. Phinney says hopefuls must engage in some serious analysis and thought before investing. How will the Olympic brand support your business? If you package a product in an Olympic wrapper, will this do anything for sales or just add costs? In other words, you need to approach Olympic partnerships as you would any other investments: what are the costs and benefits, and what is the potential return on investment? Altius has 11 clients (among them Bell Canada, Petro Canada and Roots) who are pursuing, have pursued or have already bagged deals with VANOC. With Roots, Altius suffered a crushing disappointment. [pagebreak] Not surprisingly, Phinney believes VANOC may have made a mistake by turning its back on a successful brand which, in recent games, became so entwined with the Canadian Olympic identity. Just how HBC will repackage our athletes remains to be seen. In the meantime some marketing experts are urging businesses to look beyond the podium. Nicola Lambrechts of National Public Relations’ Vancouver office says 2010 is front and centre in the minds of many of her clients and she likes to remind people that there is more to the Olympic movement than skiing, jumping and running. Lambrechts says opportunities for attaching your company name to the Olympics could include art exhibits, theatre, dance and other cultural activities. Given the massive sponsorship packages scored by VANOC so far with some of the country’s largest corporations (it expects to complete two more tier-one sponsorships this summer before moving onto smaller deals) one might wonder if there’s room for the little guys in the Olympic family. Other than offering press releases chock full of platitudes aimed at their chosen sponsors to date, VANOC is surprisingly secretive. All spokeswoman Cathy Binstead would say was stay tuned for more information about the so-called tier-two and tier-three sponsorships, deals that are smaller in value and hence offer smaller-scope marketing rights and benefits. Walt Judas, VP of marketing communications and 2010 strategies for Tourism Vancouver, offers this advice: “Big sponsors like Bell and HBC don’t have a lot of infrastructure in Vancouver, so small business could take advantage of procurement opportunities with these companies without having to go to VANOC.” GUERILLA MARKET Wool toques, patriotism and the Winter Olympics: how much more Canadian does it get? In the heart of Kootenay country, a small grassroots company used that formula to secure a place for itself at the table at the 2002 Games. That winter, when Ron MacLean sat in the CBC anchor’s chair for the Salt Lake City Olympics, he sported a colourful wool sweater made by a small firm that few people outside Cranbrook had ever heard of. When he endorsed the sweater on air in front of an audience of millions, Kootenay Knitting’s fortunes catapulted through the roof. “The sweater MacLean was wearing instantly became one of our best-sellers,” recalls Allan Rella, who with his wife Kathy started knitting and selling wool toques and clothes back in 1995 from the basement of their Cranbrook home. The 2002 Games provided a seminal moment for his company. Not only did it score a contract to outfit MacLean and his colleagues with sweaters and vests, it also provided 2,500 toques to Calgary-based Moving Products, a firm that outfitted star Olympic sponsors such as Xerox, AT&T, Lucent Technologies, John Hancock and Texaco. Kootenay Knitting was propelled from a basement mom-and-pop operation to a thriving enterprise with a peak production staff of 20. But how did a small Kootenay company get the attention of a big national broadcaster? Through personal connections – Carol Jeske, the company’s marketing manager, knew the buyer at CBC – and undeniable product appeal. Kootenay Knitting capitalized on its image as a homegrown Canadian business, an attribute that dovetails perfectly with the patriotic love-in of the Olympics. Rella, who was born in Trail and grew up skiing the steep slopes of nearby Red Mountain, says, “We always knew that the Olympics had a great branding image. We knew being connected to it would create a lot of goodwill.” Not to mention brisk sales. Which is why the Rellas have also partnered with Kootenay ski racing legend Kerrin Lee-Gartner, now a broadcaster with CBC. “When you connect with someone like Kerrin who gets your story, that’s invaluable,” Rella says. Every time Lee-Gartner dons a Kootenay Knitting sweater on air she helps to spread the gospel.
ADOPT A JOCK Stockbrokers in tight-fitting cross-country ski wear is an image most of us could do without. That’s why companies prefer to put their logos on buff athletes instead. In the last few years, Vancouver’s Haywood Securities has become a major financial backer of Canada’s national cross-country ski team and a sponsor of Salt Lake gold medallist Becky Scott. “It’s very much become part of our culture and it’s filtering down through our staff,” says CEO Rob Blanchard about the company’s community service and sponsorship program. The partnership forged between Haywood Securities, Scott and her teammates has fostered a new and surprising sense of spirit and pride within the company. Today Haywood supports the team to the tune of $150,000 per year and is halfway through a three-year personal sponsorship of Becky Scott worth an undisclosed amount. As for cashing in on Olympic fever and translating it into increased business for Haywood, Blanchard says he has neither tried to quantify it nor given it much thought. That said, Haywood has netted some unexpected benefits. Scott wears Lululemon clothes which sport the Haywood logo. She also writes a regular training diary that can be viewed on the company’s website and pays occasional visits to the Haywood office to speak with employees about training, achievement and excellence. And when Scott and other members of the cross-country team find their way onto the pages of ski magazines they often bring the Haywood logo with them. “If you flip through a cross-country magazine you’d be amazed at how many times you see the Haywood logo,” Blanchard says. “I wouldn’t say there’s a direct impact on our business but there’s definitely an indirect effect.” The firm has extended its sporting commitment to include grassroots cross-country ski programs for children at local mountains. It also added a summer sport athlete to its list of sponsorships: veteran Olympian and North Vancouver mountain biker Alison Sydor. “It’s amazing what these athletes do with basically no funding,” Blanchard says. “It’s not that much money but the coaches and athletes talk about it like it’s millions.” Haywood Securities isn’t the first company to recognize the value of backing an athlete, but does a world-class amateur athlete necessarily make for a savvy corporate ambassador? When things are going well it seems an athlete can do no wrong, generating enough media exposure and photo ops to leave marketers and advertisers salivating. But when things go bad, corporate sponsors stampede for the exit like people from a burning building. “There’s always a risk attaching your company to a single athlete,” says SFU marketing prof Lindsay Meredith. “You become that person and if your candidate has blood on his hands you’re going to share it.” [pagebreak] When sprinter Ben Johnson went down in the flames of a steroid controversy after his ill-fated gold-medal dash in Seoul, sponsors would have been “running not walking from the scene of the crime,” Meredith says. And McDonald’s probably didn’t anticipate that its cover boy, Olympic snowboarder and Whistler native Ross Rebagliati (a.k.a. “roll a fatty Rebagliati”) would be at the centre of a comical pot-smoking scandal at the Nagano Olympics. Oddly, the Rebagliati scandal almost morphed into a public relations positive for the Golden Arches when the telegenic snowboarder started doing the TV talk show rounds. Obviously pot doesn’t carry the same taboo as steroids. The lesson: choose your athletes carefully. In Becky Scott, Haywood Securities clearly has a winner. Photogenic, well-spoken and hardworking, Scott saw her bronze medal at the Salt Lake City Games raised to gold when the first- and second-place finishers lost their hardware after testing positive for banned substances. In early May, Home Depot Canada lost an Olympic sponsorship bid to its Canadian competitor Rona. However, Home Depot is far from out of the Games. Since 1996 the big-box building supply retailer has been supporting Canadian Olympic hopefuls – but not by the traditional, “We’ll give you cash to train and you’ll wear our logo” means. Home Depot seeks out athletes in training to hire as sales associates, pays them a full-time wage with benefits but only asks them to work an average of 20 hours per week. Among its roster of 25 athletes, Home Depot counts paralympic swimmer Walter Wu and women’s national team hockey player Danielle Goyette. There’s no doubt it’s a good deal for Home Depot. Not only do the athletes splash the company logo across magazine pages and on TV prior to the Olympics (athletes are forbidden from displaying their personal sponsor logos during the actual Games) but Home Depot adds disciplined, often inspiring personnel to its workforce. SPEND MONEY, LOTS OF IT Step aside, lightweights. Bell Canada, which last October became the first corporation to close a deal with VANOC, has set the sponsorship bar at a dizzying level. In a total sponsorship package worth $200 million, Bell Canada paid $90 million cash to acquire marketing rights, will supply $60 million in telecom support and infrastructure, and another $50 million for community sports development and First Nations initiatives. Like all top-flight sponsorships so far, the deal spans four Games from Torino next winter through to the 2012 Olympics, including the Paralympics. Bell executives are fond of saying that employees were high-fiving in the hallways after the company was invited to join the so-called Olympic family. The ‘Olympic family’ is indeed a tight-knit, some might say incestuous, tribe. The importance Bell places on its Olympic positioning can be measured in part by its hiring of Linda Oglov, a sports marketing specialist whom the firm seconded from Altius. She has her work cut out for her at this nationwide company and can only hope that employees are still high-fiving five years down the road. “The Olympics will be the platform for everything we do,” says Oglov, who has added VP of Olympic partnerships for Bell to her job title. “In Canada it is the premium brand to be associated with for the next six years.” The bid was a year in the making and now that the contract is in the bag, the firm must brainstorm exactly how it will press the rings and torch into service. That means cooperation and integration between business units and the scripting of expensive marketing campaigns to flog Bell’s Olympic association at every opportunity. But is it worth $200 million? The capital has to come from somewhere within the company and inevitably money must be transferred from one marketing project to fund another. SFU’s Lindsay Meredith is among those surprised by the magnitude of the deals VANOC has cut so far. But he agrees that in an age when the average consumer is assaulted by between 2,000 and 5,000 ads every day, a sponsorship deal that comes with exclusive marketing rights can be an effective strategy for cutting through the clutter. But hefty sponsorship contracts signed by the likes of Bell and RBC start to sound more palatable when you consider that they will amortize their investment over a span of eight years and four Olympic Games. “You have to make sure you’re holding hands with the right people,” Meredith cautions. He calls the Olympics a “gold-plated brand” that reaches an affluent, educated market well matched with Bell’s target. Gold-plated perhaps, but the Olympics are not beyond reproach. The judging and doping scandals that characterized the Salt Lake Games continue to taint this so-called pillar of athletic purity. An Olympics clouded in controversy can leave mud on the face of corporate sponsors simply by association. As Michael Budman of Roots concludes, “The power of the Olympics is only as good as whose hands you put it in. It’s not a no-brainer. It’s not as simple as one ‘poor boy’ hat, it takes creativity from within. And there are good sides and bad sides. Hopefully the Olympic movement has cleaned itself up.” THINK 2005 TO 2009 Long before Vancouver was officially awarded the Games, Mt. Washington ski resort president Peter Gibson was in Salt Lake City talking to coaches, event organizers, athletes and anyone else who would lend him an ear. He mined Utah for nuggets of wisdom that could help a medium-sized resort on Vancouver Island, which is a little removed from the heart of the action, to benefit from the Olympics should they come to Vancouver. In the midst of planning an expansion of its Nordic skiing facilities, the resort was looking well down the road, hoping to uncover growth potential that could be tied into the Games. Since its cross-country ski tracks are at roughly the same elevation and offer similar snow conditions to those found in the Callaghan Valley south of Whistler, future site of the 2010 Nordic events, the potential was easy to spot. The mountain would make an ideal training site in the run-up to the Games. In the next few years the resort plans to double its cross-country trails for a total of 100 kilometres. At the same time it will build a post-and-beam training facility complete with a dormitory and meeting rooms for visiting athletes, with hopes of luring both the Canadian and international Nordic teams. It’s a multi-million-dollar expansion, and Mt. Washington has applied to Legacies Now, a pool of provincial money intended to help heartland B.C. share in the Olympic lustre. At press time, the resort was still awaiting a decision. “We’re in such a great position to capitalize” on 2010, says resort spokesman Dave Hampshire. “We want something that will be around for athletes after the Olympics are over.” CREATIVITY INSTEAD OF CASH The beaches of Marina Island at the top of Georgia Strait where Brent Petkau harvests his oyster beds are about as far from Olympic hype as you can get. Yet Petkau recognizes a business opportunity when he sees one, and what he lacks in cash he makes up for with creativity and marketing ingenuity. [pagebreak] Five years ago when he joined the oyster trade, he faced two choices: attempt to compete with big producers which, in his view, was a price-gouging race to the bottom; or produce a pristine, delicious oyster, wrap it in a story and direct-sell it to high-end restaurants across Canada. So far that’s been the winning formula for this Cortes Island-based oyster man and his beach-grown bivalves. And along the way he has made valuable contacts with luminaries in the Canadian culinary world, icons like Ontario chef and former Food Network host Michael Stadtlander. At the invitation of Stadtlander, Petkau found himself in Vancouver last November at the Pan Pacific Hotel, shucking oysters for a $250-per-plate crowd at a Gold Plate Dinner; one of eight gastronomic events sponsored by the Canadian Olympic Committee to raise money for athletes. “There were a thousand people at this event. . . the exposure was fantastic,” Petkau reports. At that moment Petkau had an epiphany. He could use the 2010 Winter Games to help launch an idea that had been percolating for some time, that is to start cultivating Ostrea lurida, an overlooked species of oyster indigenous to the West Coast that happens to be known more commonly as the Olympia. Using culinary events similar to the Gold Plate Dinners, he hopes to re-introduce B.C.’s native oyster to seafood lovers at some point during the run-up to the Games, a gimmicky but undeniably clever way of cashing in on 2010. “I may be flirting with some sort of trademark issue,” he says with a chuckle. He admits he’s never been a huge fan of the Games but “they’re coming here so why not use the Olympics to promote something you believe in?” Professor Meredith calls this marketing through the “back door,” a way firms or entrepreneurs can steal a ride on the Olympic bandwagon without paying “heartbreaking” sums for sponsorships. So when you sidle up to the Olympic table you might be breaking bread with a lonely oyster grower from Cortes Island with a knack for low-budget promotion, or with the big boys at Bell Canada. Either way, if it works for you, dig in.