Techscape

Official sponsors who pay millions see ambush marketers as … ring dings

An executive from AT&T recently spotted an MCI commercial that featured the image of a runner with an Olympic like torch. The spot introduced a promotion offering customers the chance at a trip to Barcelona in late July–in time for the start of the Summer Games.

Shortly thereafter, the U.S. Olympic Committee received a call from AT&T. The telecommunications giant had paid $4 million to become an official sponsor of the 1992 U.S. Olympic Team and wanted to make it clear that it didn’t appreciate the Olympic-themed advertising of its rival, which is not a Games sponsor. Following talks with the USOC, MCI pulled the commercial.

Instances of marketers trying to take a free ride on an event are nothing new. But because the Olympics offer a unique mass-market spectacle and a chance to tap into a worldwide market, the Games draw more “ambush marketing” than any other event.

Such unofficial tie-ins have become the bane of the International Olympic Committee and the Olympic committees of each nation, which are charged with selling official sponsorships. These organizations can’t afford to have the investments of their marketing partners diluted by outsiders.

“For anyone to come along at the eleventh hour and create confusion in the marketplace as to who has an Olympic sponsorship is absolutely unconscionable,” says John Krimsky, deputy secretary general and marketing chief of the U.S. Olympic Committee and the organization’s top cop when it comes to enforcing official sponsorships. “By looking for a near-term opportunity to violate what someone else has bought, they’re trying to diminish the value of Olympic sponsorship. Who gets hurt? The athletes. That’s not ambush marketing. It’s parasitic.”

The ability of non-sponsors to buy media on Olympic telecasts became a source of controversy earlier this year during CBS’ coverage of the Winter Games from Albertville, France. American Express received a call from the USOC about ads featuring Alpine scenes and the line “winter fun and games.”

No matter how staunch the anti-ambush posturing, the Olympic Games are simply too big a property to be encircled by an ironclad perimeter. The purchase of umbrella sponsorships from the lnternational or U.S. Olympic committees affords only the price of admission. The mar- keter is then responsible for creatively leveraging its tie among 160 countries and 10,000 athletes. Each sport is under the control of national governing bodies which, in turn, sell their own sponsorships

Domestically, there are two backdoors for unofficial marketers seeking Olympic tie-ins national governing bodies (NGBs) and star athletes. The much-hyped U.S Olympic basketball is a prime example of a secondary sponsorship buy. With a roster of NBA stars, the team drawn corporate partners like McDonald’s, AT&T, Visa, IBM and Quak er Oats’ Gatorade brand. The tie has been supplemental for established Olympic sponsors such as Visa and McDonald’s. But for a non-Olympic Sponsor like Gatorade, it offers the chance to show endorser Michael Jordan in a Team USA uniform.

Similarly, the Athletics Congress (TAC), the governing body for track and field, has held a high sponsorship value, and its events have been a major focus of every summer Olympiad. This year Fuji Photo Film USA has heralded its ties to the TAC–to Kodak’s chagrin–with a “Commitment to Excellence” promotion with free-standing inserts and coupons, and print ads featuring decathlete Dan O’Brien.

Nike Inc. also brandishes a TAC sponsorship, outfitting the team in spite of Reebok’s official Olympic sponsorship.

Nike is another company using the backdoor. In addition to a contract with the Athletics Congress to outfit the U.S. team, the No. 1 athletic-shoe maker has tie-ins with Jordan and several other Olympians.

“If you’re Coke or Chrysler, it’s more efficient to just throw a single lever in the form of a big mega-sponsorship, but Nike takes a more holistic approach,” says Scott Bedbury, Nike’s director of advertising. “For a company that is all about the authenticity of sport, you find yourself on par with a lot of companies that have nothing to do with sport. We don’t benefit from that kind of association.”

It’s hard to convince organizations to share the wealth they garner as premier NGBs.

“There’s no such thing as a seamless sponsorship,” says John Bevilaqua, president of the Atlanta-based sports marketing consultancy Bevilaqua International. “You can buy up all worldwide rights, lock up every NGB, and I can still go out and sign up Florence Griffith-Joyner and take her to every mall in the U.S.”

Coca-Cola, the Olympics’ perennial No. 1 corporate partner, may be a victim of such a scenario. The company paid the IOC $33 million for worldwide sponsorship, bought some $40 million worth of media on NBC’s Olympics broadcast and spent several million dollars more to lock up 22 U.S. NGBs. While Coke positioned the latter agreement as representative of its commitment to U.S. athletes, one source close to the company calls it “purely a defensive move,” to keep PepsiCo from using backdoors.

Pepsi, however, found another way by tapping Magic Johnson of this year’s Olympic basketball team for a campaign building into the Olympics. Coke’s media package with NBC blocks Pepsi from the network’s coverage, but Pepsi will break its campaign next month as a preemptive strike.

Some Olympic marketers concede that standing deals are valid. Nike, after all, has had Jordan and fellow NBA stars under contract for years. Miller Brewing Co., which split the beer category on NBC with official sponsor Anheuser-Busch, is running TV advertising highlighting its sponsorship of the U.S. Olympic volleyball team.

The USOC’s Krimsky is prepping what he calls his “ambush patrol,” a team of lawyers across the country, for battle this summer, and Pepsi may be the first opponent. “If a soft-drink company ambushes our soft drink sponsor, then all sponsors are infringed upon,” he says. “That might well result in, say, our official airline discontinuing its business with a certain soft-drink supplier. Or if it’s a credit-card company ambushing Visa, our airline or other service sponsors might consider discontinuing acceptance of a certain other card.”

Sponsors and Olympic officials alike feel that the Games are no game.

“Ambushers imply Olympic sponsorship, and that they’re supporting athletes,” says Peter de Tagyos, director of Olympics and corporate sponsorships at AT&T. “In fact, the more effective their ambush, the more they take away. It’s like going into a job interview and talking about how tough grad school was when you only have a high school degree. It’s false advertising.” Cashing In on the Olympics

SOFT DRINKS

Official: Coke ($33 million). Plus some $40 million in NBC Olympic media, plus some change on 22 NGBs. Coke will use Randy Travis and Natalie Cole.

Unofficial: Pepsi will reintroduce Magic Johnson, recently retired NBA legend and member of the U.S. Olympic hoop team.

CREDIT CARDS

Official: Visa ($20 million). Also a USAB sponsor, Usage-incentive program, plus “They don’t take American Express” ads.

Unofficial: AmEx last winter broke ads with an Alpine look and a message of “winter fun and games.” Who knows?

TELECOMMUNICATIONS

Official: AT&T ($4 million). Also USAB sponsor. Advertising features vignettes of real-life athletes.

Unofficial: MCI hooked time on NBC, but one “0lympicized” spot, with a runner offering a trip to a Spanish city, was nipped in the bud by the USOC.

SNEAKERS

Official: Reebok ($3 million, official supplier). Used Super Bowl media as launch for “Dan & Dave” campaign, gambling huge media schedule on two unknown decathletes.

Unofficial: Nike, longtime sponsor of the Athletics Congress, doesn’t need Olympic tie because it has contracted so many top Olympians in two of the biggest fields, track and basketball.

FILM

Official: Eastman Kodak, worldwide sponsor (est. $20 million). Running Olympic”scrapbook” ads.

Unofficial: Fuji Photo Film USA has this year heralded its ties to TAC, to the chagrin of USOC sponsor Kodak, with a promo, FSIs, coupons and print ads featuring U.S. decathlete Dan O’Brien.

Green light for drug ads

Prescription drug companies have stepped up direct-to-consumer advertising, with the blessing of the American Medical Association, which has removed its ban on this kind of advertising. UpJohn was the first company to target consumers four years ago when it put Rogaine, a hair-loss remedy, on the national air waves. The largest direct-to-consumer ad category to date is the nicotine patch. Marion Merrell Dow, Ciba-Geigy Ltd, American Cyanamid and Warner-Lambert have invested over $100 million ad dollars in this product.

The American Medical Association has given license to a growing and aggressive breed of consumer advertiser–prescription drug makers. At its semiannual meeting in Chicago last week, the group scrapped a longtime ban against direct-to consumer advertising to allow educational pitches.

It’s not that drug marketers needed the AMA’s blessing. Driven by intense competition, they have been pushing the limits of prescription-drug advertising in recent years. Pharmaceutical companies are increasingly shifting their target from physicians to consumers, and they are using mass-media strategies to build their brands.

Upjohn Co. started the avalanche of direct-to-consumer advertising four years ago with its Rogaine baldness treatment. Other companies have been following in droves. Glaxo Inc. is said to be considering a consumer ad campaign for its Sumatriptan migraine remedy, now awaiting federal approval. Earlier this year Marion Merrell Dow Inc. broke an $8 million print and cable TV campaign for its new once-a-day cardiovascular drug, Cardizem CD. Ads target consumers who now take the drug twice a day.

But those campaigns pale next to the $100 million ad war over nicotine patches. The big-bucks competition for consumers is expected to propel that category to $400 million in sales by 1995.

“There’s a tremendous opportunity here for some products,” says securities analyst Barbara Ryan of Alex. Brown & Sons in New York. “People generally want to have more input into their health.”

Upjohn can certainly attest to that. With the introduction of Rogaine, the company went beyond its traditional audience of doctors and appealed directly to end users– balding men. This year Upjohn began pitching women as well. Worldwide sales of Rogaine grew from $87 million in 1988 to $143 million last year. Direct response to the company’s 800 number rose from 165,000 in 1989 to more than one million last year.

“In 1988 the bulk of the advertising campaign focused on building general awareness,” says Ellen Miller, executive director of Upjohn’s dermatology division. “We used up a lot of national airtime. Now we’ve narrowed the focus and do more direct response. We’ve learned how to reach out to those who are really concerned about hair loss.”

The more recent battle of the nicotine patches have brought Marion Merrell Dow, Ciba-Geigy Ltd., American Cyanamid Co. and WarnerLambert to the national airwaves. Marion Merrell Dow, the first to receive federal approval, has been the most aggressive. It spent about $1 million to pitch its Nicoderm patch on CBS’ Super Bowl coverage in January. With WarnerLambert set to enter the fray next month with Nicotrol, total ad spending for the category should reach $100 million.

Upjohn’s Miller expects the consumer-advertising boom to continue, as doctors have less time to spend with sales reps and consumers become better educated. “You’re dealing with a different type of consumer these days,” she says. “They want to be a participant rather than someone who merely takes instructions and follows orders.”

The last waltz

New Yorkers have rolled out the red carpet for state delegations attending the 1992 Democratic Convention. City officials hope that, by spending $21 million on civic improvement – hotel facelifts and courses in police etiquette, they can capitalize on media coverage of the convention to win $200 million in badly needed tourism dollars in 1992. The Republicans, on the other hand, see a perfect opportunity to equate the city’s tawdry image with the moral decay of the Democratic Party.

Goons riot when mob boss John Gotti draws a life sentence. The feds are reviewing charges of police corruption. And a rogue arsonist has been torching hotels.

It’s summer in New York.

Some say the only difference between Sodom and Manhattan is that Lot’s wife had a better view. But when Kansans headed to the Democratic National Convention de-plane July 12, Sodom itself will welcome them with arms outspread.

“The Kansas delegation will be treated so well, they won’t have to buy a meal the whole time they are here,” vows Mary Holloway of the Association for a Better New York, the civic group hosting the Kansans. One stop: the East Side penthouse apartment of real estate mogul Lewis Rudin. Among the party favors will be a video called New York, a Really Great City.

Kansas, of course, is just one crew. Countless receptions, parties and special events showcasing New York’s brighter side have been planned for the 4,492 delegates, their families and the 15,000-odd news folk who will descend on the city.

New Yorkers know the drill. The convention, which runs from July 13 to 16, is a chance to flex the city’s tourist-mecca muscles. So thousands of volunteers have been enlisted. Convention site Madison Square Garden and Midtown hotels have been spruced up. Police have taken refresher courses in direction-giving and other friendly cop-on-the-beat behavior.

In all, the city has spent some $21 million to make a good impression. The payback? Some $200 million in tourist dollars.

But even more is riding on good reviews. Staggered by the recession, the city needs tourists like never before. The state, in trouble itself, chopped its tourism budget by more than half this year, to just $5.2 million. So the city is relying on the free media the convention brings. And a kind word or two. “Several thousand delegates–people influential in their home states–will be here,” stresses Stephen Morello, deputy commissioner for marketing at the state’s Department of Economic Development. “We intend to show off New York as a place to do business and as a vacation opportunity.”

Not an easy sell. In the spin-doctoring hands of the Republicans, the city and party both represent moral bankruptcy and anything but the real America. Designated GOP rock thrower Dan Quayle recently trashed the convention, thundering how “liberal Democrats chose the perfect site–almost as if they feel a strange compulsion to return to the scene of the crime.”

Publicly, Democratic and city officials herald their pairing. Both sides cite 1976, when the New York convention spawned a successful candidate–Jimmy Carter–and a civic rebirth. “The city was on the verge of bankruptcy,” says Anne Reingold of the Democratic National Convention Committee. “Hosting a convention was important, psychologically and economically.”

Neither side mentions 1980, when New York hosted the convention that led to the Reagan era. But informally, Democrats sigh about New York’s negative associations. And the city could well ask whether/t wants to de-couple. The party has faded so swiftly that, come November, its nominee, Gov. Bill Clinton, could easily run third to President Bush and H. Ross Perot.

To both partners, then, the convention is mostly about image. Convention organizing group NY92 has scripted a careful agenda, starting with volunteers shuttling delegates from the airports to their hotels. On Sunday civic groups will host 56 delegation parties. The convention books up Monday through Thursday nights. But during the days, special events will keep delegates from wandering. “We hope the media will focus on these events, too,” says NY92 consultant Ken Sunshine.

Only if they must. For New York, the safest fallback is the old PR credo: “There’s no such thing as bad publicity.”

The band that’s a brand: The Grateful Dead line of products

Jim Lewis, a twenty something North Carolinian with a taste for psychedelic rock ‘n’ roll, is out there pitching in the parking lot of Giants Stadium in East Rutherford, N.J. He’s selling decal likenesses of Grateful Dead lead guitarist Jerry Garcia for $2 a pop, in the time-honored tradition of making “tour money”–enough bucks to buy tickets to the Dead’s summer shows.

That the decals infringe on merchandise licensed and controlled by the Dead doesn’t disturb Lewis. “I’m just supporting myself on tour, man,” he says. “These guys make enough money without worrying about me.”

For 26 years–longer than Lewis has been alive–the Grateful Dead have played anything but commodity rock. Yet the band’s enduring popularity has built its euphonious name and distinctive logos into some of the rock world’s most lucrative commodities.

The Dead have mastered marketing nuances with a facility that brand managers can only respect. By responding to tour inquiries, they compiled a fan database. By exercising artistic quality control and applying their trademarks judiciously, they built a brand that confers immediate cachet. And they have easily crossed the great generational divide that has stymied so many youth brands. Not only do Dead shows attract fans from 15 to 50, but merchandise now extends from adult items like $500 skis to $25 children’s toys.

Despite having just one Top 10 song in their lengthy career, the Dead was the country’s top money-making band last year, according to Pollstar magazine, grossing $34.7 million in 76 shows. The Licensing Letter estimates the band sold more than $10 million in licensed merchandise at its concerts in 1990, fourth among rock acts. But with the Dead the only group able to consistently sell out stadium venues, publisher Ira Mayer says it’s safe to rank them as rock’s top merchandiser this year.

“The Dead have a constant level of appeal that has nothing to do with records,” says David Bluestein of Brockum, the Toronto merchandising company that holds the rights to sell licensed Grateful Dead paraphernalia at concerts. “They are always touring. So their stuff sells all the time. I have eight Metallica T-shirts that are selling great right now. But I have 40 Grateful Dead shirts that always sell.”

The band’s merchandise goes well beyond T-shirts and posters. Its traditional “Skull and Roses” emblem can be found on a variety of kitsch sold in Anymall U.S.A. The Deadheads’ ubiquitous tiedyed T-shirts have become enough of a staple to sustain dozens of boutiques. “No band has ever generated this kind of subculture and loyalty,” says Jim Errico, who owns two New Jersey clothing stores that take their name from the 1973 Dead song “Eyes of the World.”

Grateful Dead Merchandising was formed in the mid-1980s when contractual rights to the Dead’s older recordings reverted to the band. Starting with a few records, decals and a calendar, GDM now sells more than 100 licensed products through a catalogue that had a print run of 150,000 last year. There’s also a toll-free sales number, 1-800-CALDEAD. While declining to discuss dollar figures, Patricia Harris of GDM says sales are up more than 300% since 1988.

GDM’s 34 Dead and Dead-related recordings represent about 80% of sales. But there’s a wide selection of Dead tchotchkes. A recent catalogue offers trademark-embossed ceramic mugs, playing cards, address books and license-plate holders. Corporate Deadheads can buy three patterns of neckties, as well as a tie tack. For the most upscale, there’s a wool and leather Grateful Dead varsity letter jacket ($250).

In recent years major manufacturers have sought out GDM. This fall Olin Skis of Stowe, Vt. will be selling a limited edition of downhill skis beating the Dead insignia, at $499 a pair. That’s for starters. Olin plans a line of “Lunatic Fringe Gravity Control Devices,” featuring Deadified snowboards, skateboards and rollerblades.

Perhaps GDM’s neatest merchandising triumph has been its push of a teddy-bear 1ogo to supplant the band’s traditional skeleton motifs. That’s helped tap new markets, with kids’ wear and six different colors of plush bears. “We’ve been trying to find stuff for women and children,” says Harris.

The rise of Dead marketing has created a small but constant tension between professional merchandisers and fans like Lewis who sell their own Deadwares. At any Dead concert, hundreds of vendors will be selling all manner of unlicensed memorabilia, from Dead yo-yos to beach towels. T-shirts often infringe on two trademarks by using popular cartoon characters. Near Lewis at Giants Stadium, a vendor was selling a Bart Simpson shirt with the caption “Grateful Dude.”

“The band always wants to know why the bootleggers have better shirts,” sighs Bluestein. One reason: the Dead won’t let Brockum use their likenesses or song lyrics. Many unlicensed properties contain both.

The Dead maintains an official policy discouraging vending at concerts. But a real crackdown would kill the goose that laid the golden egg. So the pros defer. “When the Dead started, no one paid royalties,” Bluestein says. ‘The licensed guys like us are the new guys on the block and we know that.”

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