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Monday, August 18, 2008

Visa's Exclusive Olympic Sponsorship Backfires

There is a myth in marketing today that many people blindly believe about sponsoring events ... that you always need exclusivity. The benefits of being an exclusive sponsor are easy to list, but there are some less considered negative aspects that could end up doing more harm to your brand than good. Let's look at the stories of a worldwide Olympic sponsor for whom the strategy of being an exclusive sponsor may not be such a good idea ... Visa.

Just about every Olympic traveller here in Beijing has a story to tell about one really annoying moment when they were trying to pay for something and learned that at all Olympic venues the only card they could use was a Visa and no other type of credit card. The fact is, people already have decided on their credit cards before arriving at the Olympics. Hardly any first time Olympic visitor is going to know that Visa is the only card accepted at the Games, and arriving here to learn this fact can make life very difficult and expensive. In addition, business travellers are often locked into a particular kind of credit card to use for work and finding that they cannot use it is a very big inconvenience that is blamed on Visa. The end result is lots of negative experiences and consumer anger against Visa, including several people I spoke to who even said they would NOT get a new Visa card because of this tactic. The incremental sales and revenue for Visa cards at the Games may be good, but the word of mouth generated for Visa at the world's largest sporting event is nearly all negative.

Another example of the down side of exclusivity from the Olympics is what I remember from Foster's sponsorship of the Games in Sydney. If you are among the many people in America who think Fosters is actually an Australian beer, let me burst your bubble. It is an American beer and before the Olympics in Sydney, you could not find it anywhere in Australia. During the Sydney Games, lots of Americans travelled to Sydney, which Fosters knew, so they purchased a large sponsorship where they were one of two kinds of beer served at events. I went to one beach volleyball event and vividly remember one side of the beer stand with the Aussie beer sold out, and the Fosters side with lots of stock untouched. It was an embarassing moment for Fosters. Added to that was all the Australians who talked about how Fosters was not, in fact, Australian.

There are likely many other examples of brands that should think a bit harder about whether an exclusive sponsorship actually makes the most sense for them. Don't get me wrong, sometimes exclusive sponsorships can work very well, if the strategy aligns with the experience offered and way that the brand is integrated into the event. Adidas' sponsorship of the Olympics works because they supply all the uniforms and custom made gear. Omega's sponsorship works because they are the official timepiece at an event were time really matters. Not surprisingly, I think Lenovo's sponsorship of the Games works for a similar reason. Ultimately, there are some brands who can realize the benefit of exclusivity and some that cannot. The trick is understanding where your brand fits before you drop a big chunk of your marketing budget into an exclusive sponsorship that won't deliver the way you expect.

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Comments

Don't you think that the Olympic brand itself has been sold out to the Chinese this year?

Hasn't Visa been the "only card accepted" for, like, decades? How is this a shock to anyone?

DW

David,

As marketers we pay attention to things like that, but the vast majority of people don't.

Rick,

I wasn't a marketer when I was 10 years old seeing those commercials. Everyone saw them ...

DW

I'd have to agree with Rick ... though lots of people likely saw the Visa commercials, my experience in talking to people here leads me to conclude that they didn't put the pieces together to realize the Visa would be the ONLY card accepted at the Games. If you think about most other sponsorships, none dicatate what you can or cannot use to the same degree as Visa. United may be the official airline, but you can still fly others to Beijing. Kodak may be the photo sponsor, but you can still buy batteries or chargers for other kinds of cameras. The list goes on. From what I could see at these games, and what I remember from the Sydney games, people simply don't expect that they cannot use any other card at the Games and are ticked off when they get there and realize it.

When I saw/heard the Visa commercial touting it was the only card accepted at the Olympics I thought to myself, "that is ridiculous!" I immediately thought how inconvenient that would be for many visitors. Just think how much extra money they are paying for exclusivity just to piss a bunch of people off.

Hey Rohit, nice meeting you tonight here in Singapore! I totally understand what you're talking here, since I work for Mastercard :p just kidding, great story!

I couldn't agree more with this Rohit. My guess is the exclusivity of the games is institutionalized inside Visa headquarters. They are probably too afraid to pull out of the commitment and blindly spend the cash year after year on something that lost its usefulness yeas ago. They just see the $ from forcing people to use their card, whereas the ill will of a forced choice is invisible.

Very nice article. Knowing this would help Marketers making more shrewd decisions..

Great post, Rohit. I'm linking to it from a post I was drafting regarding Visa's "Go World" campaign on The Responsible Marketing Blog (http://responsiblemarketing.com)

Keep up the great work.

Patrick Byers

Fosters is definitely an Aussie beer. What's this about it being an American beer? THat's sooo wrong!

Rohit - I think you have raised a great point. In the case of Visa, it appears exclusivity has come at a great price. Thanks for sharing.

p.s. - Fosters is an Australian Beer.

Good insight. It seems a lot of times exclusivity is expected as part of the standard sponsorship package (and many times is worth every penny), but as you point out... it's definitely wise to take a step back and consider whether exclusivity is necessary w/respect to such issues as a sponsor's competitive position, exclusivity benefit/additional fee payoff, consumer experience, etc. Another point to consider is that from the property side limiting participation to exclusive partners provides a stronger position in renegotiating sponsorships with current partners and their competitors.

Kris I SponsorPitch.com

This discussion is ridiculous, because, when you need a credit card, what choices do you have? It's like you can live without Visa card, but you cannot live WITHOUT credit card. This rule applies to many things that surround us. For instance, Intel & AMD for PC. or ABC, CBS, and NBC. At the end, it is the choice for individual what card they use, or what PC they buy. But those are commodities for people like us.

Actually, Fosters IS an Australian beer. The Fosters sold in the US, however, is brewed in Canada. It is different than the Fosters sold in Australia, which was widely available in Australia prior to the Sydney Olympics, BTW.

That said, Fosters is not a popular beer in Australia, as any proud beer-drinking Aussie will tell you, and the Australians do indeed scoff at the American Fosters, which my Aussie cousin described this way, "Fosters is a lot like making love in a canoe. It's #$@%ing close to water."

This rings VERY true, and I can see that exclusivity could well have backfired on Visa.

Similar cases abound - and we as Marketers should be alert to the perils.

While this just might paint me as a drinker (which I am), I am especially peeved when I can't get my favourite brand of beer at a sporting event sponsored by another brewery, and when I'm told by some smug barperson that "we don't stock your brand"!

An interesting conflict arises when a sporting team or sportsperson is prevented to display their Sponsors' logos because the competition or venue is sponsored by another Brand.

From a marketing standpoint, Visa hasn't been very smart in its advertising. Their current tv ad campaign that shows shoppers who use cash instead of their Visa credit card are nincompoops is completely out of sync with the credit crisis and the need for consumers to reign back on indiscriminate use of credit cards.

From a marketing standpoint, Visa hasn't been very smart in its advertising. Their current tv ad campaign that shows shoppers who use cash instead of their Visa credit card are nincompoops is completely out of sync with the credit crisis and the need for consumers to reign back on indiscriminate use of credit cards.

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