Why This Company Really Sponsored the Olympics
Chris is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Take a moment to recall the commercials during the Olympics. Visions of swimmers Michael Phelps and Ryan Lochte likely fill your mind. You probably remember how commercials were filled with inspiring music, intense athletic sequences, and the crowd break into thunderous applause.
Companies like Coca-Cola (NYSE: KO), McDonald’s (NYSE: MCD), and Visa (NYSE: V) own these commercials. All three are consumer companies who are trying to rapidly expand overseas.
Coke has been pushing its international strategy for years, and it has long been a large sponsor of the Olympics. The same goes for McDonald’s, who has seen tremendous international growth and who hopes to continue that growth. McDonald’s aims to cater to the local tastes of its consumers, as it attempts to become their restaurant of choice.
And don’t forget Visa, who hired Michael Phelps to give it notoriety. Visa, which is “everywhere you want to be,” wants to be across the world and in the wallets of internationals.
One company that you would not expect to sponsor the Olympics is business-to-business firm Dow Chemical (NYSE: DOW). Dow became a sponsor in 2010 in exchange for cash and donations to the Olympics. Since then it placed its logo on 500 cabs and numerous billboards throughout London and even aired a TV commercial featuring a man walking around in a giant grass-like outfit.
Why would a business-to-business company want to do this? There are three reasons.
1. Hire Top Employees
Dow hopes to become a more prestigious firm by sponsoring the Olympics, and it hopes that its newfound name recognition will help to gain it top talent.
2. Woo Clients
Dow had a suite in London specifically to entertain 1,000 of its best clients, executives representing a total of $30 billion in sales for Dow. Dow hoped to “wine and dine” its best clients to keep their business, and it also purchased Olympic tickets for its best clients.
3. Win Infrastructure Deals
This was Dow’s major motivation for sponsoring the Olympics. Since sponsoring the 2012 games, Dow was able to get the contracts to build adhesives for the running track, recognized as the fastest track ever built (this is a very interesting read), and it also built the cabling for the power and broadcast operations – no small task.
Since sourcing the Olympic deal, Dow has also procured contracts for every competition venue for 2014 when Russia hosts the Winter Games. What’s more, Dow will already be on the ground in Russia and will have experience working with the Russian government and other Russian contractors. Now Dow Chemical has a chance to grow its business operations in Russia.
And let’s not forget about the 2016 games in Rio de Janeiro, Brazil. The Olympic contracts are just a starting point. Eventually Dow hopes to gain more contracts in Brazil. And come 2018 there will be another Olympic games in another part of the world, giving Dow a first shot at gaining even more business.
Dow’s Vice President of Olympic Marketing, Amy Millslagle, says it best: "It allows us to hear of these opportunities probably sooner than others…while we had issues, all sponsors have issues,” and “the benefits far outweigh all the issues that come with it.” Finally, Millslagle says: “It was 100% worth it.”
For Dow, whose goal is to produce $1 billion in new sales as a result of the partnership, it certainly was 100% worth it.
ChrisMarasco has no positions in the stocks mentioned above. The Motley Fool owns shares of The Coca-Cola Company and McDonald's. Motley Fool newsletter services recommend McDonald's, The Coca-Cola Company, and Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
