To be an official partner in FIFA’s World Cup costs adidas close to US$80 million a year, and experts say it’s worth every cent.
This article is from the July 2014 issue of INTHEBLACK.
Australia’s national football coach Ange Postecoglou picked up the football and, as is his habit, twirled it between his hands as he instructed the Socceroos at training in the humid conditions of Cuiabá, smack in the geographic heart of Brazil, for the FIFA World Cup in June.
The ball in the coach’s hands was Nike-branded and the team, outfitted in their Dri-FIT Nike clothing, dribbled and kicked balls patterned with Nike’s trademark swoosh around the manicured practice field – as the international sporting goods conglomerate is the official partner of Football Australia.
Yet the ball the players used during their first match at nearby Arena Pantanal against group B opponents Chile, and throughout the month-long competition, was not Nike, but one manufactured by adidas.
adidas has had an association with FIFA (Fédération Internationale de Football Association) since 1970, and it’s so critical to the brand’s image globally that adidas has just extended its near US$80 million-a-year, top-tier partnership with football’s world governing body. The deal gives adidas naming rights to the World Cup referees’ apparel, advertising inside and outside the stadiums, and the ball, until 2030.
“This unique partnership and our extensive presence at all FIFA World Cups will help us to expand adidas’s position as the leading football brand worldwide,” says Herbert Hainer, chief executive of the adidas Group.
While the brand’s German roots have helped it to dominate the European market, adidas has been battling the marketing savvy of Nike in the developing world, particularly growth areas in Africa and South America.
So having Brazil host the World Cup has been a huge opportunity for adidas. This year adidas involved a million Brazilian fans in naming the World Cup match ball, which now has its own Twitter handle, #brazuca. And in a cute activation strategy, adidas delved into the Brazilian passion for the game by gifting balls to babies born on the day the match ball was launched – 3 December last year.
Tim Crow, chief executive of London-based sponsorship group Synergy Sponsorship, says it’s impossible to overstate the importance of the FIFA deal for adidas.
“Yes, it gives them global brand exposure and promotional rights, but what it says about adidas is even more important,” says Crow.
“Being the technical partner of the world’s most important football tournament is absolutely fundamental to adidas’s history, brand positioning and reputation – especially in football, which is their key battlefront with Nike. If they lost the deal to Nike it would be a disaster.”
Andrew Walsh, global director and football expert at London sports marketing research company Repucom concurs, saying adidas has an ‘‘exceptional advantage’’ by being the partner.
He says locking out the competition for another 16 years means any new competitor buying the rights “would really have to invest a considerable amount”.
Of course the Socceroos trained with the adidas brazuca in the lead-up to the tournament, but the Australian team management would have been mindful of the multi-million dollar deal it has with Nike through to 2023. Host team Brazil has an agreement with Nike worth US$60 million a year.
Concern about competing sponsors’ needs and moves to accommodate them are becoming more common in sport.
Just two years ago at the London 2012 Olympic Games, British distance runner Mo Farah and Tour de France sprint cyclist Mark Cavendish, both sponsored by Nike, faced contractual minefields. They had conflicting sponsors at personal, sporting federation, national Olympic Committee, London Organising Committee and International Olympic Committee (IOC) tiers. At one point they feared they would have to accept medals standing barefoot on the podium, lest it interfered with the official adidas contract signed by the British Olympic Association. (They didn’t.)
Certainly in Brazil 2014, it may be the case that some of the biggest stars in the game feel compelled to tape across any non-official headphones listening to their pre-match music, to circumvent contractual problems.
Brazil's Neymar prepares to train with a Nike ball.
And whenever you see players during the national anthem with hand firmly on heart, it may not be the patriotic act it appears, but rather a way to obscure a logo and keep the peace with other sponsorship deals that might be more supportive to them.
As far as adidas or Nike is concerned, having “their” team win the World Cup brings with it extra sales and, more importantly, future bragging rights.
“It could mean many millions of dollars to the bottom line,” explains Crow.
Companies engage in sponsorships for all manner of reasons, and global sporting events provide unique opportunities for exposure, brand association and goodwill. Spectators and global television audiences feel an increased sense of connection with the sponsor of their beloved sport because it is exactly that – their beloved sport. A connection based around passion is invaluable to a brand.
In 2014, CPA Australia became a sponsor of the Australian Open tennis tournament
, the first of the year's four grand slams, and will have a strong media presence at the Shanghai Masters in October. Former Chief executive Alex Malley says that for CPA Australia, sponsorship is all about members.
“Our members are in leadership roles in Australia, China and other key international markets, and we want the world to know about that,” he says.
“Associating our brand with events as significant as the Australian Open and Shanghai Masters is about highlighting that our members are relevant leaders in all our markets.”
William Jefferson, the global external relations director of Paris-based Havas Sports & Entertainment, says the breathtaking television reach of major sporting events like tennis, golf – and of course the World Cup – means big brands can’t afford not to have an association.
“Fast-moving consumer brands look at that impact and say we need that, we need to be associated because it is such an important property,” he says. “For some sponsors it is not so much the actual event, but the events all around it. Many of the brands have already been activating their campaigns a year or even two years before.”
Jefferson says brands have drawn inspiration from Brazilian culture and expanded it across core concepts of friendship, aspiration and happy feelings for their marketing campaigns.
"Our members are in leadership roles in Australia, China and other key international markets, and we want the world to know about that." – Former CPA Australia chief executive Alex Malley
Coca-Cola (as part of its 16-year, US$500 million deal with FIFA) has taken the FIFA trophy around the world. Castrol (which has a six-year deal worth US$120 million) promoted ticket competitions to its service station operators.
Gillette produced razors in team colours. McDonald’s (with a seven-year contract worth US$40 million) encouraged customers to tweet pictures of themselves in moments of “happiness”.
And in a nod to Brazil’s rhythm and dance, Sony (with a seven-year deal worth US$300 million) launched a song video competition with the winning entry performed by Latino pop star Ricky Martin.
Official vehicle supplier Hyundai-Kia (with a US$350 million deal over 15 years) activated its global sports campaign, Glorious Journey, and invited fans to submit slogans for each team’s official bus to win a trip to the tournament. The winning Japanese entry was: ‘‘Samurai, the time has come to fight’’. South Korea? ‘‘Enjoy It Reds!’’
It may seem counter-intuitive, but being shut out of FIFA has actually been a benefit for Nike, says Crow, “because it forced them to build a strategy that doesn’t need FIFA, by involving national teams, star players and, above all, high-impact campaigns around World Cups and other major events”.
Nike has endorsements with arguably three of the biggest names in world football – this year’s Ballon d’Or winner Cristiano Ronaldo of Portugal, Frenchman Franck Ribéry and home country hero, Brazil’s Neymar.
This has been a ground-breaking lesson for other brands to follow.
“They have shown it’s perfectly possible to create a World Cup-themed campaign at scale without being a FIFA partner,” says Crow.
“But no question, there are a lot of competitors of FIFA sponsors who would jump at the chance to become a FIFA partner.’’
But amid the hype lies an undercurrent of concern that this particular World Cup poses far higher reputational risks amid an increasingly unstable environment. Before the contest began, protests flared across Brazil about the US$13 billion cost of hosting the event and building the stadiums.
Jefferson says that at sponsorship gatherings ahead of the World Cup it was clear that companies had prepared strategies to counter the two possible downsides to the tournament: stadium and infrastructure issues, and social unrest. It was critical that the tone and context of a brand’s pitch throughout the World Cup was absolutely spot on.
Coca-Cola’s marketing budget was boosted by US$1 billion specifically for the World Cup, but after demonstrations in Brazil during last year’s Confederations Cup, Coca-Cola’s global executive vice president commercial and marketing, Joe Tripodi, noted his company’s plans to react quickly to any social divisions.
“We certainly hope there is no unrest but these things happen,” he said.
Last year’s expansive unrest magnified attention on how much money was being spent on the World Cup compared to Brazil’s transportation chaos, its ineffective health services, its poor education and the worry of ongoing corruption and gang violence. The anarchy group Black Bloc signalled it would continue public disruptions while the World Cup was run.
The Brazilian Government has tried to calm fears by deploying 7000 military police in Rio de Janeiro to create a sense of order, secure tourist areas and provide a ring of protection around the famous and redeveloped Maracanã stadium, the venue for the final match.
The pay-off? The Ministry of Tourism says the country will benefit from a projected US$3.03 billion to be spent by visitors attending the competition.
Beijing’s Olympic gold
The Beijing Olympics in 2008 marked another watershed in international sports sponsorship, with the 12 official Olympic partners providing more than US$850 million in sponsorship money.
“The attractiveness of the Beijing Olympics is summarised nicely by the two words: Olympics and Beijing,” says John Zhang, a marketing professor at Wharton, the business school at the University of Pennsylvania.
In a 2008 report, Navigating Olympic Sponsorship, Zhang wrote that Olympic Games offer “a rare advertising opportunity for a global company to reach billions of potential customers … competition, strength, perfection, beauty and endurance are Olympic values corporations like to associate themselves with.”
That effect was multiplied by the mammoth Chinese consumer market emerging at the time. The Wharton report concluded that companies used the Beijing Games, more than any other, as an opportunity to position themselves in China.
“With that many customers in front of you and the many business opportunities they represent, you do not worry about your return on investment,” says Zhang, “you only worry about being outspent by someone else.”
This article is from the July 2014 issue of INTHEBLACK.