Will Olympic sponsors strike gold?

By Michael Brush

When the Olympics kick off Friday, you will witness the biggest sports advertising extravaganza in history -- along with, of course, some stirring athletic performances.

As NBC broadcasts a sprawling 3,600 hours of Olympics on seven networks -- and an unprecedented 2,900 hours of live events -- advertisers will spend more than $1 billion for U.S. airtime alone.

Is it worth it? No, the skeptics say. All those sappy, overly emotional ads evoking the Olympic spirit with the hope that some good will rubs off are just a waste of money.

But not so fast. A well-designed campaign can not only offer a boost to sales but also build substantial brand loyalty, according to some studies and marketing experts. In short: We're suckers for sap. We'll buy in.

• Video: Shoe companies look to cash in on Olympics

Plus, research and recent history suggest that the stocks of the companies advertising big at the Olympics -- such as General Electric (GE, news, msgs), Coca-Cola (KO, news, msgs) and McDonald's (MCD, news, msgs) -- will beat the market, as a group.

That theory is supported by an index Dow Jones set up to track sponsors of China's games; they've beaten the market for the past year by nearly 21 percentage points. Here's a closer look at what you might get from Olympic advertising as a consumer and as an investor.

The big spend

Here's a look at spending the last time around, for the 2004 summer games in Athens, according to Nielsen:

• The two biggest advertisers during the Athens games, AT&T (T, news, msgs) and General Motors (GM, news, msgs), spent about $141 million each.

• The next biggest, Coca-Cola, spent about $92 million.

• Anheuser-Busch (BUD, news, msgs) spent $74 million.

• The top 20 advertisers during the Olympics spent $1.6 billion to advertise on U.S. television.

Overall, the International Olympics Committee will collect $1.74 billion in broadcast revenue this year worldwide. It also gets an additional $866 million from Coca-Cola, McDonald's and other top sponsors.

Big audience during a slow summer

It's easy to see why companies flock to the Olympics. An impressive 26% of households watching TV during prime-time Olympic coverage in 2004 were tuned in to the games, according to Nielsen.

"The Olympics are a place where you know you are going to reach more people than anywhere else" during the slow summer months for TV, says John Consoli a senior editor at Adweek. "On some nights the Olympics will draw more viewers than all the other networks combined."

Plus, the Olympics bring in a lot of viewers who don't watch TV regularly. "Advertisers like that because it gives them an opportunity to meet some new potential customers," Consoli says.

Corporate puffery

But are advertisers really getting their money's worth? Some marketing experts aren't so sure. Rob Frankel, a branding expert and the author of "The Revenge of Brand X: How to Build a Big Time Brand on the Web or Anywhere Else," doesn't even give Olympic advertising a bronze medal.

"The ads are mostly high-level corporate puffery that does nothing to mobilize consumers," Frankel says. "Olympic advertising has little real value for the vast majority of advertisers."

In addition, the ads are expensive, and companies have to run a lot of them to stand out in the vast ocean of coverage, Adweek's Consoli says. The average cost of a 30-second ad during prime-time Olympics coverage in 2004 was $339,000, says Nielsen. (That's a bargain compared with the Super Bowl, where a 30-second spot cost $2.6 million this year.)

When you look at some of the Olympic ads, it's hard to see how they can make much of an impact on sales. Many of them don't even discuss products. Instead, many offer feel-good messages, associating brands with uplifting Olympic values such as global togetherness, hard work and sacrifice:

• One McDonald's ad portrays a warm message of world unity highlighting a song lyric: "The more we get together, the happier we'll be." Another salutes parents with the courage to give their children the freedom to be what they were meant to be. "That's nice -- McDonald's shares the spirit," quips Frankel. "But if you are really good guys, make your hamburgers healthier."

Continued: 'Go World'

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