How Brands Intend To Capitalize On The 2016 Olympics In Rio

Rio Olympics 2016 Zika
The 2016 Rio Olympics will begin on Aug. 5.
Toby Neilan.

Athlete withdrawals. Political instability. Violence. Pollution. Zika.

The headlines surrounding the Rio de Janeiro Games have many people on edge heading into the 2016 Summer Olympics, which kick off in less than three weeks.

But athletic players and marketing insiders stress that there is still a big opportunity to create brand awareness — and dollars.

“Yes, there are negatives, but there were also negatives going into [the 2014 Winter Olympics] in Sochi [Russia] that dissipated,” said Bob Dorfman, a sports marketing expert and executive creative director of Baker Street Advertising. “Overall, it’s still going to be a huge global event. If you’re a sponsor and have a four-year deal for $100 million, you can’t focus on [the unfavorables].”

In fact, many brands are going all-out this year, but executives stressed that a multipronged approach is key. One thing all experts agree on is that a successful presence in Rio needs to include a serious community component.

As an official sponsor, Nike is taking the lead in that area. The brand has outfitted 22 sports and recreation sites, or Olympic Villages, around Rio with equipment and training for coaches. Four of these locations have received major renovations, including the Encantado village in a depressed Rio neighborhood.

“The villages serve about 25,000 kids in total,” said a Nike spokesperson. “In the next five years, we are looking to increase this number to 50,000 kids.” Nike declined to address how the Zika virus or the other issues had affected its marketing plans, but the brand will be competing in Rio without some of its biggest athletes, including golfer Rory McIlory and basketball star LeBron James.

Michael Colangelo, assistant director at the USC Sports Business Institute, said that to offset the overall pessimism around the Summer Games, a local presence is crucial for Nike and every athletic company.

“Brands should promote their community outreach as much as possible,” he said. “If they put in programs to help the people of Brazil, whether it’s with health care, building youth sports facilities or just basic community outreach, then they should promote that they care.”

Under Armour, one of the newer Olympic advertising heavy hitters, said a key element of its entire program was promoting fitness and bringing sports to the people of Rio.

Peter Murray, VP of global sports marketing, said Under Armour aims to make the Olympics, set for Aug. 5-21, an inclusive moment. It plans to host pop-up fitness classes around Rio and has partnered with local groups on various workout stations on a 50-mile stretch of beach that debuted in April and will stay open into 2017.

Under Armour will also host VIP events for guests to mingle with its roster of athletes, including swimmer Michael Phelps, the U.S. women’s gymnastic team and Wimbledon tennis champion Andy Murray. (Two of its other stars, Jordan Spieth and Steph Curry, will sit out the games.)

UA’s Peter Murray said the brand was fully aware of the challenges going into the games.

It has tapped its internal human resources department and a security team to monitor the ongoing situations leading up to and during the event.

The Baltimore-based brand is also taking advantage of one of the biggest changes at the Summer Games: the loosening of Rule 40. (In the past, only official sponsors such as Nike were allowed to advertise.)

The lifting of the blackout rule allows brands with advertising waivers to promote their athletes as long as they don’t use any Olympic properties, such as rings, medals or Rio. Olympians can also give a shoutout to brands on social media as long as they don’t mention the games in their posts.

“It’s an opportunity to raise the awareness of the brand around the world and tell some great stories. The goal for us is to support our athletes as they pursue their Olympic dreams,” said Under Armour’s Murray. “As a brand, when we approached Brazil, we started with the consumer and culture. In Rio, there is a real focus on health and fitness as part of the lifestyle, and we’re excited to support that.”

Additionally, Under Amour unveils a brand house in Rio this month.

“Under Armour is just getting started in Brazil,” said NPD sports industry analyst Matt Powell. “Brazil is a huge shoe market, and I think that Under Armour will leverage it well to introduce the brand to the country. That’s the domestic impact of the games.”

Another way companies, both small and large, are getting in on the Olympic action is by sponsoring smaller sports and teams. By targeting niche markets, they also limit exposure to some of the bigger talking points surrounding the games.

“More brands are looking for better [returns on investment],” said Joe Favorito, a sports marketing consultant. “They’re not just going out and hitching their wagon at high cost to [big names such as] Michael Phelps. They’re looking at a wider swath of athletes for niche areas — wrestlers, rugby players and Para-Olympians. The audience [for those sports] follows them, and then the messaging works a lot better.”

Yoga brand Lululemon signed a deal to outfit the U.S. beach volleyball team. Brooks, a favorite with runners, is planning smaller activations ahead of the games, despite the fact that it didn’t receive a waiver on Rule 40 and can’t advertise. The brand announced a patriotic collection of three running shoes ahead of the Rio games and is also sponsoring Olympic marathoner Desi Linden.

Brooks said its big focus around the Olympics was having a presence at the track and field trials in Eugene, Ore.

“The Olympics are a moment when we are all inspired to achieve more and when there is renewed interest in running,” said Stephen Cheung, global director of brand marketing. “Brooks sponsors some of the greatest athletes in the world, and our support of them represents just part of our brand’s investment in the sport.”

Adidas said it is focusing on athlete performance and product innovation this year. For example, the brand has added Boost technology to the track and field runner cleats for the games.

“Whether we’re outfitting heptathletes like Jess Ennis-Hill [who will compete in a track and field contest consisting of seven events] or a judoka like Teddy Riner, we are working with the athletes to put them into competition wearing product that can help deliver the crucial difference,” said Tim Janaway, Adidas’ general manager of Heartbeat Sport. “We obviously hope to see our athletes competing at their very best. Our approach has been to innovate, on and off the field of play, and we’re very much looking forward to bringing that all to life in the coming weeks.”

The brand also addressed Zika and security concerns, noting that after Adidas helped sponsor the World Cup in Rio two years ago, it was confident in the

Brazilian government and International Olympic Committee to manage the situation in the weeks ahead.

Overall, brands still have a lot to be optimistic about. More than 270 million people are expected to tune in to NBC’s coverage of the games, and the small time difference between the U.S. and Brazil is more favorable for live events.

The increased viewership, expanded social media reach and growing buzz around the Olympic Trials give brands the opportunity to make a sizeable impact, according to Favorito.

“Companies need to engage well in advance and well after, especially if you have a medalist. Once you have an Olympic team, you can take that with you forever,” said Favorito. “Brands tend to roll Olympians out every four years or two years instead of realizing the power of a [long relationship] — every day, from the minute these athletes qualify to the day they die.”

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[Editor’s note: This story first appeared in the July 18, 2016, edition of Footwear News.]