Posted by: John S Kiernan

The 2018 Winter Olympics in PyeongChang, South Korea won’t be all fun and games. Countless dreams are on the line, not to mention billions of dollars and national pride. Plus, after finishing fourth in the medal count in 2014, Team USA is seeking Winter Olympics payback, armed with the largest squad in the history of the Winter Games.

But medal envy isn’t the only holdover from 2014. Russia and global conflict are still big themes four years after the Olympic community left Sochi’s seaside slopes. The simmering political soap opera between Russia and the United States has gotten hotter. Russia will not be formally represented in PyeongChang due to a massive doping scandal. And security is once again a major concern, considering the host’s hostile northern neighbor. So let’s just hope NBCUniversal’s record 2,400+ hours of coverage showcase nothing but good sportsmanship and fair competition.

To help you prepare for the 2018 Winter Games in PyeongChang, WalletHub put together a world-class collection of Winter Olympics fun facts. You can check them out in the infographic below. Following that, you’ll find our Ask the Experts Q&A, where our guest panel gives their insights on a variety of issues related to the 2018 Games.

{article_social_buttons}

Ask the Experts: Winter Olympics Wonders

To learn more about the Winter Olympics, from the action on the snow and ice to the business behind the scenes, WalletHub posed the following questions to a panel of experts on advertising, sports business and politics. Check out their bios and responses below.

1. How has the process of hosting major sporting events changed?
2. What is the ROI for hosting the Olympics?
3. Does mega-event advertising pay off?
4. How do the Olympics impact tourism and retail spending?
5. Which companies will be the biggest winners in PyeongChang?
6. Does participation in the Olympics impact earning potential?

  < >

• Matthew Read Visiting Assistant Professor in the Department of Communication & Film Studies at Le Moyne College
• Laurence Minsky Associate Professor in the Communication Department at Columbia College Chicago
• Christina M. Ceisel Assistant Professor of Communications in the College of Communications at California State University, Fullerton
• Natalie Brown Devlin Assistant Professor in the Stan Richards School of Advertising & Public Relations at the University of Texas at Austin
• Timothy Penning Professor & Advertising and Public Relations Major Coordinator in the School of Communications at Grand Valley State University
• Krista Tucciarone Professor of Advertising and Public Relations at Lindenwood University
• Thomas J. Aicher Assistant Professor of Sport Administration at the University of Cincinnati

Matthew Read Visiting Assistant Professor in the Department of Communication & Film Studies at Le Moyne College

How has the process of hosting major sporting events changed?

The rise and takeover of social media has really connected brands directly with audiences. Good brands (which include cities and countries) create hashtags and spark direct, wide-ranging conversations with viewers, like live-tweeting during the event itself. Viewers love it -- shows like The Voice and any regular sporting event gets tremendous real-time engagement. It used to be about how much you spend to make an event worth it for visitors, now it's more important to know how you're going to engage all the viewers.

What is the ROI for hosting the Olympics?

Brazil famously got burned by the last Olympics, though project and budget management may have influenced that. While there is clearly an impact on travel, the ROI is less tangible, and maybe that's how it should be. Understanding that the inherent value is the branding your country gets, and exposure to potential travelers, it is imperative to make a hosting decision. That, and planning, too. If well-planned, the ROI could be strong. But that's a big if.

Does mega-event advertising pay off?

It can, if you align your brand with the target audience. Rolex sponsoring the U.S. Open is always a good move, and Adidas has seen strong returns from the World Cup. United is a sponsor of this year's Olympics, and we'll see how well that works out. Connecting with travelers and attendees on a personal level will be key. There's risk, of course. Often, the brands that go big at these events have massive budgets, McDonald's, Coke, Pepsi. They are well-equipped to run blanket campaigns.

How do the Olympics impact tourism and retail spending?

If planned well, and that can be a big if, the Olympics can be huge for an area and tourism. Lake Placid still sees some benefits from the '80 games. But I imagine Sochi didn't become the global destination that the Russian Federation had hoped.

Which companies will be the biggest winners in PyeongChang?

Sporting goods companies, particularly skiing and snowboarding, should do well, without having to spend as much as the other, larger consumer brands. United has a chance to generate some earned media, too. However, Samsung has gone all in, and considering the strong impact they have globally (and not just in South Korea), it is poised to really capitalize on the games.

Does participation in the Olympics impact earning potential?

It can, no question. However, that depends on whether a brand has made the right connection, and whether their target audience will be loyal viewers and visitors. Are you creating a smart, multi-media campaign that's authentic and relevant to those viewers? And if it is, are you going to use social media, both organically and with paid advertising, to stay connected with viewers at every turn? If you can answer with yes to those questions, your brand will bring home the gold. If not, pack your bags.

Laurence Minsky Associate Professor in the Communication Department at Columbia College Chicago

What is the ROI for hosting the Olympics?

My understanding is that the payoff can take a very, very long time, and the ROI is very complex to determine and should be based on the location’s reason for hosting the games. The goals for hosting can be (and probably should go) beyond any immediate financial return (and, as I said earlier, they should become the basis for judging the ROI). In other words, since the goals of one host might be different than those of another, the way to judge the ROI should be different, too.

Goals can include rebranding of the city, state, country; positioning the location for future investments; attracting business development (hosting the games is the perfect opportunity for creating backroom conversations during the games); and boosting civic pride.

Whatever the goals, hosting the games enables the promotion of the location on a global scale that can eventually translate to “heads in beds” -- i.e., increased tourism -- or business investment. I understand that the goals for the failed Chicago bid was to simply show the city to the world -- to make it an even greater global player.

I worked on the McDonald’s activation of their sponsorship of the Atlanta Olympics when I was employed by an agency called Frankel (now called Arc Worldwide), so I got to see how it the sponsorship’s comprehensive nature. Second, sponsoring the Olympics was not the only thing Atlanta did to rebrand (or brand) themselves. Their visitors’ contention bureau also had an audio brand created, with variations for the various neighborhoods -- an activity which I featured as a case study in my book, “Audio Branding: Using Sound to Build Your Brand.” To successfully create or reposition a brand, people, product, organizations need aligned multiple activities.

Look at all of the businesses that relocated to Atlanta since they hosted the Olympics. It would be very hard to draw a straight line from the Olympics to the decision to relocate. But the games could have helped set the wheels in motion, which, when combined with other developments, placed Atlanta into consideration as an acceptable place for relocating a business.

On another note, the locations are building facilities that, if done right, could produce future revenue streams, which could be another basis for the ROI calculation.

Does mega-event advertising pay off?

I would change the questions to “Does mega-event sponsorship pay off?” There are lots of marketing activities that go on behind the scenes, that can have a substantial impact on a brand. Advertising or the sponsorship is just the price of the ticket. Coke, for instance, is using the partnership to gain retail floor space by creating floor displays and other in-store or retailer programs (more floor space typically translates into more sales and share). Other companies, particularly B2B brands, but also consumers, use their association to sponsor sales incentives and other programs by sending the winners to the games.

As I emphasize in a book I wrote with William Rosen, CEO of VSA Partners, “The Activation Imperative,” the marketer needs to provide value with every piece of communication, and sponsorship helps enable it providing opportunities for news, entertainment, identification, story interest, exclusive access, and other value generators (beyond mere discounting). Global and country-wide marketers generally create an all-encompassing program that leverages the association. What can they do on social media, owned media like their websites, and more? How can they use it to enhance their partnerships, channels of distribution? How can they use it to motivate their employees? These are some of the questions marketers ask. It’s the totality of their answer -- combined with the quality of their execution -- that will ultimately determine the ROI.

But the short answer to your question -- it could. From a distance, P&G seems to be creating advertising based on their Olympic sponsorship that is helping to build their brands and increase their sales. Also, note that they have a larger story to tell with their Olympic-based advertising.

Building a promotion around the sponsorship is another way to build immediate business by engaging prospects. McDonald’s classic game, “When the U.S. Wins, You Win,” is an example that once worked, although they withdrew as a global and U.S. sponsor of the Olympics for other reasons (they will still operate restaurants at Olympic Park and Olympic Village for the 2018 Olympics and, as a result, send people to the games, an opportunity which grew out of their sponsorships -- in other words, the restaurants were part of a total program).

How do the Olympics impact tourism and retail spending?

That depends on whether you mean short-term or long-term. Short-term, such as during the games, you’re limited by the number of places to stay. But the Olympics show off the host city and surrounding areas to the world -- even the entire country -- which could help tourism in long-term.

On the other hand, Rio came across as beautiful, but had other issues. So, I am not sure how much they boosted tourism. As for retail, it also depends on whether you mean during the event or long-term. Often, it’s not about boosting overall retail spending, but taking share from the competitor. By building channel-specific programs that drive transactions and increasing floor space, using the Olympics sponsorship as the center or key to the value generator can help brands achieve this shorter-term goal.

As for the longer term, the brand needs to figure out how to get a halo out of their sponsorship to reflect on them, emphasizing a key value or two from their brand DNA, which can help them build or reinforce preference and loyalty to them.

Which companies will be the biggest winners in PyeongChang?

It’s too early to tell. The usual suspects are running global ad campaigns. The same goes for larger U.S. companies running national campaigns. A lot of the brands are connected to athletes. If their athletes do well or come out of game with a great story, the brand can utilize it and gain momentum. So, until the games are over, we won’t know the true winner.

And it’s the brands that achieve or exceed their goals who will be the big winners, but we, as consumers, might not recognize them as such. A brand that gets lots of attention and a lower proportionate boost in sales might be seen from the outside as the winner. A smaller brand with a smaller investment, but with a larger proportionate boost in sales or with a positioning or repositioning that sets them up for future gains, might ultimately be the bigger winner.

In the meantime, Comcast, which owns NBC, has done and is executing some interesting initiatives to dramatize their capabilities and engage their prospects and customers (to quote their website, they “integrated all of NBCUniversal’s live, on demand, and online streaming content into one comprehensive Olympics dashboard). We shall see what kind of returns this brings them, but, perhaps, if they even become less disliked, it might have been worth it.

Does participation in the Olympics impact earning potential?

Ultimately, positively impacting earning potential is the goal -- for the location and the brands. Otherwise, they wouldn’t do it. Some have realized that goal, and others haven’t. For the athletes (they are brands, too), it could make them more marketable. But it’s the whole package -- side interests, day-to-day activities, their back story -- that is considered, that makes them fall into consideration for a brand sponsorship.

Christina M. Ceisel Assistant Professor of Communications in the College of Communications at California State University, Fullerton

How has the process of hosting major sporting events changed?

Major sporting events, such as the Olympics and World Cup, have exploded in size and costs over the past few decades. We’ve also seen them used as a branding strategy for their host countries -- a way of showcasing a city, and by extension, a nation. We saw this very explicitly in the 2008 Beijing Olympics, where the ceremonies and symbolic elements of the Olympics were used to project an image of China that is global and modern -- coverage of the Olympics highlighted the infrastructure that was built, the high-speed rail to travel between stadiums, and an emphasis on China as open, friendly and harmonious. The organizers were quite conscious that this as an opportunity to place China as a leader among the global powerhouses. Similar strategies have been employed by Sydney, London, Sochi.

We also see cities approach hosting the Olympics as a way to improve local infrastructure, with varying results. In their bids to impress the IOC, cities propose expanding local public transit, building new stadiums, and more general promises of “urban redevelopment.” The costs of fulfilling these promises are astronomical, both financially and socially, as we saw with Rio in the 2016. The cost to Brazil is estimated to be at least 13.1 billion, with many of the promised infrastructural developments left incomplete or even abandoned; and many of the stadiums that are built for the event remain unused once the Olympics move on. Beyond the cost in preparing a city to host the Olympics, there is a human cost, with massive displacement and increased inequality often a result.

Many cities are now wary of the costs and impact of hosting the Olympics, to the point where there is now very little competition to host. Los Angeles and Paris were the only cities to bid for the 2024 games (Paris will host in 2024, and Los Angeles in 2028), with cities such as Boston, Budapest, Hamburg and Rome passing on the opportunity to bid. Local residents are wary of taking on the costs of these projects, especially as the profits often go to the private industry, while the risk is carried by the state.

Combined, these trends pose a challenge for the Olympics moving forward. The IOC, which has been plagued by controversy, is taking some steps to rein in the spiraling costs of the event, such as limiting the number of events and increasingly using already existing venues.

The Winter Games are in a particularly precarious position. Fewer countries compete, and the infrastructure needed to host -- luge tracks and ski jumps -- have limited use outside of the games. This winter’s event in PyeongChang will be watched closely. Ticket sales have been slow, and tensions with North Korea threaten to cloud the celebration of unity that is a symbolic hallmark of the games.

What is the ROI for hosting the Olympics?

The ROI for host cities is ultimately rather low, taking into account the costs of building space for the games. While the Olympics can improve a city’s brand image, and possibly attract private investment, it is a gamble that hasn’t proven to pay off. Rather, cities and states are on the hook for the building costs, with the profits often going straight to sponsors and the IOC.

How do the Olympics impact tourism and retail spending?

As mentioned, a successful Olympics can increase a city’s profile within the global imagination. This could, in turn, result in increased tourism, which often accompanies a rise in retail spending. The longevity of this increase is unknown, and while branding is an important economic strategy, it is difficult to calculate the exact impact that hosting the games has on the retail and hospitality sectors in the long term.

Natalie Brown Devlin Assistant Professor in the Stan Richards School of Advertising & Public Relations at the University of Texas at Austin

How has the process of hosting major sporting events changed?

Host cities of modern Olympic Games have to consider logistics, like the construction of necessary infrastructure and the heightened safety concerns surrounding the event, all while putting on a good show while their city is being showcased on a global stage through television and digital media.

What is the ROI for hosting the Olympics?

The ROI for hosting the Olympics depends on the host city. The cost of infrastructure that is required for hosting can cause a budget for a host city to explode. The 1984 Olympic Games in Los Angeles are still seen as a “gold” standard. A large part of their success was the decision that they would use existing venues rather than pour money into building new ones. Cities often struggle after the Games with finding a way to use the venues that were built specifically to host the event, and properly maintaining them.

Does mega-event advertising pay off?

It depends on each advertiser’s campaign and whether they tell their consumers a good story. In order for it to pay off, advertisers have to connect with their target audience in a way that transfers the feelings they have when watching the Olympics to their products. A campaign like P&G’s “Thank You, Mom” campaign or Apple’s “The Human Family” ad did that exceedingly well.

Which companies will be the biggest winners in PyeongChang?

The companies that will be the biggest winners are those who integrate the Olympics and the Olympic “ideals” into their brand storytelling. Consumers now demand a more personalized experience with the brands they support. The Olympic Games allows for great storytelling, as viewers are inundated with stories of young athletes overcoming obstacles and fulfilling their dreams. The way for brands to win is to extend that emotional connection to their products, while seamlessly telling their customers a good story across media channels, including digital and social media.

Does participation in the Olympics impact earning potential?

It certainly can. When you examine some the high-profile Olympic athletes from the Summer Olympic Games in Rio, it is difficult to ignore the economic benefits they enjoy. For instance, Michael Phelps is now worth an estimated $55 million -- thanks, in part, to sponsorships with Speedo, Visa, and Under Armour, to name a few. Also, the breakout star of the 2016 Olympic Games, Simone Biles, has enjoyed a huge increase in her net worth. It was reported that she obtained over $2 million in prize money and endorsements from companies like Kellogg and Nike. Yet, for other athletes who might not have endorsement opportunities, they certainly can have their earning potential impacted if they want to pursue a career in coaching or training other athletes in their sport, through the increased credibility they garner from being an Olympic athlete.

Timothy Penning Professor & Advertising and Public Relations Major Coordinator in the School of Communications at Grand Valley State University

What is the ROI for hosting the Olympics?

A lot of the time in recent years, there isn’t a positive ROI. Cities get a lot of tourism dollars and extend the city brand, but the cost of building the necessary infrastructure to host the multiple events is significant. In the end, an Olympic venue should have a strategic plan to promote not just the Olympics, but to leverage the attention in the years that follow, including things that lure tourism and trade investments for years to come, that might not have happened without the visibility of the Olympics.

Does mega-event advertising pay off?

There are few mega event advertising venues anymore beyond the Olympics and Super Bowl. But major brands -- and even small start-ups -- are willing to pay a premium for a 30 second spot or on-site out-of-home ads and sponsorships, in order to get the reach that isn’t possible in conventional media anymore. If the brand is associated with the sport or event, it can be an even better opportunity. But here again, it has to be leveraged beyond the ad. Most advertising brands do ads about the ad appearance for weeks leading up to the event, and maintain it after on social media sites, etc.

How do the Olympics impact tourism and retail spending?

The retail impact is short-term, but sites try to gain a long tail effect of the event, with marketing that touts visitors can either see the venues made famous by Olympic athletes, see the scenery of the venue (especially if that is advertised during the Olympics by the host country), or for sports enthusiasts to ski or do their sport in the arenas and sports facilities of the Olympics.

Does participation in the Olympics impact earning potential?

There is a positive impact on the potential, but that depends on what I’ve said above. Just being present is not enough. There needs to be a strategy that overlaps the games, before and after.

Krista Tucciarone Professor of Advertising and Public Relations at Lindenwood University

How do the Olympics impact tourism and retail spending?

The Olympics offer brands the opportunity to engage in what is defined as event marketing. Event marketing is a program focused around a sponsored event. The greatest advantage of event marketing for both consumers and brands is the excitement generated. Other advantages of sponsored events include building brand associations, where the brand is defined by a distinctive character and meaning, increased brand value as perceived by consumers, heightened exposure among the target audience, awareness for those with little brand knowledge, and velocity in product sales.

Audiences are drawn to their viewing devices to cheer on their country, and watch with anticipation as their favorite athletes go for gold. We are not drawn to athletes’ chosen events as much as we are drawn to the athletes’ emotional stories. These athletic heroes exude happiness, inspiration, and pride in moments of great challenge and hardship. For example, who doesn’t recall Kerri Strug landing the vault on one ankle?

The Olympics, unlike the Super Bowl, generates worldwide appreciation due to representation from over 200 nations. Such representation does not come without costs. The estimated cost to host the 2018 Olympics in PyeongChang is $8.9 billion.

Due to worldwide exposure, sponsors are faced with a multi-million-dollar question -- is it worth the estimated $100 million to claim the title as an “official” Olympic sponsor? To protect official Olympic sponsors, in 2015, the Olympic Committee passed Rule 40 Athlete Image Policy with language stating athletes may endorse non-official sponsors’ ads and social media posts without using the Olympic rings, visuals of winning gold medalists, and the use of the Olympic location (for example, Rio 2016). For the 2018 games, athletes may be disqualified for being showcased in ads not approved by the International Olympic Committee and U.S. Olympic Committee.

I do not think it is worth the estimated $100 million to claim title as “official” Olympic sponsor, because viewers are not connecting with the Olympics, rather, they are connecting with the athlete and his/her personal story. Athletes are defined as celebrities, since they are well-known to the population because of the publicity associated with their lives. Celebrities encode a unique set of meanings, which resonates with those who cheer on their favorite athlete. To a certain degree, as viewers, we think some of the athletes’ meaning transfers to us. For this reason, I think brands should invest in endorsing an athlete that is relevant to the brand, as consumers we will be more inclined to purchase a specific product featuring our beloved hero.

Thomas J. Aicher Assistant Professor of Sport Administration at the University of Cincinnati

How has the process of hosting major sporting events changed?

The cost alone is one of the largest changes to hosting major events, and in particular the Winter Olympics. The amount of infrastructure needed for these events is much different than the Summer Olympics, where many of the facilities exist.

What is the ROI for hosting the Olympics?

ROI is an interesting concept for hosting the Olympics. Most point to the economic impact created by the number of tourists who travel to the destination during the two weeks of the Olympics, and some impact the week leading up to, as the buildup from media, volunteers, etc. starts, and those individuals take time to leave. However, this amount of new economic activity is typically dwarfed by the amount of money spent on the facilities, infrastructure, and security to host the event.

The second area commonly noted is the increased awareness and subsequent tourism to the destination. Sochi is a good example of a city that was unknown to most non-Eastern Europeans and Russians; however, this heightened awareness in the western hemisphere has not increased tourism or even a desire to visit the destination. Further compounding the issue is that the location is not well-known as a winter resort, but rather a beach vacation. Mostly from my research, it’s the civic pride that increases as the event approaches and occurs, but then within a few months, that also subsides, as the reality of the costs and the impact of those costs begin to become known to the citizens.

How do the Olympics impact tourism and retail spending?

There are various ways to leverage the event through advertising, media/PR, and those who visited for the event; however, most hosts have not taken advantage of this opportunity. The focus of the events should change from crowd management and security to crowd relations. This way, these individuals become repeated visitors, as well as spread information about the location through word-of-mouth, which is consistently one of the main methods in which sport tourists in particular choose a destination.

from Wallet HubWallet Hub


via Finance Xpress