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Morgan:News:2010 |Moguls| #1108Here are three moguls we ran into today:
- IS AN AIRLINE SPONSORSHIP FOR VANOC IN THE WIND?
There are indications, but no official comments or confirmations, that the Vancouver 2010 Winter Olympic Organizing Committee (VANOC), is in the process of working on filling the official-airline category of sponsorship, and, if so, the indications are that it's a Tier 2 level and involves, probably among others, Air Canada.
- WASHINGTON STATE'S TRANSPORTATION PLANS SHUFFLE
Transportation issues connected with the 2010 Winter Olympics in Washington State took one step forward and one step back this week. The Puget Sound Transit board is in the process of approving plans and financing to extend light passenger rail 1.7 miles from Tukwila to the Seattle-Tacoma International Airport at a cost of about US$244 million. Under the current plan, trains are to start running by December 2009, in time to ease tourist movement to the 2010 Winter Games. It's part of a complicated plan connected with better airport access, and that plan's key piece involves adding a third eastbound lane to Highway 518, the freeway that connects the Sea-Tac airport to Interstate 5. The step backward: voters behind Initiative 912, which would repeal a state gas-tax hike introduced earlier this spring to finance the new lane, have nearly twice the number of signatures needed to place the measure on a November referendum ballot. If 912 succeeds, the tax disappears, and so would most of the money for the third lane. Without the third lane, the light rail airport Link likely couldn't be built.
- QE THEATRE PROPOSED FOR 2010-RELATED FACELIFT
Yet another large capital project is being spurred on by the advent of the 2010 Winter Olympics. The City of Vancouver is considering a C$35-million renovation of the City's Queen Elizabeth Theatre, which is 46 years old this year. It's seen as a main cultural venue for the 2010 Arts Olympiad, which starts next year and runs until the 2010 Winter Olympics. Under current plans, two balconies would be added to the auditorium, and there would be three levels of box seats. Seating would be slightly reduced, to 2,800. The Playhouse and the adjacent theatre would also be reworked to considerably reduce to sound from leaking between the two venues. A decision on whether to proceed with the project is expected to be made later this year.
Originally published to Morgan:News:2010:Gold subscribers on July 14, 2005
Morgan:News:2010 |VANOC| #1107 FEATURE
MASTER MARKETER LOOKS AT WHAT UNDERLIES VANOC'S MAJOR MARKETING THRUSTS[The man in charge of Revenue, Communications and Marketing for the Vancouver 2010 Winter Olympic Organizing Committee (VANOC), Dave Cobb, says VANOC's approach on how an organizing committee should work has underlain its success in raising funds so far. And it will continue in that vein until the end of 2012.
[[Cobb, VANOC's master marketer, whose layers of departments must be, by definition, the most forward-thinking of them all, made the comments as part of an hour-long, wide-ranging interview.
[In this first part of a series on VANOC marketing, we look at what VANOC was able to achieve in negotiating its Master Marketing Agreement with the International Olympic Committee, and how this year Canada will begin to hear the buzz of 2010 marketing as those major engines are tested and staring running.
[We begin with the agreement that governs all the marketing VANOC will be doing until the end of 2012. - Peter Morgan, Editor]--
Dave Cobb says VANOC's approach, in part, was the reason the Master Marketing Agreement between VANOC and the IOC -- which governs how VANOC can deal with its marketplace between January 1, 2005 and December 31, 2012 -- took five months to negotiate before it was completed in February. And, he says, the delay was due to several factors that ranged from a learning curve, to what VANOC wanted to achieve for the advancement of sport, to the fact that VANOC wanted the arrangement done so early in its life cycle.
But it was all worth it, he says, because VANOC was able to achieve in its negotiations with the IOC the approach that has subsequently allowed VANOC to set up sponsorships that were far more lucrative -- for both VANOC and the sponsors -- than either the IOC or VANOC itself believed possible for a Winter Games.
The new approach was simple and basic marketing: Take the time to tailor the sponsorships so that they fit the needs of both the sponsor and VANOC.
"That's one area where [VANOC CEO John Furlong] and I came to agreement instantly," says Cobb. "If we're going to generate the amount of revenue we need to generate, to ensure we have successful Games, we wouldn't be sending out an RFP to, for instance, all the banks and saying, 'Here's the price, let us know.' It wouldn't have worked. And I think what has got us the value is sitting down with these companies, and understanding what they're looking for, and working with them to put an agreement in place that meets those objectives. If we give them more value, we're going to get paid more."
And, Cobb says, for the sponsors, it was equally beneficial approach. "It's early in these agreements with these companies, but I think they're going well. I think they're satisfied to this point, on the relationship and the benefits they've been getting. Time will tell, but the agreement we signed with the IOC gave us the flexibility to meet the needs of the individual sponsors."
Cobb says VANOC was able to build that flexibility directly into some of the provisions of the marketing program during those talks. "Historically, there has been specific language that says, 'You have three tiers of sponsors. Here's the entry-level point; here's the exact rights and benefits you'll give to everybody in the tier, and the value they'll have to pay to get in.' Well, I wasn't ready to commit to that, because I didn't know what the value was. We hadn't gone to the market; we hadn't determined it."
Cobb agrees that there has to be a standard rights-and-benefits package, but, he notes that the sponsors objectives vary considerably, so he had to convince the IOC that VANOC needed to widen the standard marketing provisions. "Bell Canada, Hudson's Bay Company and Rona all had different objectives, so we're going to give them different things. And we're going to do different programs with them. That flexibility was important to have in the agreement with the IOC, because I knew that was what we would do, and I didn't want to say anything different in the agreement. That's where spending time with the IOC allowed them to understand that, and they gave us that flexibility within the agreement."
Cobb says the length of time in part had to do with demonstrating to the IOC that VANOC was not about to sign a marketing agreement and then ignore its provisions as, he says, he was told other Olympic organizing committees had done in the past.
"There was a lot of learning on both sides that was going on," said Cobb. "From us understanding what the IOC was looking for, and for the IOC to understand a little bit about our Organizing Committee, and how we plan to do business over the next five years."
Cobb points out, "The IOC's mandate is to preserve, protect and strengthen the Olympic movement on a long-term basis. In the past, organizing committees have viewed their mandate as four or five years to put on the best games they can that are financially successful. Sometimes you have conflicts there between short-term and long-term interests being different. So the IOC is not going to let any organizing committee do anything that would put the long-term interests of the Olympic movement in jeopardy. And we respect and understand that."
Cobb says the IOC tries to have common agreements between itself and the organizing committees from Games to Games, and the rationale is to treat the organizing committees consistently in all areas, and particularly in sponsorship and marketing. But, says Cobb, "Our concern is that certain sections that are relevant in China, Italy or Athens maybe aren't as relevant in Canada. It's difficult to have a marketing agreement apply in different environments, different times, different games and different countries. So there were parts of the agreement where we really needed to understand what the IOC's intent was, and to make sure we could live with the outcome."
Cobb says there were no major problems between them during the talks, but, "it just took time understanding, and if we ran into a stalemate, what would happen, and what process we would go through to resolve issues, and it took some time to build the relationship, and built the trust and understanding between our group and the IOC."
Cobb says VANOC's own methodical and extensive approval process on such major agreements also contributed to the delays in reaching the agreement. It's known, for instance, that the Board of Directors is an active, involved group, and Board chair Jack Poole has said on several instances that it has VANOC's management "on a short leash." Cobb did not mention that, but, he says, "We have a process to go through to get it approved. I would come to our management group, and let them know, because it affects a whole bunch of different areas of VANOc, then it goes to our Finance Committee, and ultimately to our Board [of Directors]. It took longer than I expected, but a bit of that was the process. Ultimately, we got there."
But, says, Cobb, once it was done, it became, for him, an historical document. "I can tell you that I haven't opened the agreement since February. But that's normal; it's what you want to do. It's like signing an agreement with a sponsor. Once you hammer out a negotiation, you sign it, and then you get on with working as partners, and hopefully you never have to go back and look at what a particular line in an agreement says."
Cobb says that if everybody understands the deal, there's no need to constantly refer to it. "And the relationship is a huge part of it. I think the IOC is starting to build confidence in us, and trust us, and respect us more. Every time we do a project review, and there are good reports coming out from the IOC, it helps us because we get a little more benefit of the doubt when issues come up. They know what we're striving to achieve, and we wouldn't do anything that was counter to what the IOC was looking for."
Cobb agrees that six months has gone by since the start of VANOC's ability -- and that of its sponsors -- to use the IOC's marketplace in Canada without any significant sponsor visibility. Only Bell Canada has run a brief national co-marketing campaign with Olympic tie-ins, and only for about two weeks after the launch of VANOC's logo in March.
But he says a lot of foundation work has been going on behind the scenes and that the public will really start to see the results of the efforts by this fall. "When the merchandise comes out [starting this month] that will be a big piece of the general buzz. The [sponsors] are frantically getting ready for the fall. There is a lot of lead time that is involved. Let's say, for example, a packaged-goods company. We're past the point of being able to do any packaged-goods -- whether it's cereal or whatever -- for the Torino Games [next February]. The lead time is just so significant. Or to expect a wine sponsor to have an Olympic wine bottle in a store by Christmas; we're too late. That's why getting our merchandise in stores this year is such a push for, say, HBC. From the design stage, to what colours to use, what products, what materials -- and then the whole social-compliance requirements that we have, and factory audits, although it's not a problem for HBC because their standards are higher than most. All the things that have to happen between wanting to have a VANOC T-shirt appearing on the shelf and it actually being there, has been really fast-tracked to get it out by this month."
Cobb notes that there are lot of similar steps companies have to go through for promotional activities, "including coming up with the concept of what works and getting it through the marketing and management teams of the companies before bringing it to us. But they're determined to get out this fall, and be out in the market in a big way around the time of the Torino Games [next February and March]."
Cobb, for that reason and others, dismisses ideas that time's awasting as its time in the market dwindles.
"I look at it this way: we've signed two less sponsors than [the Beijing 2008 Summer Olympic Organizing Committee], and they're two years ahead of us. We're early. And that was one of the problems with the IOC [marketing agreement negotiations], was getting it done this early; they weren't ready for us. We originally hadn't intended to have any sponsors until the Torino games were over. So we're forcing a much earlier cycle to everything that we're doing, and trying to bring everybody along with us, including the IOC. There are still two Olympic Games before ours."
The fact that VANOC owns the Canadian marketplace for Olympic promotion until the end of 2012 influences virtually everything that VANOC is doing on a marketing front, as well as many other aspects in other parts of the organization. "There's definitely an incentive to sign a sponsor earlier because they'll enjoy the benefits for a longer period," Cobb says. And they have access the Canadian Olympic Team that's going to next February's Torino Winter Games in Italy.
"That's why we're pushing our Tier One sponsorships to get ready to go this summer, because there's still time to put programs in place to leverage the [Canadian aspects of] the Torino Games."
But Cobb points out that because this is all new, both to VANOC's staff and to some of its major sponsors, such as HBC and Rona, it's taking some time to get organized because the Olympics is a new property for them to market. "They are getting the structure in their own companies; they're getting staff in place, and working with us to start planning what those [implementation] programs will be. We're staffing up our sponsor-services department right now [see Resources, below]. It consists of one person now; we're actively recruiting for two or three more. So we're catching up now, to put the infrastructure in place, to allow these companies to really start to use the benefits that they get. And we will have merchandise available for the public soon."
Cobb says that while it seems like it's taking an inordinate amount of time to organize the branding elements, it's a matter of seeing the movement in context. "It may seem like it's taking time, but it is moving much quicker than any other organizing committee has ever done."
Cobb confirms that HBC will have Olympic-branded products for sale in their stores across the country by the end of this month -- "And they're going flat out to do it -- but they won't have their themed stores all set up for a much longer period. Clearly, they're going to get as much of that done as they can before Torino, and for this Christmas season."
Cobb says that between now and the Torino Games, the major focus, because VANOC negotiated agreements last fall with the Canadian Olympic Committee to handle its marketing as well between now and 2012, will be on promoting Canada's Olympic team that will be attending the Italian Games, and this will be evident in the merchandise being offered this year as well.
VANOC has had several meetings with the major sponsors to talk about how the brand marketing will work, and there will be more scheduled as programs evolve. Besides hiring brand managers, and senior account managers, VANOC is also in the process of contracting out the extensive but necessary branding development and production work, and that work will take place this summer and fall.
"We're doing a number of parallel things at the moment. We're working on developing our brand right now," Cobb notes. "We did things in a reverse order from what's normally done. Normally, you do all your research, all your brand-development work and create a logo from that. We did it backwards; we did the logo first, for a whole bunch of reasons, and now we're catching up. I think we all have a really good feel about the core elements to our brand. We're not worried there are going to be inconsistencies, but we're in the middle of doing that brand-development work right now."
Cobb says that, at the same time, VANOC is allowing its sponsors to use its trademarks. "We didn't want to hold our sponsors up [while the brand-development work is underway]."
Cobb says that he has established an on-line process provided by the IOC but run by VANOC in which every sponsor use of the VANOC and Olympic trademarks -- without exception -- must be approved by VANOC staff. "Whether it's on their letterhead, on promotional materials, on packaging, in-store, signage... Whatever it is, we approve every one of them."
Sponsors have to prepare a sample of whatever the mark will be used on, so it can be approved -- or rejected -- by VANOC. Depending on what it's for, it will be shunted within VANOC to the desks of specific staff for review. Cobb says they check for the quality of the reproduction, and whether the spacing, size and colours all meet VANOC's stringent guidelines.
The sessions with the sponsors, held in Vancouver and Toronto, have included demonstrations of the process, and representatives of the IOC's marketing department have been involved in those meetings, so the sponsors understand guidelines for handling the IOC's brands which are, in some aspects, different from VANOC's. "On any day -- and even this early -- we've had 10 or 12 requests from sponsors on our desk wanting to use the marks in certain ways, and we're trying to get staff in place to match up to that level of demand."
Cobb says, however, "It's not just a matter of them knowing how to use the system, it's them knowing what's behind it, so that they know what the parameters are, when they are creating their programs at the conceptual stage, and then, hopefully, it becomes more of a formality at the approval level. That's a big part of what's going on right now."
It's not Cobb's intention to have VANOC become a ponderous bureaucracy, however, because he recognizes that marketing often needs flexibility and speed to deal with opportunities as they arise, and to adjust to changing market conditions. "We guarantee turn-around in 10 business days, but our goal is two to three business days, and we need to staff ourselves so we're able to do that."
VANOC's vice-president of the Sponsorship department, Andrea Shaw, is in eastern Canada this week discussing programs now, and Cobb will be joining her in Montreal next week for a half-day session with VANOC's renovations corporate sponsor, Rona. In all of these cases, they're meeting with the sponsors' creative and design departments to continue the education of brand use. "And we also take real responsibility," says Cobb, "to help them use this relationship to be the best of their ability."
Cobb says the sponsors all have different levels of familiarity with Olympic marketing. The RBC's Royal Bank, for instance, has been coupled with Olympic marketing programs for decades, Bell Canada also has had years of experience working with the Canadian Olympic Committee, while Rona has some experience with Olympic marketing, but it's recent and not yet extensive. "The experienced sponsors don't need help on how they should be structured or staffed, and types of programs, whereas others do. One of the responsibilities of our account-service department is to make sure they are taking advantage of the association [with the Olympics and 2010]."
Cobb says VANOC's Tier 1 sponsorship program is nearly at an end. "We hope to conclude our automobile-category deal, which may concluded our Tier 1 at six companies," says Cobb. "It may be possible to get one or two [more] in there. We don't know; it depends on how the discussions and negotiations go."
He notes that one of the major components for VANOC when it was deciding on its approach to the Tier 1 companies was the ability of the winner to help VANOC market its brands, and get publicity for the Games, throughout Canada, but that won't be a feature that'll be needed for Tier 2 and 3 sponsors. "Those six companies [including the car sponsor still in process]," notes Cobb, "there's not a community in the country that they don't exist in. That was a major focus for our Tier 1's, not only the cash and product value we're getting, but what can they do to take our message across the country. That'll be less important to us when we get down into the Tier 2 and 3 deals, and, in fact, you could argue you don't want to go beyond Tier 1, because there could be too much out there. We don't want our logo plastered everywhere, because it becomes wallpaper, and people will stop noticing it. There'll be selected co-branding with certain selected sponsors, and you'll see a lot more from the Tier 1's. But I think with those five or six companies alone, we're going to have a presence everywhere we want."
VANOC's marketing strategy at the Tier 1 level hasn't been a one-way street. Cobb says the sponsors themselves have made suggestions for adjusting VANOC's marketing structure. "For example, we've had to hire more staff now than we though we would. That was from realizing that, with the level of investment that these companies are making, we really need to spend a lot of time with them to make sure they get a return. By signing sponsors early, we're having to hire earlier. And the account managers need a higher level of sophistication than just approving how a logo looks. They need to ensure that, if an event happens, a sponsor's needs are looked after through hospitality and other things we offer. The demands on our team are greater than we originally thought. And we'll be spending more time with the less-sophisticated sponsors to make sure they get up to speed, they're educated and structured properly to take advantage of what we can provide."
VANOC, as of today, has nearly finalized its strategy and approaches for the regional and local sponsorship levels, Tiers 2 and 3. That work, which has been underway for the past two months, is detailed. It includes identifying and assessing the value of categories, identifying target companies, and coming up with individual sales strategies for all of them. By coincidence, Cobb was expecting staffer Dave Dougherty to present him with the second part of the two-part presentation on those Tiers shortly after our interview. The first part was presented to him last week.
Cobb says the same philosophy that infused Tier 1 will inform the way VANOC approaches the development and negotiations of the next two Tiers. "We'll certainly have milestones, and parameters we want to work within, but we'll have lots of flexibility. The decision to do the Tier 1 was easy, and we knew we had to go through [the process] and hammer through these six or seven deals and get them done. And that's going to be probably two-thirds of the value of our sponsorship program."
But Cobb says the Tier 2 and 3 sponsorship program is important, because they represent several hundred million dollars in offsetting expenses that VANOC would otherwise have to find the cash to cover. "But we have a lot more flexibility on which categories we will do, and when, than Tier 1. Our top priority, regardless of value to some degree, where we're using and consuming products and services right now, and having to pay cash for them. For example, airlines, hotels, office supplies -- things like that, where we're spending cash for now -- will be early on our list... and it will be in exchange for marketing rights. And were taking advantage of the Torino Games, we'll focus on them."
But Cobb says there also a number of categories of sponsorship in the Tier 2 and 3 levels where VANOC doesn't need the product or service for two or three years, and they will tend to be "at the bottom end of the Tier 3 deals, that are maybe worth a few million dollars [in total]. And, for them, it's not important to have a six- or seven-year sponsorship period; it's strictly supplying a specific product that we don't need until, say, two years out. It'll be a couple of years before we get to those."
Cobb says the rights and benefits going to the sponsors of such arrangements "are going to be far less" than the rest of the sponsors. "We have to differentiate between a company that pays C$3 million, or C$30 million or a $100 million. One of the differences will be a short period that they are sponsors. And, for example, if a company is just sponsoring the Games, not the teams, then the sponsorship ends after 2010 [instead of 2012]. There are a lot of different elements that will go into these deals."
Cobb acknowledges that there are a lot of things going VANOC's way at the moment: the business climate is good, and there's a lot of interest by companies in being a VANOC sponsor. "We're going to keep plowing forward, to take advantage of the climate that we're in right now, and people are phoning, so we want to deal with as many as we can, and get a lot of deals locked up as early as we can. Maybe they can wait for a year or two, but if we don't have to, we won't."
Cobb says that VANOC has to judge how best to manage marketing expectations; it can't let the strength of the combined sponsorship marketing machines pull the public's interest too strongly in the Games yet, it's still years before they will occur. On the other hand, it can't wait for the last minute, either. It has to build public interest to a manageable crescendo that peaks at the best time for all the sales channels, and when the broadcasts of the Games will be ready.
Cobb uses merchandise sales as an example. "We're not going to throw everything we could produce into the stores on day one. It has to be a planned-out program, and we'll put certain products out at certain times, or a different series of products, and build up as you get to the Games. But look at the merchandise program alone. Making money at that is important, it's a big part of getting our brand out there, and for people being associated with our Games."
Cobb says there are lots of aspects to sponsorship and other marketing that needs to be managed, and timing of going into the market is one of them. "Similarly with other sponsor activities -- whether it's RBC doing a promotion through their branches, through their ATM machines -- it's all going to be managed and co-ordinated. And we'll always know what one sponsor is planning to do next week, and same with the other ones, so they're not banging up against each other in the marketplace. All those things will be timed to get maximum benefit for the companies when they go to the market with promotional activities."
Cobb guarantees Canadians that when sponsors activate their programs, the standards will be high, the implementation will be professional and they'll be promotions that are interesting to consumers. "They will be done in a positive light, and they'll present the Games in a positive light, with athlete focus, and connections, and the things the Olympics really stand for will come through in everything these sponsors do."
Cobb is clear about sponsor motivations, though. "Absolutely, they hope, if not directly then indirectly, to sell more product their relationship with us... But it's much broader than somebody seeing a sponsor logo beside the Olympic logo, and thinking somebody's going to buy their product. That's why you hear Bell Canada's [CEO] Michael Sabia say the Olympics is going to be part of his marketing platform for the next eight years. They're going to make it part of what they're doing, and aligning the values of the Olympic Games with the values of their company. It's much deeper than throwing a logo on a brochure, and it takes time to build that."
Cobb says VANOC and the sponsorship companies will be promoting two Olympic Games -- Torino and the Beijing Summer Olympics in 2008 -- before the 2010 Games arrive, and, he says, even though they all have marketing rights for all these Games, they will make sure they don't confuse the Canadian public using a fairly simple strategy of focusing on Canada.
"We acquired all the marketing rights from the Canadian Olympic Committee, which are for the all the teams through 2012. So the sponsors will have VANOC, IOC and COC logos. I think you'll find, when it gets to the [Torino, Beijing] Games time, the heavy focus will be on our Olympic team; you'll hear much more about them than you will about VANOC or the Vancouver 2010 Games."
Cobb says, in fact, there will be cycles of promotions over the next few years. "Between Olympic Games, you'll see more focus on our Games, and how they're getting closer, but as it gets closer to 2008, there will be a shift in focus to the team we're sending there." And so, back to VANOC after 2008.
And what about the two years after the 2010 Games, when public interest will have dropped off sharply and the VANOC Games will no longer be a requirement, and VANOC itself will become a skeleton that will wrap up by 2011? Of what use are the sponsorship marketing rights then?
Cobb puts it this way: "They'll still have rights to the Canadian team going to London's Summer Games in 2012, and there will be a transition of the management of those relationships from VANOC back to the Canadian Olympic Committee, and it will return to the more-traditional relationship sponsors have had with the COC before we came along. It will be more like what RBC or Bell did with our team going to Athens [in 2004]. I think the IOC was absolutely right in including this in the term that we have to sell for. It allows for a buffer period. Had we ended the rights in 2010, we would have been in negotiations and discussions in the months just before our Games, when we're trying to put them on. Now there's certainty through 2012. We are giving our Tier 1 sponsors first rights of negotiations with the COC after 2012, and they can start talking with the COC about renewing before 2012, not us."
--
Next in this series, Cobb talks about the coming growth in VANOC public relations events and how it will approach the concept of ambush marketing.RESOURCESDetails on the types of marketing jobs in the process of being filled:
2010 organization to fill 15 jobs in next 10 days
[Morgan:News:2010:Number:1092; Published on Tuesday, July 5, 2005]
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Details of VANOC's brand-identity work now underway:
'Brand-identity system and Paralympic logo to be contracted out through RFP'
[Morgan:News:2010:Number:1067; Published on Monday, June 20, 2005]
Originally published to Morgan:News:2010:Gold subscribers on July 14, 2005
