Filed under: Etc., Marketing/Advertising, GM, Earnings/Financials
GM ends $1 billion Olympic sponsorship
GM will be out of the Olympics after Beijing. The General said Monday that it can no longer justify spending $1 billion on its expensive sponsorship of the U.S. Olympic team when there are other options that offer a better return. The global giant is said to be looking into non-traditional advertising outlets in an effort to keep ad dollars spent as efficiently as possible, so they have made the decision to let the Olympic contract lapse when it expires in 2008. They will continue their involvement with the U.S. Snowboarding Team, and GM of Canada is still a big sponsor for the 2010 Winter Games in Vancouver, but their overall sponsorship will cease. GM wanted to make it clear that this isn't a sign of financial weakness, so much as a sign that business as usual is no longer going to be blindly accepted. They are getting more efficient in every aspect of business and this is just another example of that. While we applaud that trend, we have to wonder if being the official vehicle of the U.S. Olympic team didn't have a certain cachet that went above and beyond the dollar value, if leveraged correctly.
[Source: MSNBC]
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Reader Comments (Page 1 of 2)
Don 8:38PM (8/08/2007)
Yeah, your company's name plastered over everything during the most televised event of the year shouldn't produce any type of return...yeah.
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waLLy 12:29PM (8/09/2007)
Most televised? Yes. Most watched? I don't know about you, but nobody I know watches the Olympics anymore. Most people don't even realize when the games are actually going on.
As you can see from their steady market share decline, paying a billion dollars to have their "company's name plastered over everything during the most televised event of the year" really has paid off for GM in spades. Because when I think of centuries-old athletic competition, it's only natural that my next thought should be Buick.
Don 1:04PM (8/09/2007)
Yeah, that's true to a certain extent...we don't seem to care how we do in the Olympics. That's tragic.
Brooks 9:02PM (8/08/2007)
Gah, this is like the fifth post wherein Autoblog uses "cache" instead of "cachet." Please, please, please: if you're going to use fancy words, learn what they mean. Or at least listen when people point out that you're using them wrong.
And Dan, they're not saying the Olympic sponsorship had no return. They're saying it didn't have $1B return. How many cars would the Olympics have to single-handedly sell to generate $1B in profit? Even assuming GM were as profitable as Honda, Toyota, etc ($1500/car), sponsoring the Olympics would have to generate 650,000 car sales that GM wouldn't otherwise see.
Sounds like a smart move to me.
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Don 9:24PM (8/08/2007)
Who's Dan? "Don" has so much more cachet!
;)
Gardiner Westbound 9:03PM (8/08/2007)
The billion dollars are better spent designing, producing and backing GM cars consumers will buy.
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geo.stewart 7:50AM (8/09/2007)
When dealing with a known entity, the most effective marketing is word of mouth.
And nothing will spark the right kind of word of mouth like good product design.
What to do with that $1B? hmmm, new platform, replace Cobalt with RWD version. put more attractive sheet metal on the Impala. ....
F451 9:18PM (8/08/2007)
Finally, GM is starting to use its head!
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Dummy petrol 10:20AM (8/09/2007)
Agreed 100%
RicardoHead 11:14PM (8/08/2007)
Bet those domestic-hating losers at NBC are thinking twice about their hateful hype now.
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aaron 1:17AM (8/09/2007)
No one here brought up the fact ratings are down for both Winter and Summer Olympics in the States? Even NBC regrets signing that long-term contract more than 10 years ago. So it comes no surprise that a big sponsor leaves. I'm glad Chevy left...but I got a feeling Toyota is going to take over in it's place.
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Rene Curry 3:57AM (8/09/2007)
YES...YES...YES good move GM!
As Brooks pointed out it takes a heck of a lot of sales to justify those marketing dollars. The root problem is a marketing guy will take credit for those sales, thus justifying the cost. However we all know those sales would happen without the Olympic sponsorship.
GM needs to do two things. Pull out the microscope on all sales & marketing costs and assign that cost to each vehicle. Then recalculate how much sales the marketing really did generate, you cannot assume 100%. The cost per vehicle would be staggering on the marketing related sales.
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Brooks 4:46AM (8/09/2007)
Exactly. It makes a lot more sense to build cars that people want than it does to build cars that people don't want, but which people might be convinced to buy anyway with billions of dollars in advertising.
Marketing and advertising exist to get the word out and to maintain brand consciousness. They should not be used as a substitute for a desirable product.
Groovdog 8:43PM (8/10/2007)
This has been done forever (I used to work there). Quantifying the return, however, is near impossible. This is the only reason marketing/advertising is still around and why the web is shaking things up. You can actually quantify stuff...
jeffinToronto 8:28AM (8/09/2007)
Anyone here bought a car because it was the official car of the Olympics (or anything else, for that matter).....me either.
I remember when they used to put those stupid Olympic rings on their cars too and try and charge more for the "special edition". Most buyers are just want the best car for their hard earned dollars, not the official car of the San Antonio chili cook-off.
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J.Crew 8:37AM (8/09/2007)
I think it is a good move. You can buy air time during the events and have the same impact for less ad dollars. $1 Billion dollars... I think that could be better used on the launch of all of the new products coming in the next few years.
Toyota should pick it up since they are trying to be an "American" company now.
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geo.stewart 9:55AM (8/09/2007)
Taking a note from NASCAR, a new sponsor will take over GM's contract for Beijing.
Announcing the new sponsor of the US Olympic Team:
Brilliance!
LOL
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Nick 11:04AM (8/09/2007)
Good move...as said, the $1 billion is better spent on product development. TV advertising is largely a waste of $$ in the US. I do hope, however, they put some money into advertising on TV in China. Those people are going to be fanatic watchers of everything, and GM's market position there could really benefit from some good local advertising.
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Tsunami Racer 11:37AM (8/09/2007)
i'm a car guy and a marketing guy and i had no idea they sponsored the olympics. either i'm watching all the wrong channels or this was the smartest marketing decision GM ever made...
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gerard Vandenberg 1:42PM (8/09/2007)
....................GOOD THING!!
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