Sponsors pay up to $65 million for the right to affiliate their brand with the Olympics, and they do not want their advertisements eclipsed by nonpaying competitors. The job of policing the marketing landscape is generally left to the host country, the IOC and national organizing committees.
Since China won the right to host the Games seven years ago, the government, the IOC and the BOCOG have been building legal barricades to try to prevent unlicensed companies getting illegal benefits.
The Beijing Games has 12 global sponsors in the top partners program, with contributions totaling around $900 million. And an additional $1 billion is from local marketing contracts with 11 partners of 2008, 10 sponsors, 15 exclusive suppliers and 15 suppliers.
Winners and losers
For sure, sponsors are welcoming the ban.
"We really rely on them to monitor and correct those problems," says Petro Kacur, spokesman for Coca-Cola. "It's not a role that we play."
However, in addition to ambush marketers, some local businesses are rather frustrated.
VisionChina Media, a Beijing-based company that specializes in selling advertising on buses and subways in 16 of China's biggest cities, a perfect place for Olympics-themed campaigns, had been expecting a bonanza this summer.
The appeal of the Beijing Games has helped drive VisionChina's Nasdaq initial public offering last December, when the company raised $108 million. It has been also anticipating a big sales increase for the third-quarter this year due to the Games and starting from May 1 the company has raised advertising rates by 50 percent in Beijing.
"In the coming 15 years, this is the only chance we can increase our revenue in a very short period of time," Alfred Tong, chief marketing officer of VisionChina, said in April.
But, the new rules issued by the BOCOG invalidated contracts that advertisers had signed with the firm in the past year.
Advertisers, including VisionChina, must put their ad buys back into a pool and resubmit their bids. Olympic sponsors bought advertising bundled into packages of airport, bus shelter, and subway advertising at capped rates in the order of their sponsorship rank.
When Beijing won the rights to host the Olympics in 2001, it promised the IOC that it would limit increases in advertising rates for official Olympic sponsors to no higher than the average inflation rate. So, outdoor advertising companies must charge Olympic sponsors a fixed rate based on last year's advertising rate plus the rate of inflation.
