"The Alchemy of Olympics Advertising & Sponsorship: Turning the Games into Gold"

From the Journal of Management Policy and Practice

Review by Ben Thacker in KIN 501

Over the past several months, there have been several current events that pertain to marketing within the sports world. The first that came to my mind was the Olympics. The Olympics are a fantastic opportunity for companies to get their name to people watching the games on both TV and at the events. Companies take advantage of marketing during the Olympics by utilizing both sponsorship and or advertising techniques. Companies that utilize sponsorship own some of the rights to the event and their competitors aren’t allowed to participate at the event itself.

The Alchemy of Olympics Advertising & Sponsorship: Turning the Games into Gold is an article that hypothesizes whether advertising and sponsorship in the Olympic games actually helps to generate stock increases in stock prices. The article hypothesized that Olympic stocks would outperform the SAP 500 during the Olympic games, during a four week period thirteen weeks before the Olympics there would be no significant difference between the Olympic stocks and the SAP 500, companies that use sponsorship and advertising do better than companies just advertising and companies that use both sponsorship and advertisements will not see a major difference in a four week period thirteen weeks before the Olympics.

To accomplish this study the researchers looked at 225 publicly traded firms that had participated in the last seven summer and winter Olympics. The control period (the four week period, thirteen weeks prior to the beginning of the games) was used exactly thirteen weeks prior to the games. Comparisons of companies that used both sponsorship and advertising to companies that used just advertising techniques showed a vast difference between their stock price performances.

Overall, the study showed that these hypotheses were all confirmed. Hypothesis one was supported. Olympic Stocks did better than the SAP 500 Hypothesis two was supported. There was no significant difference between Olympic Stocks and SAP 500 in the four week period, thirteen weeks before the games. Hypothesis three and four were supported. Companies that used advertising and sponsorship outperformed companies that only used TV advertising for the first week. Lastly, the authors said that this Olympics proved to show a synergistic effect, where the Olympic stocks actually did much better than anticipated. This study may have several implications and they showed that stock prices can go up during the winter Olympics and not just the summer games. Also, this study shows that more companies would want to make future investments and lastly, firms would want to study the more successful Olympic sponsors like Coca-Cola at McDonalds.

Overall, this is an interesting study. The study shows that there is usually no correlation between advertising and sponsorships with the stock price of a company. The trend seems to show that there are several companies who benefit from being Olympic sponsors and advertisers. By doing other research and finding a relevant video, I did notice that there seems to be a trend with the research. Since Nike has been a publicly traded company they typically do well during the Olympics. The only Olympics that Nike struggled during was in 2010 at Bejing and that was during the beginning of the economic downturn. Lastly, this study seems to prove true and indicates that investors could make a fair amount of money during the Olympics if they pick the right companies during the Olympics.