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A global Kick-start for Chinese brands?

There are many theories about why China does poorly in football. A nation which effortlessly procures the largest haul of gold medals at the Olympics finds it a challenge to even qualify for the World Cup. This is despite investments of enormous sums of money, importing some of the most expensive players in the world for the China Super League, and the President himself wistfully voicing the need for China to do better on the soccer field. 


Money has not been able to buy success in the game, but this failure has not discouraged the Chinese companies from investing wholeheartedly in the marketing opportunity of the World Cup. This year, China is the largest sponsor of the games, spending $835 million of the total $2.4 billion that FIFA raised through official sponsorships. This is twice the amount that American companies are pouring in, and more than ten times that the host is pumping in. While money failed to bring glory to the Chinese in the game, will it succeed in bringing success to the Chinese brands?


There are definitely arguments In support of this investment. It will serve the sponsors well that the Chinese people seem to match the ardent fervor of the sponsors despite the fact that China is missing from the contenders on the field. A significant proportion of the World Cup tickets are grabbed by the Chinese fans, and It is reported that a train has carried large quantities of crayfish from Wuhan to Moscow, to cater to the appetite of the Chinese fans. Sponsors can definitely hope that at least a part of the passion for the sport will translate into an enthusiasm for the brands.


However, while this enthusiasm points in favor of the sponsorship, this alone does not indicate whether such a massive infusion in World Cup sponsorship by Chinese companies will offer them a decent return on investment. Effective sponsorship of sports events has always been elusive and even when the sport enjoyed huge popularity and success among the company's target, there have been few demonstrations of any tangible benefit to the sponsors. Sponsorship of sports events, from businesses of a country with poor performance but the high aspiration for the sport is questionable. Brands usually benefit from association with success and achievement, and the World Cup offers no opportunity for the Chinese to swell with pride.


A counter-argument to this thinking may be that the target of many of the sponsor brands are actually consumers in countries other than China, where the popularity and passion are matched with a respectable performance and hence this is a great opportunity for the brands to establish their credentials globally. This may be an acceptable line of reasoning for brands like VIVO (smartphone) or Hisense (consumer electronics), which have their eyes focused on developing markets of Africa and Latin America and where soccer is an obsession. Or maybe even for electric bike maker Yadea which may want to target its brand for these markets. But, some marketing experts may question the wisdom of sponsorship for a brand like Mengniu, which derives most of its sales from selling dairy products to the Chinese consumers.  However, while Mengniu may not derive a direct benefit of increased sales or loyalty, it may still benefit from this investment in the long run, by establishing global credentials and trying to create a new image for the Chinese dairy industry, after the 2008 melamine contamination debacle.


Like all marketing investments, sports sponsorship needs to face scrutiny from the financial point of view and it is necessary that the sponsors invest at least a fraction of what they have spent on sponsorship in evaluating its effectiveness and ROI. In today’s digital world, there are sharper ways of assessing the ROI, and one does not have to settle for basic measures of disputable validity such as eyeballs and awareness. The question which needs to be answered is to what extent the investment in sponsorship will add value to the brand, from both a short-term and a long-term perspective. Without proof of ROI, the money could well be spent on countless other ways of furthering the interest of the brand, including sponsoring and supporting the large number of sports where the Chinese do excel or at least handed over to more worthy recipients of China's corporate altruism than FIFA.


Written by Ashok Sethi

ashok.sethi@illuminera.com