Source: McDonald’s Winter Olympics 2010 commercial
Why did McDonald’s end its Olympic sponsorship?
Joining Budweiser and other major advertisers, McDonald’s has ended its a 41-year run as a sponsor of the Olympics.
The fast-food chain’s contract was scheduled to last through 2020. Others not renewing their sponsorships following the Rio games include Budweiser, Citi, Hilton, TD Ameritrade and AT&T.
“As part of our global growth plan, we are reconsidering all aspects of our business and have made this decision in cooperation with the IOC (International Olympic Committee) to focus on different priorities,” Silvia Lagnado, McDonald’s global chief marketing officer, said Monday in a statement.
McDonald’s first Olympic appearance was at the 1968 Winter Games in Grenoble, France, when burgers were airlifted to U.S. athletes homesick for McDonald’s food. The sponsorship began with the 1976 Montreal games.
Beyond geopolitical concerns, among the reasons seen for McDonald’s opting out:
- Asia time-zone: With the 2018 Winter Olympics in Pyeongchang, South Korea, the 2020 Summer Olympics in Tokyo and the 2022 Winter Olympics in Beijing, the next three events won’t hit prime-time live coverage in North America.
- Olympics Not Paying Off: The games may not be providing the payback they once did. Television audiences began shrinking with the Beijing games in 2008. During the Rio games, many followed the events on social media, such as Facebook and Twitter. Wrote Reuters, “Some companies find it is much cheaper to work directly with athletes or specific countries than the IOC.”
- Fast-food mismatch: Despite its increasing emphasis on healthier options, McDonald’s core offerings land far off most dietitian’s recommendations. British sports marketing expert Patrick Nally told AFP, “The scale of obesity and diet-related disease around the world is alarming, and although we can’t put this at McDonald’s door they must be aware that sponsoring the Olympics has now become ‘illogical’ and even in many ways ‘counterproductive.’”
- Cost-cutting: McDonald’s is seeking to reduce costs by $500 million by the end of 2018 while investing in its food quality and technology, including in-store kiosks and mobile ordering.
To make up for non-renewals, the IOC has reached new deals with Alibaba, Bridgestone and Toyota, and is set to land a major deal with Intel.
- IOC And McDonald’s Mutually Agree To End Worldwide Top Partnership – IOC/McDonald’s
- Intel To Announce Global Sponsorship Deal With The IOC, Sources Say –Sports Business Daily
- McDonald’s ends Olympics sponsorship deal early – Reuters
- McDonald’s Exits Longtime Olympics Partnership – Advertising Age
- McDonald’s shuts up shop on Olympic support – Yahoo/AFP
- Why Budweiser Backed Out of the Olympics – Advertising Age
Discussion Questions
DISCUSSION QUESTIONS: What do you think is the primary reason McDonald’s ended its sponsorship deal with the Olympics? Will they regret the decision?
Poll
BrainTrust
Bill Hanifin
CEO, Hanifin Loyalty LLC
Max Goldberg
President, Max Goldberg & Associates
Ultimately every significant financial decision needs to be based on some form of payoff — if McDonald’s believed that the Olympic investment was paying off (however they measure it), I have no doubt that their sponsorship would have continued. Obviously there is no shortage of other sponsors lining up to take McDonald’s place, and so if McDonald’s decides that the Olympics does make sense for them in the future, the cost of getting back in the game could be significantly higher. Overall, I don’t think this was a bad move for McDonald’s and I suspect that they won’t regret their decision.
McDonald’s ended its Olympics sponsorship because the company is not seeing enough of a return on its investment. Its sales are down or flat, the next three Olympics are not conducive to watching live in the U.S. and there are numerous other ways to tie in with Olympic athletes without the high price demanded by the Olympic committee. Many companies, many mentioned in the article, are not realizing value from Olympic sponsorship. McDonald’s is merely the biggest name to end its relationship with the games.
The Olympics are problematic for many companies considering sponsorship for several of the reasons you have well outlined. Time zone differences, access to results, athlete tracking via social media and geo-political concerns are all valid reasons that brands might struggle with Olympic sponsorship.
Probably the biggest challenge for McDonald’s in particular is the brand mismatch. Watching a high-level athlete promote burgers and fries is not an easy message to swallow (pun intended).
An equally interesting question is why the other brands mentioned (AT&T, Citi, Hilton) opted out. Each of these has a global footprint and there are no brand compatibility issues. Possibly geo-political concerns as well as continual allegations raised against IOC’s handling of site selection and budget are impacting these relationships.
Analysis after analysis has shown that sport sponsorships do not pay off. They have been largely supported by management hubris and benefits to top people in the corporations. Like the others that have dropped out, maybe they are getting smart.
Uhm, because the terms “Olympics” and “McDonald’s” are the antithesis of one another? Just guessing.
I’m not sure there is a primary reason for MacDonald’s choices as much as there are a series of compelling arguments for pulling out of the Olympics. The most obvious is, of course, the money. The investment is too high and the return is obviously too low, otherwise they’d stick it out. Olympic sponsorship is just too expensive for most companies without a clear and tangible return.
And then there is the fact that new digital technologies and platforms make traditional broadcast media less and less effective. Audiences are getting used to the idea that they can take events in small bites — well, OK, bytes — and just ignore what doesn’t interest them. If ribbon dancing is your thing, it’s much easier to just focus on exclusive ribbon dancing coverage.
There are a host of other causes of course including — as we saw in Rio — Olympians acting badly. As to the idea that there is just too much of a contradiction between Olympian ideals and fast food realities, come on. Have you ever seen a beer commercial with young, hot, hard bodies laughing it up? Now have you ever been to a neighborhood corner bar where the average waistline is roughly twice the circumference of Iceland and butt cracks are more common than sophisticated wise cracks? That’s called aspirations marketing.
That guy on the bar stool is probably one of the last people in America watching the Olympics. He probably believes he can have 12 super-sized Big Mac meals a day and still swim like Michael Phelps in exactly the same way he believes those beautiful people will leave the Budweiser ad and come through the door any minute.
I don’t mean to sound like an old fogey but, for U.S. audiences, I fear the Olympics peaked with the 1980 USA hockey team and the 1984 L.A. Summer Games. Since then “progress” has chipped away at the “Olympic ideal” that made the games compelling viewing — amateur athletes that we could relate to getting a moment in the sun. Viewership isn’t down because of multi-screen viewing or time zone issues, it’s down because the Olympic narrative is now pretty boring.
Prime-time viewership for 18- to 49-year-olds was down 25 percent during the London Games four years ago, according to a Bloomberg article titled “NBC’s $12 Billion Olympic Bet Stumbles, Thanks to Millennials.”
Millennials don’t do the Olympics. So McDonald’s stopped doing the Olympics.
It’s a pretty simple math problem: the more sponsors, the less value there is (at the individual level) in being a sponsor. How many us can really name even a single “official sponsor” of some major event when we’re asked?
I’m sure claims could be made that this has broad implications, either for McDonald’s, or the Olympics, or even the world itself, but at this point it just seems to be a marketing decision.
The Olympics, politics aside, are an expensive sponsorship in both actual dollars and relative to other, more measurable marketing investments. Perhaps MCD realized that it could better invest the money in customers or a better customer experience? They seem to be making good progress on their turnaround and this just might align with that strategy.
I think McDonald’s did the math on this very expensive sponsorship and realized they just aren’t getting their money’s worth. With the next 3 Olympics taking place outside of live primetime hours, there must be little benefit to McDonald’s in the way they most likely measure this. Plus, I suspect they also realize their customers are not buying McDonald’s food because their favorite sports star is promoting it — certainly not in the demographic age groups they must be pursuing. I expect they will have no regrets on this decision.