April 13 - Olympic and Paralympic sponsors may spend as much as £2 billion ($3 billion/€2.5 billion) on marketing initiatives to "activate" their London 2012 rights, according to WPP, the global advertising group headed by Sir Martin Sorrell (pictured).
Interviewed exclusively by insidethegames, Sir Martin, WPP's chief executive, said that activation spending by sponsors was typically between 100 per cent and 200 per cent of the outlay expended to acquire a given set of rights.
insidethegames calculates that the more than 50 companies with global or domestic sponsorship rights to London 2012 have together spent more than £1 billion ($1.5 billion/€1.2 billion) in cash and value-in-kind goods and services for the privilege.
Expenditure at the upper end of WPP's scale would produce the £2 billion ($3 billion/€2.5 billion) figure.
Sir Martin said that WPP was budgeting for four per cent growth in 2012 – a figure that suggests economic problems in some Western European markets, including the UK, are not dampening down marketing spending all that much.
Growth is good in several other areas, with Latin America, the region hosting both the next FIFA World Cup and the next Summer Olympics, described as "very strong".
"What we see are, first, people investing in brand spending in the mature markets and, second, people investing in faster-growth markets behind capacity," Sir Martin said.
In addition to the Olympic and Paralympic Games, 2012 sees both the European football championship in Poland and Ukraine and a United States Presidential election.
All of these would normally be expected to boost overall marketing spend, although the sports events, clearly, could attract money that would in any case have been spent on other campaigns.
Sir Martin said that WPP's clients spent on average about 18 per cent of budget on digital media.
If this were replicated at London 2012, it suggests that Olympic sponsors may spend between £200 million ($317 million/€242 million) and £400 million ($634 million/€485 million) on digital outlets.
According to Jonathan Lenson, WPP's business development director, expenditure on experiential marketing techniques, such as showcasing, is typically higher than average in Olympic campaigns.
This is because of marketing initiatives linked to the Torch Relay (related TSB, an official Olympic partner, advert pictured above) and sponsors' presence on the ground in the Olympic Park and elsewhere in the host city.
Hospitality is another major budget item for many Olympic sponsors.
Nonetheless, Lenson expects digital media spending by London 2012 sponsors to amount to 15-20 per cent of their overall budgets, with digital outlets attracting expenditure that might in the past have been earmarked for television.
The Olympic broadcaster in London 2012's home market is the BBC, meaning that sponsors will be unable to schedule advertisements during Olympic events on the television channels via which the bulk of the UK audience will be following the action.
This will not be the case with the Paralympics, which are to be broadcast on Channel 4, a commercial channel.
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