Measured advertising expenditure by the top Olympic Games sponsors has jumped by 49 percent in the second quarter (April-June) compared with the previous quarter to 9.1 billion yuan ($1.33 billion), said an Olympic research report run by R3 and CSM, two independent marketing consultancy companies.
"Not only are sponsors dominating the mass media, we're seeing them extend this activity to activation events, both around the Torch Relay and standalone activities" said Greg Paull, principal of R3. "While these are harder to independently track, there has never been more on-ground activity in China's main cities than right now."
In addition, the report shows there has been unprecedented investment in TV sponsorship in these three months. There was a 65 percent increase in the sponsored broadcast hours this wave, led by live Torch Relay programs associated to Coca-Cola, Samsung and Lenovo.
And it's not only the sponsors that pushed for more content - local milk company Mengniu sponsored over 50 hours of national TV through this period, four times more than any other company. Their China Music Chart Awards recorded a substantial audience share through this period, adding confusion to the consumer perception.
"Despite the fragmentation of the media, prime time TV viewership is still strong this year in China, and marketers continue to invest to get returns," said Matt Brosenne, International Client Service Director at CSM Media Research in Beijing.
But does the huge amount of investment really work? On the question of return on investment, R3 and CSM have linked sponsorship costs and total media investment to both consumer perception results and published business data for mainland sales.
"We have developed a proprietary method called the OP (Olympic Performance) Index, which weights awareness, purchase intent, value and recall," said Paull.
New players vs old
While some companies such as China Mobile have invested close to 5 billion yuan in measured media over the last two years, their "cost per OP point" is 31,000 yuan.
By comparison, Coca-Cola is a cost per point of 4,000 yuan - while some giant enterprises such as China Netcom have a cost per point of 50,000 yuan.
"So purely from a consumer impact point of view, some companies are outperforming others by ten times" he added.
In terms of sales, for some such as Coke with $30 billion, a $100 million investment in Olympic sponsorship, along with supporting activities might still be less than 0.1 percent of their sales, less than 10 percent of their annual marketing budget - "so the returns are there," Brosenne added.
In the case of dairy maker, the Inner Mongolia Yili Industrial Group Co, their China business has seen a 21 percent growth in the first quarter of 2008 and is on track now to be over 20 billion by year-end, something that without an Olympics association would have been difficult for it to achieve, he explained.
According to the report, drink giants Coca-Cola and Yili both showed the greatest improvement during this period in their awareness, purchase intent, values and promotional recall.
"Coke's secret is just the right combination of experience, athlete management and focus that a lot of other sponsors have lacked," said Paull.
Coke has an 86-year head-start over most companies in this area, with the longest sponsorship history and great shared learning across the Olympics and FIFA World Cup.
For the first time, close to 50 percent of all respondents spontaneously mentioned Coke as a sponsor-and more than 86 percent recognized the brand on a prompted basis. Meanwhile, local milk company Yili continued to improve its position.
"Yili has made some smart choices on stars such as Liu Xiang, Guo JingJing and Yi Jianlian - but used them in a relevant and creative way. Using Liu Xiang with his parents is a strong method to build differentiation and drive impact" said Paull.
Amongst this stiff competition from more than 60 active sponsors, there are some that have failed to leverage their Olympic investment.
"A lot of the State-owned enterprises (SOEs) are relatively new to consumer marketing, and don't have the experience of Coke or talent pool of companies like Yili and Mengniu" said Paull.
"Sinopec, Air China, China Netcom and others have all done tactical work to support their investments, but the payback has been poor. This has been a great learning curve for them though, to see how other world class Chinese companies such as Lenovo and Yili have generated a positive return" he added.