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4 U.S. Stocks Going for Gold as Rio Olympics Begin
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As fans, athletes and officials await the final moments of the countdown to the Rio Olympics, the event’s key sponsors are also looking on expectantly. The quadrennial event is not just the world’s largest such activity in sporting terms; it also attracts record sponsorship amounts every time.
The amounts involved at the very top are often stratospheric in nature. For instance, spots at the Olympic Partners (TOP) program, featuring the crème de la crème of sponsors have gone for nearly $200 million at the current edition. Naturally, sponsors look on with bated breath to see whether the campaigns they are betting on are delivering the necessary buzz.
Rio Battles Controversies
Every edition of the Olympics has been marred by a range of controversies However, Rio has been an exception, since troubles have dogged it from the very beginning. Construction of various facilities was running behind schedule for quite some time.
Attention then shifted to the Zika virus threat, with several key contestants withdrawing for fear of contracting the disease. Following this, the economy of Brazil slumped, and political instability continued until recently. However, now that the Olympics are about to begin, focus has shifted to the teams and participants who are already in Rio.
Focus Shifts to the Positives
Players are feeling enthused by the tropical surroundings. Additionally, several officials who have travelled to Rio during the preparations stage reported that they have not encountered many of the problems that were being talked about.
Additionally, this is not the first time that the city has hosted an event of a similar scale. Events which saw successful completion at this venue include the 2014 soccer world cup. Besides, there is the annual carnival which attracts nearly a million tourists on every occasion. TripaAdvisor (TRP - Free Report) still puts Rio at the third place on its list of leading destinations for South America for this year.
Perils of Ambush Marketing
For sponsors, the challenge is to derive maximum value from their investments in the event. The key to this is also the execution of their campaigns related to their sponsorships and their success may not be related to the amount spent on the event. The rival campaigns of Adidas (ADDYY - Free Report) and Nike (NKE - Free Report) at the 2012 London Olympics are a good example of successful and not so successful campaigns.
In London, Adidas’ sponsorship amount touched nearly $156 million for which it secured official sportswear partner rights. On the other hand, Nike spent a much lower sum to provide outfits for the Brazil national teams for both the London and Rio games. Often, such a move is referred to as ambush marketing. For the event, Nike shot ads across various places across the globe called London. The launch was timed to coincide with the opening ceremony of the event.
While Adidas’ commercials focused on British athletes, Nike chose to show regular people struggling to do their best at everyday physical exercise like jogging. Several experts and polls later showed that the target audience identified more strongly with Nike as an Olympic sponsor rather than Adidas. This example illustrates that often correct execution is more important than the actual level of sponsorship which a brand opts to zero in on.
4 Stocks in Focus
The Nike and Adidas example also illustrates that the stocks which stand to lose the most are those which opt for relatively higher levels of sponsorship. The majority of Worldwide Partners for this edition of the games are U.S. companies. This makes it extremely important to focus on their campaigns during the games, since they have the most to gain and lose. We are looking at four of these stocks today.
The Procter & Gamble Company’s (PG - Free Report) campaign for the Rio Olympics has already gained massive popularity on various audiovisual platforms. It tagline “Thank You, Mom – Strong” is making waves thanks to its effective emotional connection. The company’s stock has gained more 8% year to date and is up more than 5% over the last three months.
McDonald's Corp. (MCD - Free Report) is one of the oldest partners of this landmark sporting event and continues to be the Official Restaurant of the Olympics. Some negative publicity had ensued after calls for bans on its association on ground that its offerings were unhealthy. But officials have said that they stand by their association with McDonald’s.
Visa Inc. (V - Free Report) inked deals with all 10 members of the International Olympic Committee’s (IOC) refugee team and was its first corporate partner. Additionally, it is launching special lines of accessories such as rings and watches which will be used to make “contactless” electronic payments. The company’s stock has gained nearly 7% over the last six months.
The Dow Chemical Company (DOW - Free Report) is the Official Chemistry Company of the Olympic Movement. It has taken initiatives to reduce the environmental impact of the Games on Rio and its surroundings. The company’s stock has gained nearly 4% year to date and is up more than 12% over the last six months.
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4 U.S. Stocks Going for Gold as Rio Olympics Begin
As fans, athletes and officials await the final moments of the countdown to the Rio Olympics, the event’s key sponsors are also looking on expectantly. The quadrennial event is not just the world’s largest such activity in sporting terms; it also attracts record sponsorship amounts every time.
The amounts involved at the very top are often stratospheric in nature. For instance, spots at the Olympic Partners (TOP) program, featuring the crème de la crème of sponsors have gone for nearly $200 million at the current edition. Naturally, sponsors look on with bated breath to see whether the campaigns they are betting on are delivering the necessary buzz.
Rio Battles Controversies
Every edition of the Olympics has been marred by a range of controversies However, Rio has been an exception, since troubles have dogged it from the very beginning. Construction of various facilities was running behind schedule for quite some time.
Attention then shifted to the Zika virus threat, with several key contestants withdrawing for fear of contracting the disease. Following this, the economy of Brazil slumped, and political instability continued until recently. However, now that the Olympics are about to begin, focus has shifted to the teams and participants who are already in Rio.
Focus Shifts to the Positives
Players are feeling enthused by the tropical surroundings. Additionally, several officials who have travelled to Rio during the preparations stage reported that they have not encountered many of the problems that were being talked about.
Additionally, this is not the first time that the city has hosted an event of a similar scale. Events which saw successful completion at this venue include the 2014 soccer world cup. Besides, there is the annual carnival which attracts nearly a million tourists on every occasion. TripaAdvisor (TRP - Free Report) still puts Rio at the third place on its list of leading destinations for South America for this year.
Perils of Ambush Marketing
For sponsors, the challenge is to derive maximum value from their investments in the event. The key to this is also the execution of their campaigns related to their sponsorships and their success may not be related to the amount spent on the event. The rival campaigns of Adidas (ADDYY - Free Report) and Nike (NKE - Free Report) at the 2012 London Olympics are a good example of successful and not so successful campaigns.
In London, Adidas’ sponsorship amount touched nearly $156 million for which it secured official sportswear partner rights. On the other hand, Nike spent a much lower sum to provide outfits for the Brazil national teams for both the London and Rio games. Often, such a move is referred to as ambush marketing. For the event, Nike shot ads across various places across the globe called London. The launch was timed to coincide with the opening ceremony of the event.
While Adidas’ commercials focused on British athletes, Nike chose to show regular people struggling to do their best at everyday physical exercise like jogging. Several experts and polls later showed that the target audience identified more strongly with Nike as an Olympic sponsor rather than Adidas. This example illustrates that often correct execution is more important than the actual level of sponsorship which a brand opts to zero in on.
4 Stocks in Focus
The Nike and Adidas example also illustrates that the stocks which stand to lose the most are those which opt for relatively higher levels of sponsorship. The majority of Worldwide Partners for this edition of the games are U.S. companies. This makes it extremely important to focus on their campaigns during the games, since they have the most to gain and lose. We are looking at four of these stocks today.
The Procter & Gamble Company’s (PG - Free Report) campaign for the Rio Olympics has already gained massive popularity on various audiovisual platforms. It tagline “Thank You, Mom – Strong” is making waves thanks to its effective emotional connection. The company’s stock has gained more 8% year to date and is up more than 5% over the last three months.
McDonald's Corp. (MCD - Free Report) is one of the oldest partners of this landmark sporting event and continues to be the Official Restaurant of the Olympics. Some negative publicity had ensued after calls for bans on its association on ground that its offerings were unhealthy. But officials have said that they stand by their association with McDonald’s.
Visa Inc. (V - Free Report) inked deals with all 10 members of the International Olympic Committee’s (IOC) refugee team and was its first corporate partner. Additionally, it is launching special lines of accessories such as rings and watches which will be used to make “contactless” electronic payments. The company’s stock has gained nearly 7% over the last six months.
The Dow Chemical Company (DOW - Free Report) is the Official Chemistry Company of the Olympic Movement. It has taken initiatives to reduce the environmental impact of the Games on Rio and its surroundings. The company’s stock has gained nearly 4% year to date and is up more than 12% over the last six months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>