Sunday, February 28, 2010

Brand Premium of Team Canada & Why the Olympics Matter

So here we are- less than an hour away from what will likely be the most watched hockey game in North American history: Canada vs. the USA Olympic gold medal. The game will also likely be the most watched program in Canadian history. (Incidentally the record is held by Salt Lake City’s Olympic gold medal game between Canada and the USA). But this game has game some extras that make it special. First, and most obviously, Canada is gunning for gold of “the nation’s sport” right at home. Second, at the time that I am writing this, the USA has already won the most winter Olympic medal in winter Olympic history (granted there are more events than ever before but still…) and Canadian athletes have already done its $118 million “Own the Podium” program proud by delivering more gold medals to the host country than ever before in Olympic history. So this game- with the most profile event at the Olympics is a battle of the Olympic champions. Here are a couple musing on the game and the Olympics.

The Brand Premium of Canada’s hockey players.
In marketing there’s something called “price premium” measure of brands. Basically, you compare 2 equivalent brands’ pricing. The difference between the two prices is the perceived “brand premium”. For example, if you compare “Kellogg’s Corn Flakes” 575g ($4.99) to “President’s Choice Flakes of Corn” 575g ($3.99), you get a brand premium of $1 for Kellogg’s. The theory is that the Kellogg brand is worth $1 more. How does this relate to today’s game? I cranked out a few numbers, and the average Team Canada player makes around $3million more per season than the average player on Team USA. On a per game basis (assuming a player plays 84 games a year), that amounts to about $35,000 per player per game. If ice time is 18 minutes, that’s $2200 per minute. Remember, that’s not what the shift is worth- that’s the “brand premium”.

Why the Olympics Matter.

Olympics are so wonderful for a bunch of reasons: Olympics generate excitement about sport which in turn inspires kids (and kids at heart) to pick up healthy activities; Olympians are role models (most of the time) for gracious winning and defeat; and the Olympics give nations a healthy way express nationalism. By watching the Olympics, citizens of a nation root for their home country while at the same time are forced to realize the diversity of talent around the world. And for these reasons, I will always be a fan of the Olympics.

Friday, February 19, 2010

Steve Nash Is The Most Ridiculous Man In The World

A while back I shared a few thoughts on Dos Equis campaign: The Most Interesting Man in the World. Well, you know an ad strikes a chord when it gets parodied. Usually this parodying occurs on a show like SNL or amateurs making clips for You Tube. But what is unusual about the parody of the Most Interesting Man in the World is that the parody is done by another brand: Vitamin Water. I'm not quite sure what Vitamin Water is trying to communicate (and if I am representative of the target market, that is not a good sign) in the ad, but given the presence of celebrity endorser Steve Nash, there's a good chance that the parody cost more than the original.

Thursday, February 18, 2010

Getting a little Rich(ard) during a recession

In the mid 90s, my old MBA prof (well, I thought he was old at the time), Laurent Picard, said something that really hit me: "Fortunes are won and lost when there are changes in the external environment." His idea was predicated on the notion that new technologies, changes in governmental regulations or "shocks" to the system break down entry barriers - which are then rebuilt over-time by the new entrants. Of course, the entry barriers protect profits which accrue to fortunes. We only have to look at companies like Amazon, Google, eBay etc. to see how true this is.

A couple of days ago, I had the pleasure seeing Richard Branson speak at the Desautels Faculty at McGill University. And, he said this: "When times are good, fortunes are made. But empires are built when times are bad." Talk about inspiring words to an entrepreneur who is debating starting up a business during this recession. His underlying point is that entrepreneurial flexibility, low cost structure of an entrepreneurial firm, and sheer heart help the entrepreneur weather the economic downturn. Certainly there is a lot of anecdotal evidence to suggest Sir Richard is right. What do Virgin, Chevron, GM,Fed Ex, Burger King, Monopoly, Revlon, HP, CNN, MTV, GE, Hyatt, AT&T have in common? (source 1, 2) That's right, they were all founded during recessions.

Saturday, February 13, 2010


Here's a quick update:

According to ABC news, on Friday, Obama just signed the bill raising the public debt limit from $12.394 trillion to $14.294 trillion. To my American friends, that means you "owe" just under $150,000 for the federal debt (which excludes state, municipal, and personal debt) and that number's just going to grow. Feel free to do your own calculations here: US Debt Clock. It's also not a bad time to revisit this earlier entry.

Canada's ad to the world

Tonight, hundreds of millions of folks got a look at Canada through our Olympic ceremony opening. In short we had a 3 hour ad to the world about our country. It’s a marketers dream to have an audience like that. That’s the good news. The bad news is that it’s a one time shot with a million moving parts. What succeeded and what failed?

Generally when an ad fails, it’s not because of faulty execution- it is because of the shoddy planning. Think of the Microsoft ads featuring Jerry Seinfeld. Excellent execution but totally missing the mark for what consumers needed to hear from Microsoft. Another ad that missed the mark was the Olympic ad for GM that showed hockey players being assembled on the GM assembly line. A very cool execution but a message irrelevant to the GM brand.

Today we witnessed some outstanding planning and excellent execution for our Canadian ad as well as some terrible planning and miserable execution. Let’s take a look.

You would be hard pressed to find anyone who was not blown away by the visual extravaganza tonight. Using the crowd as an artistic canvas to showcase Canadian landscape, seasons, and culture is nothing short of brilliant. The planners dreamed up showcasing the diversity of our nation in very artistic ways- from young man running through wheat fields to visuals featuring falling autumn leaves of Quebec.

On the other hand, who dreamed up the idea of having Gretzky hop in the back of a pick up truck in the pouring rain to light the official torch? It made for such a sketchy visual that NBC didn’t even follow the lighting of the torch. Or, who thought it would be great to have an opera singer lip synch the Olympic hymn after the Chinese lip-synch fiasco? And, what’s up with 4 First Nations chiefs being (noticeably) absent for the start of the event? After all they are only sitting by the top IOC chiefs and the top dignitaries of our country (Prime Minister Harper and Governor General Jean). Finally, let’s put on a You Tube poet to make an ode to our nation. I just got the sense that some of the opening ceremonies seemed to be made by a committee. And that’s not the way to make our nation’s ad to the world.

Friday, February 12, 2010

Should the Olympics be more selective about whom its sponsors are?

The central idea about sponsorship is that the sponsor’s brand gets endowed with associations from the event/individual being sponsored. In the case of the Olympics, the “Olympic” brand exists to endow associations like “world-class”, “achievement”, “mastery of a field”, “fairness”, “sportsmanship” on to the sponsor. These are all highly desirable intangible associations that can be transferred to virtually any product category- from fast food firms to communications companies. Little wonder so many companies line up for Olympic sponsorship (the 2008 Beijing Olympics had more than 48 corporate sponsors and the 2010 Vancouver Winter Olympics have well over 60 sponsors) and are willing to pay big bucks to do it. Coca-cola, for example, spent an estimated $70million USD to be one of the lead sponsors of the Olympics in ’08.

Given the favorable associations that the Olympics can convey, it’s also easy to see why struggling brands want to sponsor the Olympics. Bell Canada, for example has to overcome associations related to being one of the most hated brands in the country. (A quick search on Google of Bell Canada sucks spews out more than 100,000 sites and BrandMojo has Bell Canada rankings at Enron and Halliburton levels) But any decent brander knows that association transfer works both ways. The Olympics benefits from the “internationalism”, “optimism” and “happiness” values of a brand like Coca-Cola or “performance” related associations of Omega. This takes us to my next point- the Olympic brand can also be hurt by the negative associations from sponsors like Bell (read the blogs to see the extensive, visceral criticisms about the brand). The point that I am making is this, all sponsorship dollars are not equal; the sponsorship of favorable brands like Coca-Cola, Omega, and Rona are worth a lot more to the Olympics than sponsorship dollars from brands like Bell. The Olympic brand ought to consider this more when forming its "partnerships".