Wednesday, August 13, 2008

The 2008 Beijing Summer Olympics – Michael Phelps (The Marketing Machine of the Beijing Games) II

All that glitters is gold when it comes to Michel Phelps and while he may not be buying a stairway to heaven, Michael Phelps future includes millions of dollars in endorsements. Today in part II of our Michael Phelps series SBN will take the first of a two part look at the marketing machine that is Michael Phelps.

Five gold medals and counting. Phelps Beijing gold medal total after winning three gold medals (this morning in Beijing) five and counting. Phelps gold medal parades takes today off before his seemingly date with destiny – eight gold medals at one Olympic Games and the title of greatest Olympian of all time.

Leading the way among name recognition, as he has in much of the pre-Olympic coverage, is U.S. swimmer Michael Phelps. With three gold medals -- and one world record -- down, and six more to go, Phelps was the most-mentioned athlete among those being tracked by Dow Jones Insight in both traditional (print and online) and social (blogs and boards) media sources.

Of the 11,131 total mentions in traditional media sources between July 28 and August 10, Phelps had 26 percent, or 2,904, of those athletes tracked. His percentage of social media mentions was even larger with 37 percent, or 796 of 2,149 total mentions of athletes during the same time period. In second behind Phelps in both traditional and social media sources was basketball player Yao Ming, who is a superstar both in the U.S. and in his native China. Ming had a 16 percent share in traditional media and a 17 percent share in social media.

Australian swimmer Grant Hackett was third in traditional media mentions, with 1,182, or 11 percent of those tracked. U.S. gymnast Paul Hamm and U.S. swimmer Dara Torres followed Hackett, each with 8 percent of mentions in traditional media. American Tyson Gay and Jamaican Asafa Powell, who are expected to battle each other and world-record holder Usain Bolt for the gold in the men's 100 meters, followed with 806 and 741 mentions, respectively. Rounding out the top 10 athletes were Chinese hurdler Liu Xiang, with 677 mentions, or 6 percent, Australian swimmer Libby Lenton, with 631 mentions, or 6 percent, and British marathoner Paula Radcliffe, with 581 mentions, or 5 percent.

In social media sources, Hamm was third behind Phelps and Yao with 239 mentions, or 11 percent. Torres was fourth, with 215 mentions for 10 percent. Gay, Liu Xiang and U.S. women's gymnast Shawn Johnson each had 5 percent of the total mentions. Rounding out the top 10 were Radcliffe, Powell and U.S. women's gymnast Nastia Liukin, each with 3 percent of the total mentions.

The Beijing Games are quickly becoming a platform not only for Phelps but for the companies who had the foresight to invest millions of dollars in the Maryland born athlete in the years leading up to Beijing.

On March 10, 2005 Matsunichi Communication Holdings, the Hong Kong-based company that produces electronic equipment signed Phelps to what was the biggest sponsorship agreement ever signed by a traditional Olympic athlete.

"Based on all of our research, I don't think there's a more lucrative individual endorsement deal that's ever been done by a traditional Olympic athlete - outside the major sports," said Peter Carlisle, Phelps' agent and director of Olympic sports for Octagon, which has represented Olympic athletes since the early 1980s in a Baltimore Sun report from March 11, 2005.

"[Figure skater] Michelle Kwan has had some excellent deals, [Australian swimmer] Ian Thorpe has had some excellent deals, but I don't think any of them are as strong as this one in terms of guaranteed compensation."

Ryan Schinman, who hires athletes to represent corporations as president of Platinum Rye Entertainment, said that Phelps is at the top among contemporary Olympic stars.

"Can you name someone bigger, especially a U.S. athlete?" asked Schinman

Now those comments where made more than three years ago. Marrying a 23 year old athlete to a company that produces MP3 players – insightful on the part of Phelps’ agents and Matsunichi.

"You can't discount that he has a real connection to the product," said Howe Burch, president of Baltimore-based Twelve Sports Marketing & Communications. "Music is a big part of his life and a big part of his motivation and inspiration."

"But for him to endorse an MP3 player that teenaged kids and young adults use makes a lot of sense," Burch said. "And I think it makes sense for the brand, which is a little bit off the radar screen, to attach themselves to a guy as highly visible as Michael."

Four years ago, a few months after winning six gold medals at the 2004 Athens Olympics Phelps faced a tremendous challenge – a test that had nothing whatsoever to do with his success in the pool. Now 23, but on November 9, 2004 Phelps was arrested and charged with driving under the influence of alcohol.

"I made a mistake," the Towson High School graduate said in a telephone call to The Baltimore Sun. "Getting into a car with anything to drink is wrong, dangerous and unacceptable. I'm 19, but no matter how old you are, you should take responsibility for your actions, which I will do. I'm extremely sorry for the mistake that I made."

Schinman, president of the Platinum Rye Entertainment consulting firm (who 16 months later expressed nothing but admiration for Phelps, told the Sun at the time of the arrest is "a huge blow," even if Phelps is never convicted.
"He made a name for himself not only in the pool, but with his squeaky-clean image, which is hard for corporate America to come by these days," said Schinman, who consults for Fortune 500 companies.

Mark Lepselter, president of New Jersey-based Maxximum Marketing, said at the time of the arrest the long-term impact will be minimal so long as Phelps doesn't have future problems. For now, Lepselter said, "I don't think this is going to be a major blow to his career ... . I don't think there are many people who have not made some mistake along those lines when they were 19."

Within days of his arrest the companies who where ‘banking on Phelps’ stood by their athlete as the Baltimore Sun reported at the time.

At PowerBar in Berkeley, Calif., spokeswoman Vanessa Wagar said she expects Phelps to continue as one of the company's sponsored athletes.

"Part of athletic sponsorship is celebrating highs with athletes as well as working through their difficult times," she said.

Visa issued a statement saying that Phelps, who has apologized for his behavior, has represented the company and the country "with great honor and dignity."

He pleaded guilty to driving while impaired; got 18 months probation and the Baltimore Sun reported had autograph seekers waiting for him in the parking lot after he left the courtroom. He spoke to classrooms full of kids about the dangers of alcohol. His sponsors stuck by him. Four years later, the incident remains one of his least favorite subjects.

Ask him to name the dumbest thing he's ever done and you'll get an interesting answer.

"I think I've had stupid things that I've done, but I've been able to learn from all of them," Phelps says. "You learn the most from mistakes you make. They all may not be good, but I think I've learned from every mistake I've made. In that respect, I don't think I've done any stupid things."

One sponsor who didn’t come out with a ringing endorsement after Phelps 2004 arrest – AT&T.

Phelps' initial sponsorship agreement with AT&T Wireless, ran through the end of 2004, was part of the package deal when the company was bought by Cingular Wireless that fall, said company spokesman Mark Siegel. That contract, like all other marketing contracts for AT&T and Cingular, will be evaluated as part of the changing company.

Four years later – Phelps is front and center as part of AT&T’s NBC Beijing commercial campaign. Leading up to and during the opening ceremony of the Olympics, Telecom Company AT&T launched several ad campaigns, created by BBDO New York and BBDO Atlanta, for its various business divisions.

During the week of July 28, it debuted a spot called “Phelps Phan,” featuring a fan of swimmer Michael Phelps who missed a call letting her know Phelps was in town because of poor cell phone coverage on a competing phone. The ad promotes the “best coverage” claim of AT&T Wireless service.

"What's important is the aspiration," said Mark Siegel, a spokesman for AT&T Wireless, the telecommunications company that uses Phelps in several advertisements in an April Baltimore Sun report. "It's not always about the number of medals, but the journey to get there."

Thursday’s look at All that Glitters is Gold – SBN’s Michael Phelps series will focus on his current and past sponsorships with Adidas, Powerbar and Visa. Clearly when it comes to Michael Phelps and the tremendous success he’s enjoying at the Beijing Games – his golden success in the pool will lead to a lifetime of opportunity outside of the pool.

For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report: The Baltimore Sun

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