Saturday, August 16, 2008

The 2008 Beijing Summer Olympics – Michael Phelps the Beijing Games Marketing Machine V

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 V of Sports Business News week long Michael Phelps series SBN will focus at Phelps relationship with Speedo as part of the look at the marketing machine that is Michael Phelps and take a look at the world wide interest in Michael Phelps.

Seven gold medals and counting. Michael Phelps date with destiny – winning eight gold medals in a single Olympic Games continued unabated Friday night (Saturday morning in Beijing) when America’s Golden Boy won his seventh gold medal of the Beijing Games in the stunning men’s 100M butterfly. Unless the unthinkable happens the world will be celebrating the Greatest Olympian ever by 10:00 PM New York time Saturday when Phelps swims in his final event in Beijing the men’s 4x100 relay.

Much has been made of Speedo’s LZR RACER before the start of the Beijing Games. Announced on February 14, 2008 virtually every Beijing swimming medalist wore Speedo’s revolutionary designed swimsuit. When Speedo made their announcement on Valentine’s Day – their most important athlete was all over the company’s press release. Phelps was the only athlete quoted in the media release.

"When I hit the water, I feel like a rocket", says Michael Phelps, holder of six World records, who has been involved in the development and will be sporting the LZR RACER as he sets out to achieve a world record breaking 8 gold medals later in these Olympics. "I can' wait to race in it, this is going to take the sport of swimming to a new level"

His comments, echoed by other elite swimmers, are gratifying for Speedo's research and development team, Aqualab, who have spent more than three years in intensive research and development to create their most hydro-dynamically advanced swimsuit to date.

Speedo scanned the bodies of more than 400 elite swimmers and held technical tests involving more than 100 different fabrics and suit designs in the world's leading flume and test centres. Their quest to enable swimmers to swim faster than ever before, took them all over the world from the NASA Langley Research Centre to the Australian Institute of Sport (AIS), Otago University in New Zealand and working with Ansys CFD (Computational Fluid Dynamics) software, a technology used in F1 motor racing and Americas Cup yachting.

Phelps relationship with Speedo began before the 2004 Athens Games. As will be the case later today when Phelps date with destiny arrives at the 2008 Beijing Games, Speedo offered Phelps a $1 million bonus if he won eight gold medals at the 2004 Games. Again he’ll collect that overdue $1 million bonus later tonight.

And the $1 million bonus Speedo will be paying Phelps later tonight – unlike similar promotions which company’s often purchase insurance to help defray the costs, Speedo according to CNBC’s Darren Rovell wasn’t able to buy insurance.

Craig Brommers, Speedo's vice president of marketing, confirmed to CNBC Wednesday that the company doesn't have any insurance to cover the bonus.

Brommers said that in Athens, Speedo's bonus was insured so that if Phelps -- who eventually won six gold medals and two bronze medals -- did win seven gold medals, the company would have only forked over about $300,000.

But Phelps' performance since then has made it hard for any insurance company to see much of an upside in insuring the deal this time around.

"Unfortunately, due to Michael's performance at the Melbourne World Championships and the probability that he might reach that million dollar bonus, Speedo was unable to secure insurance this time around," Brommers said.

He said the company didn't exhaustively try to insure it, believing that the premium this time around would have been closer to 90 percent.

Phelps wore a new Speedo swimsuit for every single race (he swam in a total of 17) in Beijing.

Speedo signed Phelps to a six year contract extension on November 11, 2003. His current contract is Speedo’s biggest in terms of not only dollars but importance. When the agreement was announced Promo Magazine reported that, Phelps will make personal appearances both with Speedo customers (such as sporting good chains and department stores) and at corporate events.

Cross-promotional opportunities will be available with Speedo and his other sponsors, including Visa and USA Swimming.

"The deal with Speedo is uniquely well-suited [to Phelps]," said Peter Carlisle, Octagon representative for Phelps. "Certain campaigns can maximize cross-promotional benefits through products and services that are promoted together."

Phelps is a familiar face to Generation Y. His popularity has increased attendance rates and media attention at swimming competitions.

"He is helping to promote to the Gen Y market—he is a very recognizable athlete," Stu Isaac, senior VP-team sales and marketing for Nottingham, England-based Speedo said in a statement.
"He will not only help with the research and development of swimwear, but also with footwear and swim shorts. His input was regarded while creating the Elite Racing Suit that will be used at the Olympics in Athens."

Speedo realized how great Phelps would be after he won six gold medals in Athens. In March 2005 Brandweek’s Sandra O'Loughin offered a peak at how Speedo positioned Phelps in relationship to Phelps three years ago.

The 2005 apparel collection targets men and women ages 18-34 who shop at better department stores such as Marshall Field's, Robinsons-May and Nordstrom. Initial shipments include men's casual swimwear and performance underwear, with activewear and shoes to follow in the fall. The women's activewear collection is already in-store. As part of a $3 million print campaign, handled in-house, ads for the women's apparel recently launched starring Olympic gold medalist Amanda Beard.

Print for the men's collection will run in April and May issues of GQ and Men's Health. It features a buff-looking Phelps wearing casual board shorts instead of his more familiar competition-style Speedo swimsuit, staring intently at a comely bikini-clad model. Splashes of water across the ad serve as reminders of Speedo's aquatic heritage.

The campaign is the first by the brand, outside of its sports marketing efforts, in seven years. Additional advertising, possibly including billboards and grass roots marketing in key urban areas, is slated for the fall. Support includes in-store events and POP.

"We consider Axcelerate a fusion between fashion and sport, and we've taken something very authentic to the brand, which is Olympic hero Michael Phelps, and tied him into a more fashion-focused situation that consumers may find surprising," said Craig Brommers, Speedo vp-marketing. "It's authentic and aspirational. Fashion, sports and entertainment are melding like never before. It's an area we are continuing to explore."

Joyce Julius & Associates, which measures sponsorship values, estimates that more prime-time airtime has been devoted to Michael Phelps than any other single athlete competing in Beijing through the first week of the Games. Speedo logos on Phelps’ warm-up jacket, swim cap and bodysuit have landed the brand 2:24 of airtime and $3.6 million, while highlights of Phelps’ storied career have also led to TV time for adidas and Visa.

Saturday night the Baltimore Ravens will play an NFL preseason game at M&T Bank Stadium. Phelps nicknamed the Baltimore Bullet in some circles was born and raised in the Baltimore area.

The Ravens are encouraging ticket holders at M&T Bank Stadium to stay after the Ravens vs. Vikings game on Saturday and salute hometown hero Michael Phelps. NBC has allowed the Ravens to air Phelps’ final race of the Beijing Olympics on the stadium SmartVision boards.

Throughout the Ravens game, ticket holders will be encouraged to stay for the post-game and watch Phelps swim live on the SmartVision boards. At the conclusion of the football game, fans will be directed to Section 140, located in the West end zone of the lower seating bowl. Ravens staff will be stationed near Section 140 to assist fans in picking up copies of b, Baltimore's new free daily newspaper, which will contain a poster with words of encouragement for Phelps. Fans will be asked to hold up this salute to Phelps prior to his swim.

Phelps potentially could be swimming for his eighth gold medal of the Beijing Games, which would break the 36-year-old record of seven golds in a single Olympics, set by Mark Spitz. Phelps will swim for the record-tying seventh gold Friday night.

“All of us are excited about what Michael is accomplishing, and it will be fun to salute him in this way,” Gabrielle Dow, the Ravens’ vice president of marketing, said.

Before Saturday night's game, fans can also visit the BaltimoreRavens.com area on RavensWalk outside M&T Bank Stadium and record a video message to Michael Phelps. The well-wishes will appear on BaltimoreRavens.com before kickoff.

Crain’s New York Business Friday reported that New York literary agent Scott Waxman invited publishers last week to bid on a memoir by the 23-year-old world record breaking swimmer, who has become a global sensation in Beijing.

A two-page proposal from the agent promised “eight chapters for eight races,” according to a publishing executive. Mr. Phelps is aiming to come away from Beijing with eight gold medals, which would break Mark Spitz’s record of seven. The plan is to have the title out in time for Christmas.

The agent set a $1 million floor for the bidding, and wanted offers right away, which suggested to some publishers that he already had an offer.

Others questioned whether Mr. Waxman is actually representing Mr. Phelps or is just looking to make a deal that he could then bring to the swimmer. Publishers also wondered how much interest there would be in the book.

Mr. Phelps has already published a memoir, Michael Phelps: Beneath the Surface, written with Sports Illustrated veteran scribe Brian Cazeneuve. That title came out in 2005 and sold only 9,000 copies, according to Nielsen BookScan, which tracks about 70% of the market.

“No books by great Olympians have done well, except for Greg Louganis’,” said an insider who decided not to bid on the new memoir.

An updated paperback edition of Michael Phelps: Beneath the Surface is listed on Amazon.com with a July 1, 2008 publication date. But a customer representative for the publisher, Sports Publishing, said the book is not available and no date has been set for when it will be.

Phelps along with James Bond and a handful of other ‘personalities’ has the designation of being an Omega Ambassador (there are a total of 13 and the list also includes retired Olympic gold medal swimmer Australian Ian Thorpe) Phelps relationship with Omega (one of the IOC’s 12 TOP sponsors) dates back to the 2004 Athens Games.

And Michael Phelps has become a global phenomenon.

Phelps' feats have drawn banner headlines across the world, including in regions and countries where swimming normally gets scant attention, with newspapers and commentators tripping over each other for superlatives and nicknames:

"The barracuda from Baltimore," said Chile's largest newspaper, El Mercurio.

"The New Olympic Legend," blared Egypt's El Badeel.

"The American dolphin," wrote Spain's El Pais.

"The God of Olympia," intoned France's Nouvel Nouvel Observateur.

"The water man from another planet," hailed Denmark's Berligske Tidende

"At a time when world records seemed to have hit the ceiling of what's physically possible to wrestle out of the human organism, Phelps has been the man who managed to push the limits with his magnificent performance," the Danish paper said.

According to a Reuters report: Chinese media have dubbed Phelps' the "flying fish" or the "American superfish." One editorial cartoon showed Phelps as a shark overtaking a torpedo. China's most popular sports newspaper, the Titan Weekly — which is running daily editions during the games — made Phelps one of its two front-page stories Thursday. It ran a large photo of a joyous Phelps under the headline "His Majesty Phelps."

The sports daily L'Equipe devoted an entire page to Phelps under the headline "Alone in the Pantheon." Le Parisien newspaper said, "There aren't enough superlatives" to describe Phelps.

The Times of London devoted three full pages to Phelps, including a sketch in the style of Leonardo Da Vinci's famous Vitruvian Man to highlight his physical attributes.

The British Broadcasting Corp. remained focused largely on its own country's rare successes and China's domination of the medal table, and some papers questioned whether Phelps was truly the "greatest Olympian" or just the greatest swimmer.

"The all-time No. 1 Olympian or just one of many such belt-holders?" Daily Mail columnist Paul Hayward wrote.

"The latter, is my conclusion, because numbers of golds won is only one criterion by which to weigh Olympic greatness — not least because of the sheer number of scarcely distinguishable events open to swimmers — though Phelps will move another giant step towards the all-time title on Sunday if he puts Spitz in the shade."

British bookmakers, meanwhile, are already listing Phelps as 5-6 (odds-on) to win five or more gold medals at the next Olympics in London in 2012.

"We couldn't care less whether he's the greatest Olympian ever," Ladbrokes spokesman David Williams said. "The truth is he's costing us a fortune and punters (bettors) just love him. If Phelps comes to London in 2012 there's a strong chance he could clean up again. Frankly, we're already dreading it."

Nowhere is swimming bigger than in Australia, and Phelps has eclipsed the country's own Ian Thorpe, the "Thorpedo" who won five Olympic gold medals, 11 world titles and set 13 world records before retiring in 2006.

The Australian, a national broadsheet, described Phelps in a front-page headline Thursday as "the champion who swims in his own galaxy."

"If Michael Phelps were a country he would be sitting fourth on the Games medal tally," the paper said.

A regional newspaper, The Newcastle Herald, lauded Phelps in an editorial.

"Every Olympiad produces its own titans: athletes whose performances galvanize the world's attention and whose names become synonymous in Olympic history with the cities and years.

Some estimates had as many as 4 billion people may have watched last Friday’s opening ceremonies. Sunday’s Dream Team (men’s USA Team basketball) against the host Chinese (featuring Yao Ming) might have attracted as many as 1 billion viewers world wide. How many will be watching Michael Phelps race with destiny tonight that may be uncertain but this is – more people will be watching swimming tonight than have watched any other swimming event – ever. The worldwide rating number will be a stunning tribute to how much Michael Phelps has meant to the 2008 Beijing Olympic Games.

The good news for NBC – they have one more evening of Michael Phelps magic to look forward too. The bad news – Phelps has set the bar as high as it has ever been for the network at an Olympic Games that wasn’t hosted on American soil.

The Networks of NBC Universal have reached 180 million total viewers, 30.6 million average viewers in primetime and a rating of 17.7 rating/30 share, each posting significant gains compared to Athens in 2004. Additionally NBC Universal's primetime delivery has dominated the competition for seven straight nights and Wednesday's TAMi reached 100.9 Million.

·Through seven days NBCU has attracted 180 million total viewers, 15 million more than the first seven days for Athens (165 million).

·NBC's primetime Olympics telecasts have towered over all competition, more than doubling the combined results of ABC, CBS and Fox in average viewers on each of the seven nights of Olympic coverage to date. For the seven nights of the Games to date, NBC's average of 30.6 million viewers beat the average combined totals of the other three networks by 171 percent: CBS (5.1 million), ABC (3.2 million) and Fox (3.0 million).

·Through Thursday night, NBC's primetime Olympics average viewership was out delivering the viewership of the next 14 top-scoring ad-supported English-language broadcast and cable networks combined.

·NBC's Beijing Olympic seven-day average primetime viewership is 30.6 million, more than 13 percent ahead of Athens in 2004 (27.0 million). The national rating average of 17.7/30 is the best primetime rating through the first Thursday for a Summer Olympics outside the U.S. since Barcelona in 1992 (19.0/35) and is a nine percent jump from Athens in 2004 (16.2/28).

·Thursday night garnered 76 million total viewers in primetime and 29.7 million average viewers, within two million of the comparable night in Athens (31.7). The night earned a 17.9 rating/31 share, which is a seven percent decline (19.3/32). The comparable night in 2004 was the highest rated night of the entire Athens Games, which saw Carly Patterson win the USA's first women's all-around gold medal since Mary Lou Retton in 1984.

Sunday we’ll focus on Michel Phelps lasting Olympian marketing legacy.

For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report: CNBC, Reuters and Brandweek.

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