CHICAGO (Dow Jones) -- While Chinese firms are at the financial and geographic
heart of the 2008 Beijing Olympics, plenty of U.S. and other foreign companies
are mining the Games for gold, too.
From infrastructure to ad sales, this global event has provided bountiful
opportunities for corporate profit and some of the biggest names on big boards
here and abroad have leapt at the chance to take advantage.
While it is paying heavily for the privilege -- $1.5 billion in fees for the
2006 Winter and 2008 Summer Games combined -- General Electric's (GE) NBC
Universal is apt to make that back, and more, via selling hours of ad time
across multiple platforms for one of the few events that can still draw a mass
television audience.
Ad spending on TV, including network, cable, local and spot, hit $1.5 billion
for the 2004 Olympics in Athens, up from $1.3 billion during 2000 and just under
$1 billion in 1996, according to TNS Media Intelligence.
And with the Peacock Network readying exhaustive coverage over a two-week
span, it is apt to set yet another record. Most of the available time has
already been sold, with top sponsors including AT&T (T), Coca-Cola (KO),
McDonald's (MCD), Anheuser-Busch (BUD), General Motors (GM), Procter & Gamble (
PG), Kraft (KFT) and Target (TGT).
Indeed, the Olympics and the general election may well be the only things
holding up overall ad spend this year as many companies begin to trim marketing
budgets as the result of the economic slowdown. TNS forecast a 4.2% increase in
total U.S. ad spending for 2008, with most of that loaded into the second half
the year. This week, the ad tracker estimated that spending for all of 2007 was
up juts 0.2% -- and it actually fell slightly in the fourth quarter.
Much of the Olympic-related ad spending will be funneled through the large ad
agency holding companies like Omnicom (OMC), Interpublic (IPG), France's
Publicis and London-based WPP, all of which can expect a top- and likely bottom-
line bump from Beijing. In addition, WPP-owned Hill & Knowlton is the organizing
committee's public relations and communications firm.
"It's not necessarily a big money earner," said Keith O'Brien, editor of trade
magazine PRWeek. "But it's prestigious. And agencies often want to rep [Olympic]
host countries to expand their global brand."
Credit Suisse has noted that Publicis is likely to get a lift from the summer
Olympics, while WPP (WPP)(WPPGY) has already said its performance in 2008 will
get a boost from the games.
Microsoft (MSFT) is also getting into the act, announcing earlier this year a
joint venture with NBC that will deliver live and on-demand Internet broadcasts
on MSN, which is also the official site of the 2008 Summer Olympics in Beijing.
Viewers will be able to access to more than 3,000 hours of content for free
using "Silverlight," a program the software behemoth describes as a "cross-
browser, cross-platform plug-in for delivering high-quality video experiences on
the Web."
By the time the games begin, China will have spent an estimated $40 billion on
new venues and other infrastructure to support the thousands of athletes,
coaches and dignitaries during the competition.
On a more concrete footing, hotel operators like Marriot (MAR) and airlines
like United (UAUA), the latter as the official carrier of the U.S. Olympic Team,
can expect to see brisk traffic during the Games.
Marriott already has 26 hotels in China -- seven in Beijing alone -- and
expects to have more up and running by the opening ceremonies.
"Our Beijing hotels are essentially sold out for the Olympics," said spokesman
John Wolf. "Before the games begin, we expect three more hotels to open under
our Marriott, Renaissance and Courtyard brands with the Courtyard to open very
soon. We anticipate heavy demand for rooms in these properties when they go on
sale."
Also cashing in: United Technologies' (UTX) Otis unit, which scored a $100
million contract to install 1,300 elevators, escalators and moving walkways at
Olympic venues and related infrastructure projects. Of course the company is no
latecomer to the market, points out spokeswoman Elizabeth Young. It first
shipped elevators to China in 1888 and established a joint venture as early as
1984. It currently has operations in 165 locations in almost 40 cities and with
7,000 employees, "we now have one of the largest footprints of any company in
China."
European companies are also very much in the game, with sponsors including
German sportswear maker Adidas, car maker Volkswagen , Anglo-Australian mining
giant BHP Billiton , retailer Kingfisher and banking group Lloyds TSB (LYG).
Adidas is looking to be on the top beneficiaries, according to some industry
watchers.
"The group's media presence this year is likely to be enormous, and there are
also clear positive financial implications ... the marketing effect at the
Olympic games should be significant, helping to reach the target of 1 billion
euros ($1.6 billion) in sales for the Adidas brand in 2010," wrote analysts at
Deutsche Bank.
Societe Generale agrees, noting that "the positive short-term momentum linked
to sports events should benefit Adidas more than any other players thanks to its
ideal positioning as world leader in soccer and official sponsor of Beijing
2008."
German consumer electronics firm Medion , which makes low-cost computers,
televisions, refrigerators, toasters and fitness equipment, is also in for a
shot in the arm, according to Credit Suisse.
"The super sport event year 2008 (Olympics and European Football Cup) should
support the 2008 business with regards to large-screen high-definition LCD TV
sets," the brokerage said.
European firms that have snared contracts related to the games include Swedish
telecom-equipment maker Ericsson (ERICY) and U.K. temporary power supplier
Aggreko , also a sponsor of the games.
Aggreko has a $35 million deal to provide up to 160 megawatts of power across
40 Olympic venues in six cities: Beijing, Shanghai, Hong Kong, as well as
coastal city Qingdao, on the Yellow Sea, port city Qinhuangdao, and Tianjin,
which boasts the third largest urban area in the country.
It will also supply power to the opening and closing ceremonies at the
National Stadium in Beijing as well as field-of-play lighting and camera
equipment and to the international broadcasting center.
U.K.-based hotel chain Millenium & Copthorne has opened a hotel in Beijing in
order to benefit from the games. The Grand Millennium Beijing is a 521-room 27-
floor hotel located in the heart of Beijing's financial and business district,
it said.
(END) Dow Jones Newswires
03-27-08 0012ET
Copyright (c) 2008 Dow Jones & Company, Inc.