Olympic marketers have scant leeway in Tibet riots

NEW YORK Wed Mar 19, 2008 5:49pm EDT

Chinese soldiers stand in front of shops to check identification papers in Lhasa, Tibet, March 18, 2008. REUTERS/The Himalayas Journey Society/Handout

Chinese soldiers stand in front of shops to check identification papers in Lhasa, Tibet, March 18, 2008.

Credit: Reuters/The Himalayas Journey Society/Handout

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NEW YORK (Reuters) - Companies already committed to spending millions to advertise at the Beijing Olympics would find it hard to pull their ads if they felt the situation in Tibet was hurting their images.

Advertisers and their agencies say that, at this stage, they are keeping a close eye on events, but so far the potential gains from participating in what some describe as China's "coming-out party" as a world power still outweigh the disadvantages caused by the turmoil.

"Pretty much every corporation is saying: 'We're aware of it, but it's not our place to dictate policy,'" one agency executive said. "It has not yet precluded any advertisers from being there."

Media buyers working with such advertisers say they have not seen easy exit clauses built into their contracts for commercial time on the NBC network and affiliated channels, which has exclusive U.S. broadcast rights for the Games.

Full-fledged Olympic sponsors are even more tightly locked into the ceremonies as part of costly, long-term commercial deals with Games organizers.

If they concluded that political strife could damage their brands, they would likely take down their ads, but still write off the cost.

"A lot of the inventory is contracted well in advance so advertisers are bound to their commitments," said one media buyer who did not want to be identified due to sensitive client relationships. "It's not like they could make a decision to pull out. There would need to be discussions."

Broadcasters have in the past pulled ads when bad news affected a specific industry, such as taking an airline commercial off a broadcast about plane crashes. But it will be hard for any marketer to make the same argument over a standoff between Tibetan activists and China, the media buyer said.

Another agency executive said he had not heard of any guarantees to back out in the event of political unrest, with nearly 80 percent of NBC's commercial time sold.

At the same time, a broadcaster such as NBC may be flexible in individual cases, media buyers said. But with nearly $1 billion in anticipated ad revenue from the Games on the line, media buyers would not expect it to approve a mass exodus.

"There is usually nothing built in that says, if there is another Tiananmen Square, we can be out," said Gary Carr, director of national broadcast at privately-held media buyer TargetCast. "I know we tried really hard in 2004 when we were concerned about security issues (in Athens)."

NBC officials were not available to comment. The company is majority owned by General Electric Co (GE.N), also an Olympic sponsor, with a stake held by France's Vivendi (VIV.PA).

CLOSE WATCH

Ad executives say any decisions to dial back campaigns would be taken closer to the start of the Games in August and would depend on whether the conflict deepened.

Beijing officials say at least 16 people have died in the unrest that culminated last Friday in a riot in the capital of Tibet, Lhasa. Representatives of the exiled leader of Tibetan Buddhists, the Dalai Lama, say as many as 99 people were killed when Chinese security forces moved in to quell the protests.

Twelve Games partners have marketing rights to use the Olympic logo globally, including McDonald's Corp (MCD.N), Coca Cola Co (KO.N) and Visa Inc (V.N).

The Beijing Olympics and the 2006 Winter Olympics in Turin, Italy, have already brought in about $4.4 billion in rights and sponsorship deals. Contracts for the top partners program span at least four years to include both editions of the Games.

Several major Olympics sponsors stressed their commitment to the Games this week and to its spirit of international accord.

"The Coca-Cola company joins others in expressing deep concern for the situation on the ground in Tibet," the company said in a statement.

"While it would be inappropriate for sponsors to comment on the political situation of individual nations ... we firmly believe that the Olympics are a force for good," Coca-Cola said.

Samsung Electronics said the Games should not be a focus for political demonstrations "and we hope that all people attending the Games recognize the importance of this."

Matsushita Electric Industrial Co Ltd (6752.T), maker of the Panasonic brand, stressed its 20-year history with the Olympics and said it would not comment "on political issues concerning any government."

McDonald's, also a long-standing sponsor, said political issues need to be resolved by governments and international institutions such as the United Nations.

"Our role is always to help support athletes and their teams the world over," spokesman Walt Riker said.

(Additional reporting by Kiyoshi Takenaka in Tokyo and Jon Herskovitz in Seoul; Editing by Andre Grenon)

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