| NEW YORK, March 22
NEW YORK, March 22 Four days before the Olympic
Opening Ceremony, in London's historic Horse Guards Parade
courtyard where throngs will have just celebrated Queen
Elizabeth's Diamond Jubilee, United Parcel Service will ship in
to set up scoreboards, umpire chairs, sand rakes, nets and other
fixtures for beach volleyball.
The world's largest parcel delivery company, known to build
brand awareness with relief services after disasters in Japan
and Haiti and by flying an orphaned polar bear from Alaska to a
Kentucky zoo, is sole logistics provider for the 2012 Games.
UPS expects to handle 30 million items -- everything from
boxing gloves to beds for the athletes' village, relay torches
and drug-testing samples to broadcast equipment.
That is nearly 60 percent more items than four years ago in
Beijing, where the Chinese government took a more hands-on role.
Bloopers before billions of people would threaten a public
relations blow that could hit profit, marketing experts say. But
gains from networking, and showing competence at pulling off
such a complex event, could pay dividends long after the Games.
UPS's business is a logical fit for the event, making its
sponsorship more valuable, said Ronald Goodstein, professor of
marketing at Georgetown University's McDonough School of
Business in Washington, D.C.
"It's a huge PR nightmare if it doesn't work," he said, "but
they will cover their butts" with trial runs and back-up systems
to avert any very public crises.
"The logistics of an Olympics is a nightmare, and we make
it easy," is the message UPS will impart widely with a smooth
Beach volleyball begins a day after the July 27 Opening
Ceremony, and is just one example of UPS's task to make sure all
equipment is where it needs to be at the right time.
The company likes to say that if you turned all of the
venues upside down, it is responsible for everything that falls
out except humans and horses.
Atlanta-based UPS is in the midst of moving and assembling
all furnishings for the village that will house 10,500 athletes,
having shipped the goods in from Asia.
It will handle 250,000 pieces of luggage, move 400 tons of
TV broadcast equipment into the International Broadcast Center
for 21,000 media representatives and manage customs clearance.
It will be responsible for the timely placement of 1 million
pieces of equipment for 26 sports in 34 Olympic venues across
the U.K. for an estimated 800,000 ticketed spectators.
Drug-testing samples gone missing? UPS is transporting all
5,000 from athletes and horses to the test laboratory.
"Calculating the exact return on investment is challenging,"
UPS Chief Financial Officer Kurt Kuehn said in an interview. "We
feel very confident it's a good investment," he said, "but it's
primarily a brand and customer event that showcases UPS well."
For competitive reasons UPS never discloses its investments
in Olympic partnerships or other sponsorships including NASCAR
and the PGA European tour, spokesman Mark Dickens said.
LONDON IS NO BEIJING
UPS soon learned that the Beijing Olympic could not serve as
a cut-and-paste blueprint for London, said Alan Williams, UPS
Director, London 2012 Sponsorship and Operations.
"These games are very different, not least being that
Beijing was about China coming out to the world and huge, huge
budgets while London is being run in the midst of one of the
worst recessions in our lifetime so financially it's a totally
To stay within budget, UPS opted to be a domestic sponsor of
this event, as it was in Beijing. This is below the IOC global
sponsor level that it chose in Atlanta, Nagano and Sydney.
Top tier sponsors in London will pay $100 million to $125
million for a four-year worldwide partnership, estimated Rob
Prazmark, founder of 21 Sports and an Olympic marketing rights
expert based in Greenwich, Connecticut.
UPS's tier 2 agreement is estimated to cost between $30 and
$35 million in cash and value-in-kind services, he said.
UPS can twin its logo with the Olympic rings in ads, on
trucks and driver uniforms only in the UK with this level of
sponsorship. It is using those images widely, however, via its
Facebook page, Youtube channel and the London 2012 web site.
The company reported $53 billion in 2011 revenue and record
adjusted earnings per share.. It is viewed as an
economic bellwether, with the value of packages it handles is
equivalent to 6 percent of U.S. gross domestic product and 2
percent of global GDP.
While not defining its cost, UPS plays up a 33 percent brand
awareness jump in China, a key emerging market, after its
sponsorship of the 2008 Beijing games.
And since 1996, when UPS first got involved with the
Olympics in its home base in Atlanta, it says export volume from
Europe has grown more than 10 percent each year on average.
"It's a very powerful statement for us to make to any
customer anywhere in the world that if we do this for the
Olympics just imagine what we can do for you," said Williams.
Timely deliveries are UPS's bread and butter. But with
LOCOG, the London Organizing Committee of the Olympic and
Paralympic Games, estimating a 4 billion worldwide audience, UPS
said it is doing numerous dry runs now to work out the kinks.
"It certainly isn't for the faint of heart, some of these
things that we've had to pull off to within a couple of minutes
here or there," said Cindy Miller, director of UPS's UK, Ireland
and Nordics operations.
UPS is testing every venue by the end of May in live
sporting events at newly created arenas as well as iconic
stadiums including Wembley and Wimbledon.
In one fast turnaround of a major venue, UPS has 17 hours to
dismantle and remove the entire gymnastics set-up in the North
Greenwich Arena, then move in and place all of the equipment
needed to transform the space for basketball quarter finals.
Instead of what UPS refers to as "bumping in and bumping
out" equipment, delivering to an event and then pulling the
inventory back to one of its two warehouses, UPS will now keep
supplies at the venues whenever it can.
It also prepared for at least one uncharted Olympic event.
"A year and half ago we had the ash cloud over Europe, and
that's something that never appeared in anyone's contingency
plan," Williams said. "We now have an ash cloud contingency
UPS has greater market penetration in Europe than it did in
China during the last summer Olympics, so the percentage gain in
brand awareness won't be as great.
"UPS was not only creating acceptance by the Chinese
business community but it was also in a very big way gaining
acceptance by the Communist party, which really was BOCOG, the
Beijing Olympic organizing committee, and they control a lot of
business in government," Prazmark said.
"They gained acceptance as a mainstream provider. DHL
dominated that market for many, many years."
But the benefits of showcasing UPS's expertise in London
could pay dividends long after the Games are over, analysts say,
while networking with other corporate sponsors and sports
organizations is also a crucial opportunity.
Coca-Cola, General Electric, McDonald's, Dow Chemical, Atos
Origin, Samsung, Omega, Panasonic, Procter & Gamble and Visa are
top-tier worldwide Olympic partners in London.
Georgetown's Goodstein said the idea is for the company to
become synonymous with package delivery and logistics.
"If I say petroleum jelly, you immediately think Vaseline.
If I say facial tissue, you think Kleenex," he notes. "You want
to be the generic default for the category. That's what's really
important about this sponsorship."