Let the Olympic marketing games begin.
Under Armour already has released a commercial featuring Michael Phelps that made the god of swimming cry. Dick's Sporting Goods put out a tear-jerker of its own, featuring employees who are bound for the Summer Games in Rio de Janeiro.
Nike, meanwhile, is gathering a dozens of journalists in New York on Wednesday for a product unveiling expected to be heavily geared toward athletes competing for medals in Brazil.
"The Olympics give us the opportunity to deliver our very best," Jeanne Jackson, Nike president of product and merchandising, recently told a Wall Street crowd. "We get to inspire the consumer, we get to accelerate the business through our product."
"Accelerate" might be overselling it a bit. Sure, the Olympic marketing blitz is powerful, emotional stuff and it may win some brand loyalty. But track spikes, fencing foils, and skin-tight swimsuits won't be flying off the shelves this summer.
When it comes to actually selling sportswear, the Olympics are downright unimpressive. Compared with the global might of the FIFA World Cup, for example, the Olympic Games are indeed amateur hour.
Consider quarterly results for a handful of the largest sports apparel and equipment companies-Adidas, Dick's Sporting Goods, Foot Locker, Nike, Puma, and Under Armour-dating back to the 2002 Winter Games in Salt Lake City. During periods that included the Olympics, collective sales for this group grew by 10.6 percent on average, barely higher than their average 9.8 percent quarterly gain in the period.
That heart-rending marketing doesn't come cheap. Operating expenses during Olympic quarters outpaced sales gains, with an average 12.2 percent increase. All things considered, the return on Olympic marketing for companies such as Nike may actually be negative, depending on what kind of expected lifetime value executives put on badminton maniacs.
"At the end of the day, what are these companies really going to sell?" asks Morningstar analyst Paul Swinand. "Are you going to go out and buy a track suit? Maybe a javelin?"
An aggressive Olympics strategy can even backfire on sponsors. During the Sochi Games in 2014, Under Armour was stuck in a public-relations disaster after struggling U.S. speed skaters cast aspersions on its aerodynamic suits.
Rick Burton, a professor of sports management at Syracuse University, said that even though direct sales may be sluggish, it's increasingly important for big brands to have a presence at the Games. "The revenue gains by Under Armour have produced a very legitimate third entrant in the race with Adidas and Nike," he explained. "While the ROI is always hard to prove, the risk of not investing is too great."
The more sober heads in the sportswear industry realize the Olympics are a bit of a sideshow. Adidas spent lavishly to be an official sponsor of the London Games in 2012, a financial commitment it passed on for Rio. Adidas appears more excited about two major summertime soccer tournaments, the Copa America and the Euro championship. While the company declined to answer questions about its marketing around the upcoming Rio Games, on a conference call earlier this month Adidas Chief Executive Officer Herbert Hainer described the Olympics this way: "commercially not as relevant."
Dick's Sporting Goods doesn't share any of Adidas's caution. The retailer forked out for an official Olympics sponsorship this summer, a deal that costs between $10 million and $20 million, according to Swinand at Morningstar.
Dick's CEO Edward Stack has been fielding questions about whether that is money well spent. "It's not necessarily tied to how much business we'll do around the Olympics," he said on a recent conference call. "It's around building a brand in a terrific sporting event that has equal interest for both men and women."
Even committed believers in the marketing power of the Olympic spirit are willing to admit that any payoff from sales of slick new shoes and workout clothes on display in the Games can take time. Foot Locker CEO Dick Johnson acknowledged in February that "sometimes it takes a little bit longer to commercialize that innovation."
In other words: It will be too early to count the medals from sports-apparel marketing when the athletes go home in August.
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