China Plays Offense in Sports Marketing

12/31/2009 - As we enter 2010 - just over a year after the Beijing Olympics and the start of the global economic crisis - some look positively toward the future.  Mark Thomas of S2M Sports Marketing Group in Shanghai gives insight into how China plays the game of sports marketing.





TCBN: Greetings everyone, I’m Michael McCune, and this is The China Business Network.

Mark Thomas has been involved in sport in China since the early 1990s, when he first appeared on the scene as a health club manager and later investor and operator of the largest health club in Shanghai. He later left those ventures to found S2M Group, a sports marketing agency that helps brands maximize the value of sponsoring sport in the China market.

We caught up with him in his office in Shanghai via Skype to talk about the 2010 market for sport in China.

I want to just kick things off with asking you, Mark, about the impact of the Olympics, and looking at the 2009, the year after the Olympics. It was tough for everybody in marketing. What legacy does Olympics leave for sport marketing in China?

THOMAS: Well, I think that the Olympics in China was, obviously for the Chinese government, a massive strategic event for them to pull off and show China to the rest of the world on a macro sense. I think when you look at it in terms of our industry itself, I don’t think it was the game-changer that many people would like it to think it was. Firstly, I think it sucked lot of the impetus away from more generic sports marketing programs that were going before, during, and even after the Olympics. Take a good example. If you look brand like Adidas who sank so much money into the Olympics it actually made them lose track of some of their other marketing programs that they built over many years. And also in the aftermath of the Olympics, when they spent that much money and they didn’t get the return they were expecting, it meant all those other things were cut the year after as well.

So you know I think the Olympics was a good sentiment driver, but it wasn’t a massive commercial game-changer for China. And I think obviously post-Olympics, if you look back into September 2008, you never really have a chance to understand what the Olympics could have done in a greater economic situation. So the economic bubble bursting soon after the Olympics caused us to basically go into tailspin in terms of budgets related to sports marketing because companies were in panicked situations. One of the things they didn’t make decisions, certainly didn’t make decisions on budgets on something that was considered maybe non-essential, such as sports marketing.

So we have this massive aftermath where the whole market was in a little bit of a tizzy for a while. It’s taken almost a year for things to start to be consolidated. And now going where people are understanding that this is the world we live in. We have to be far more financially prudent about what we do. It has to be far more key metrics attached to what we do. At the end of the day there has to be very, very good business reasons for getting involved in sports, whether it be sponsorship, or execution, activation around it.

TCBN: For some of our audience that isn’t as familiar with China, can you explain how something like as traditional as badminton or table tennis fit into landscape China sports marketing, versus say things we’re so familiar elsewhere: volleyball , soccer, basketball.

THOMAS: Well, I think the first thing is that Chinese sports are driven by success. The government wants their Chinese teams to be successful at sports built up by elite programs and the main focus when they define success is by the Olympics and world championships. So China’s government then put a lot of effort and investment in what they see as key sports that they can succeed in. So obviously in the west we’re all aware of the success of Chinese badminton players, table tennis players, even volleyball, weightlifting to lesser extent. What the government does is put money into making sure those things are successful, but also state run media like CCTV5, the main sports channel, basically is full of content of those sports.

So it’s like the chicken and the egg scenario. Because content is there, actually it becomes popular across China. There is no other Han Chinese sporting media platform. So by doing that the structure’s in place so well, if a brand wants to associate well with sports, and it wants mass awareness, it must attach itself to one of these sports that has this great awareness across China. So the Chinese sports do that well. And I think also the NBA is a notable example for foreign property, but also maybe English primary soccer has also done well at establishing not only a brand here but also media platform so they can communicate to the mass Chinese. Which then obviously is a major positive when a brand associates with those particular sports.

TCBN: Now that’s quite a traditional medium for doing something that’s a new requirement. Flipping that around, mobile technology in China, mobile phone use is so pervasive, is it an element that gets integrated into sports marketing with the brands you work with or that you see active in arena?

THOMAS: Yeah absolutely. We now say that everything we do we have to raise and build a digital online component to what we’re doing. It’s so important to China in terms of the way young people are interacting communicating socializing that it’s something you cannot underestimate to be honest.

TCBN: Now, before we close out our talk today, I was hoping you might be able to give us a little insight on sport development overall in China in terms of new sports trying to make way into China; or sports that have been in China for some time but perhaps lay dormant, but are up and coming; new platforms perhaps appearing on the scene for brands that are interested in working in a less crowded space perhaps but one that might have future impact based on developments and insights you see evolving there.

THOMAS: It opens up a very complex issue. One of the major structural issues - if not the most critical issue in China, I mentioned it before – is Chinese sport is driven by elite sports and success on elite sports levels. So government funds, basically, elite programs across the board in what sports they think they’re going to win medals – Olympics, world championships - in. So they and the sports bureaus that govern sports focus their budgets on that. Which means they put very little effort in what we call grassroots sports. Now what that means is that if there’s no grassroots sports, “Joe Blogs” is not playing basketball from a young level. If he’s not playing basketball or soccer or whatever, he’s probably not buying boots, or kicks, or whatever it is. So there’s no, basically, base to sport you’re effectively building a roof without the foundation. And that’s a very, very dangerous thing for sports. So for brand to get involved in any sport the first thing must do is understand where that sport is at its time. Because it can spend a lot of money at the top side of the sport, but if no one is being passionate about it or playing lower level, your money is really going to waste. So understand the sport you’re getting into, and then the key driver that we need people in our industry to look at is not just the elite level.

For sports to be truly successful, both commercially and sustainable, there must be more focus on a grassroots development: getting younger people playing, getting government to really, really start to put an effort into a sport rural-type program. And then brands will a lot more benefit out of that. Almost by default it’s the brands that are driving the grassroots side of the sport because they know they need it for people to be passionate about sports, which will in turn help their own brand. So I think that’s really an area that everyone needs to understand and get to grips with. There has to be a focus on it, and it must be something the government must change for sport to be come truly commercially sustainable in this country.

TCBN: I’ve been speaking today with Mark Thomas, from Shanghai, where he is the Managing Director of S2M Sports Marketing Group. Mark, thank you very much sharing insights with us today. We appreciate comments look forward to hearing from you more in the future.

THOMAS: Thank you, Michael.




Mark Thomas is Founder and Managing Director of the S2M Group and Vroom Motor Sports. He is a British National and graduate with over 18-years experience in sports marketing and facility management based in Australia, Hong Kong and Mainland China. Mark moved to mainland China in 1994 and speaks fluent Chinese and has excellent relationships across both business and government communities. He is considered a pioneer in the sports industry and has led many initiatives that have supported the development of a spectrum of sports in China. He is an active sportsman in his own right having achieved representative honours in Rugby and Athletics as well as being an active player in many other sports including, soccer, golf, squash and tennis.
For more information about S2M Group please visit their website.