MICHAEL PAYNE – OPEN SESAME!

Michael Payne picSports marketing and media guru and former IOC marketing chief MICHAEL PAYNE was an architect of the massive deal which sees Chinese e-commerce giant Alibaba become a TOP sponsor for the next six Olympic Games.  He talked to Sports Media & Finance about what the deal means for the company, the Olympics and the future of relationships between sports  mega brands and big business. 

The announcement that Alibaba, the massive Chinese e-commerce and technology conglomerate, is to become a TOP Olympic partner through to the 2028 Games spawned column inches and social media comment worldwide.

Much of the media impact centred on the size of the deal, reported but unconfirmed at anywhere between $600 million and £1 billion and, consequently, the biggest in Olympic history.

But according to Michael Payne, the former International Olympic Committee marketing chief who has followed two decades at the organisation’s Lausanne HQ by working as a discreet consultant high-end brands, sports bodies and individuals including Bernie Ecclestone, the agreement is about far more than the money and could have a potentially transformational impact not only on Alibaba and the Olympic Games but on the wider world of sports marketing.

Payne, working with Chinese sports marketing company Shankai Sports – the agency responsible for brokering major deals including Chinese brand Haisent’s sponsorship of the UEFA Euros –  was a chief architect of the agreement which took a year to pull to together and sees it as ushering in a new era of Olympic marketing in which multi-dimensional strategic partnerships, rather than standard B 2 C programmes, become the norm.

The suggestion is that a major property like the Olympic Games is capable of delivering more substantial brand and business benefits than have generally been mined by the clutch of global mega brands which have occupied places in the TOP line-up.

“I have rarely seen the stars line-up so clearly as they did with this partnership,” said Payne in London days after it had been announced at the World Economic Forum in Davos and just a year since IOC President Thomas Bach and Alibaba President Jack Ma has been introduced.

“Of course money puts the fuel in the Olympic tank but when you start to consider what this particular partner can do with its innovation, technology and marketing muscle then you can see that the potential goes far further that one or two other TOP Partners.”

Among the elements of the IOC operation which is placed to positioned to benefit greatly from the partnership is The Olympic Channel, the online TV offering designed to ensure that Olympic Sports which can struggle to find platforms elsewhere, have access to audiences year-round and not only in Games time.

The channel was an important – if not entirely critical –   element of Thomas Bach’s Presidential campaign and launched in the aftermath of Rio 2016. However, despite significant investment, industry insiders remain undecided about its ultimate value and prospects for success.

Payne is not among them. “Just think about it,” he enthuses.

“The Olympic Channel is a very big play although it may be unfortunate that its name means that it could be seen as narrowly defined.  But you can’t go and conquer the world overnight. Having a partner like Alibaba, which owns the Chinese equivalent of You Tube, with added on e-commerce and the oxygen of special media means that the Olympic Channel will be able to fulfil the vision for it in a market which represents one fifth of the world’s population.

“That gives you a road-map of how the Olympic Channel might be taken forward. The channel followed by the e-commerce extension delivers real firepower.”

And as Payne sees it, this is where the magic will happen – not simply by nailing the brand colours to the mast of the Games, its values and narrative but by becoming a vital cog in the operation of the Olympic Games, the IOC and the broader Olympic Family.

It is, on the face of it, the perfect marriage and to understand why the stars were in such ’perfect alignment’ it’s necessary to understand the ambitions of the two parties to the deal.

The growth of Alibaba since its launch in 1999 has been nothing short of phenomenal. Launched by Jack Ma as a Business to Business e-commerce platform to enable buyers overseas to trade with Chinese firms it is today a multi-dimensional retail and technology business which operates in 190 countries and which, in financial year 2016, recorded revenues up 33 per cent and gross merchandise value (the value of goods sold) of £485 billion, allowing it to overtake the US company Walmart as the world’s biggest retailer.

Over 12 million companies trade their products and services through Alibaba platforms and the company is also the leader in cloud computing in Asia, hosts auction sites and money transfer services. Its Initial Public offering, in the USA, ultimately raised some $25 billion.

Payne himself tells a story which illustrates the power of Alibaba in its homeland.

“China has a significant singles population so Alibaba developed a ‘Singles Day’ promotion where partners were encouraged to offer a discount for one day only.  The result was the sale of $16 billion of merchandise in that one day with sales hitting 125,000 per second at their peak,” he said.

The company’s growth has made its charismatic founder and chairman Jack Ma, a global business A-lister and a free-trade champion courted by political leaders everywhere. The significance of his every utterance is analysed globally and he was, somewhat ironically, among the first to meet incoming US president Donald Trump. Trump’s reported enthusiasm for the opportunities presented by Alibaba for US companies to access the Chinese market may just have quelled any anxieties about the new TOP deal among the Top Brass of the United States Olympic Committee , which is among its signatories.

But despite its stupendous growth and current size, it has, by and large, been built by serving the Chinese domestic market which, although huge, means there are still many territories and markets to be conquered around the world.

And with that in mind, teaming up with the Olympic Games, being part of the success of the  ‘Greatest Show on Earth’ and helping promote the event and its values made a lot of sense.

Of course, every successful relationship is a two-way-street and the deal certainly checks a lot of boxes for IOC president Thomas Bach.

“When the deal was announced a lot of the focus was on TOP and the amount of money involved but it goes far beyond that,” said Payne.

“The fact that they in for the next six Games – until 2028 – is a big statement of intent and when you really start to dig down into the potential of the relationship it is really exciting.

“In addition to The Olympic Channel there are things like the e-commerce platform where, for the first time, you will have the ability to fulfil the potential of Olympic licensing and create a whole engagement platform. Think also of the role they will play in technology as the IOC’s cloud computing partner. That will help simplify the business of the Olympics and make things more efficient and effective.

“Those are the things which make this a strategic partnership which is the most profound and significant the IOC has ever engaged in.”

While no deal of this size is ever going to be straightforward, it is clear from Payne’s account that there was something of a meeting of minds between Thomas Bach and Jack Ma from the get-go.

“We arranged a meeting between the two exactly a year before the deal was announced. They met in Lausanne and we had mapped out talking points for the two leaders to discuss.  From that we began to develop a vision that culminated with the full breadth of what has now been agreed,” he said.

“This is a deal which shows Alibaba stepping up to become a global company with strong local roots and I think the agreement is indicative of a new era with new TOP sponsors coming on board who want to engage in far more strategic partnerships.  Look at what Toyota is looking at in terms of telling the story of innovation and mobility.

According to Payne the Alibaba deal is a continuation of the development of Olympic marketing which can be traced down the years.

“There is no question that this is part of the evolution of sports marketing as it couldn’t be further from sticking Olympic marks on Olympic products and calling yourself the official widget.

“This has the potential to become a poster child success story in the same way as Samsung who negotiated their deal at the end of 1996 when they were thought of as a third-tier brand. Their association with the Olympics was transformational. Of course, they developed great products but the Olympics was, for many years, the catalyst for telling the world what they stood for and changing the way they were seen. “

The last Chinese company to join the TOP programme was the computer company Lenovo which activated around the ‘home’ Beijing Olympics in 2008. Since then we have seen a number of Chinese brands and corporations venture onto the world sports stage with different levels of success and durability.

“For the last decade, everyone has been waiting for the Chinese brands to step out onto the world stage and start to use sport aggressively and there have been several false dawns in F1 and other sports properties,” Payne said.

“The problem was that the home market was growing so quickly that these companies risked taking their eye off the ball back home because the international market was more complex – Just think they have 20 or 30 cities which are bigger than some European countries so there was a little bit of retrenchment and consolidation.

“This doesn’t mean the end of European and US companies as major sponsors. In fact, it is excellent news for the sports world to have new major players coming out of China who will challenge the way things are done and how to activate better. When we first launched the TOP programme it was the new companies who had no previous experience of sports sponsorship who re-wrote the rule book. Back then it was 3M and Visa and the way they approached it was to make it absolutely core to their whole business strategy. That was a quantum re-think of the potential and power of sponsorship.”

Perhaps the most remarkable think about the entire Alibaba deal was that it was kept so quiet particularly, as IOC marketing director Timo Lumme confirmed at Davos, it became a competitive tender. Informed sources say that even Alibaba’s own sports company, Ali Sport, was kept in the dark, perhaps for fear of alerting the notoriously leaky sports marketing world.

But one figure who was certainly in the picture was China’s president Xi Jinping who paid a visit to Thomas Bach at the IOC’s Lausanne headquarters on the day before the agreement was announced.

“As you can imagine, there were teams working 24 hours a day across time zones from the US to China to draft the agreements so that everything was ready for the presidential visit and the announcement,” said Michael Payne.

“Now it is done it’s possible to think about the potential of a relationship between the governing body of world sport and the world’s biggest retailer and what can ultimately come out of that marriage.”