Q&A with London 2012 Commercial Director Chris Townsend

(ATR) London 2012 commercial director Chris Townsend says the end is near for the quest to raise nearly $4 billion to help pay for the Olympics.

Townsend joined LOCOG six years ago after a marketing career that started in the music business and went on to computers and then Transport for London. One of his major challenges at TFL was the marketing of the congestion charge meant to reduce traffic in central London.

ATR Editor Ed Hula met with Townsend last week to talk about the final stages of the marketing program for the 2012 Olympics.

Around the Rings: As the games are finally here, are you on target to reach your goals for marketing and revenue?

Chris Townsend: From a commercial perspective we are in a fantastic position. We've reached about 96 percent of our revenue target and we know where the other 4 percent is. We've raised over 2 billion pounds already and we have the last 2 million to go, so we're in great shape.

ATR: Where's the last 4 percent coming from?

CT: Licenses and merchandise and from some tickets. So that's pretty much it.

ATR: So you are counting on people buying a lot of licensed merchandise?

CT: Anywhere between 80-90% is bought the week before the Games and during the Games. We've signed up 60 licensees, we've manufactured their product, distributed all their product. It's in the stores ready and waiting for the games to start.

We've got a fantastic range of product, we've probably got in around 20,000 stores in the U.K. at the moment and the program is in good shape.

We anticipate creating about a billion pounds worth of sales which will create a net profit of around 100 million pounds which is the contribution the licensing program makes.

ATR: How important is the Mega Store that you have at Olympic park.

CT: The Mega Store is incredibly important we will generate a lot of revenue there and it showcases our brand. And it’s a great way for spectators to get great contact with our brand and get a great London 2012 experience. We filled a very large store and a large number of people can come in at any point of time.

ATR: there have been very long lines and waits at stores like these in past Olympic games, Are you expecting any of that here?

CT: I think at the very peak times we anticipate there being some queues. The store is 40,0000 square meters. We tried to create as large a store as we could. We tried to create other stores around the park so there are plenty of places to buy merchandise but if they want to come to the Mega Store, there may be occasions where they have to queue.

ATR: what do you anticipate will be the most popular product?

CT: It's very difficult to say. So far it’s been the t-shirts and the apparel. That line is going very well at this moment. We think the mascots will sell incredibly well for our foreign visitors. At the moment we are hitting our targets at across all the product lines there is not one product that is not hitting its target.

ATR: Are there any last minute sponsorship deals, partnership deals that you can make at this point?

CT: We set ourselves a reasonable target at 600 million to get from sponsorships. We had great success with our sponsored program and we set out and raised our target of 700 million. We reached our target in December 2011 and we decided that was it and we would focus on those relationships rather than signing up more sponsors. So we have 44 domestic and 11 international sponsors. We made a conscious decision in January 2012 to focus on all of our time with our sponsors purely developing their market plans and their activation campaigns rather than looking for more sponsors

ATR: So that gives them better experience more return on investment for the sponsors?

CT: That's correct it gives us more time to support them in developing their programs, signing off their programs and helping them execute their programs. And we have worked with all of our sponsors across the board and making sure they get a nice return on their investment.

ATR: When you started six years ago, the economic climate was different than it was today and it must have been a year or two into your job that the worldwide recession slump hit. How does it compare versus today?

CT: The whole economic situation has made the sponsorship program a lot tougher. We got off to a really good start by signing Lloyd's, the Lloyd's group as our first domestic sponsor.

But even back in 2006-07 the market was quite tough in the UK. A lot of companies were cutting back on their expenditure, the whole sponsorship was a lot less mature than in other territories like the US, and this scale of sponsorship had never been seen before in the UK.

So the economic situation wasn't as bad, the market itself was quite competitive and this type of market was very immature. So we had a lot of work to do right from the beginning, but we had good momentum from Lloyd's and we followed up with deals with EDF, with British Airways and British Telecom. And that momentum really carried us through a very difficult period of 2008-10 and very quickly we had the 44 deals done by 2011.

ATR: How would you describe the relationship you've had with the IOC between the years? Sometimes it’s pretty contentious between the IOC in terms of this deal or that deal. Have you had a good relationship?

CT: We've had a great working relationship with the IOC. We've turned out what I believe to be a good partner, and we have caused them very little concern and we have delivered on all our commercial targets and I believe that we've been one of the best organizing committees that they've worked with from a commercial perspective at least.

It's been run as a true partnership between my team and the commercial team at the IOC. We work very closely. We speak basically every day and we work very closely.

ATR: And how about with the British Olympic Association?

CT: Yes we've worked well with the BOA to a much lesser extent do we work with the IOC because we have acquired the exclusive rights to the BOA. With all of that package I have less conversation with the BOA than some other areas that are in LOCOG. Again, a good working relationship.

ATR: Why is it helpful for the organizing committee to take over those marketing rights?

CT: I guess from two perspectives, it enhances the package of rights I can pitch to the market, and there's a real advantage to be associated with Team GB. Secondly it makes sure that the organizing committee isn’t competing with the BOA for sponsorship. We are a single voice out in the marketplace developing these deals.

ATR: One common complaint is your protection of the sponsors and the complaints have been made that LOCOG is too aggressive, going after businesses that mean no harm, that do not threaten the value of the Olympic Brand.

CT: Well our sponsors are very important to us and to any organizing committee, the sponsorship program when you combine the international and domestic partners it accounts for about 1 billion pounds or 50% of the organizing committees revenue is coming from sponsors.

But they also provide a whole line of products and services to get the Games going but they also invest a lot of money in activation campaigns and programs that promote the Games and the whole Olympic movement. So it is only fair and proper that we should protect their investment and they have bought exclusive rights.So it’s our duty to protect those rights and their investments.

ATR: How far will you go?

CT: We go as far as we need to protect their rights as per the laws of the UK.

ATR: But the idea of small shops, small businesses caught using the Olympic Rights or mentioning the Olympics, are you aggressively seeking out this sort of violation?

CT: We take it on a case by case basis. And that is managed by our legal and brand protection team so that's not part of the commercial team.

ATR: is that a big problem here?

CT: Not so far, no.

ATR: How about any attempts by larger business to try to squeeze in and try and associate themselves?

CT: There have been one or two examples of businesses trying to do something known as association marketing and we have spoken to those organizations and dealt with them appropriately.

ATR: Another big item for marketing talk is sales of tickets. What's your opinion on how ticket sales have gone?

CT: The ticketing promotion has been phenomenal for us. We have now sold over 9 million tickets. So over 7.5 million Olympic tickets and 1.5 million Paralympic tickets. Myself and my team believe that it is an unprecedented target that we've achieved so far and we’re on course to sell the remaining tickets that we have available in our budget and we are delighted with the success of the program in both a national and international basis.

ATR: How many more tickets do you have left to sell?

CT: We have approximately 200,000 Olympic tickets that will be made available come Games time when we finalize our plan for the seating arrangements at the temporary venues we are building. And we have about 200,000 or so Olympic Football tickets that we are going to sell between now and the end of the football competition, and we have about half a million Paralympic tickets that we will be selling by the end of those Games.

ATR: You've scaled back your expectations on the Olympic Football competition ticket sales?

CT: We always anticipated selling around 2 million football tickets, so we are going to reach our target no problem.

ATR: But you've taken some of them off sale?

CT: We haven't taken any off sale. We have just made some contingency plans around reduction around one or two football venues where there are very large seating arrangements. So for some of the football matches we have reduced the seating capacity in certain cases and if people want to buy those tickets people can buy them and if people want to do that they can go online and buy them since the tickets are on sale.

We are obviously taking some contingency plans for the venues so we can support them for particular football matches. We only need to sell around 200,000 to reach our goals for the football tournament.

ATR: You hear a lot about legacy for the Olympic Games. There is physical legacy, there is sports legacy. What is the marketing legacy that these Games have brought about for U.K. business? U.K. sponsorship?

CT: I personally believe that we have taken the U.K. sponsorship market to a completely different level. We have demonstrated completely to UK how powerful that sponsorship market can be. We have demonstrated that you can receive return on investment with the right investment, with the right activating programs. So the whole sponsorship market is more buoyant that it has been. In fact the combination of sponsorship experiential marketing and social media is where the big companies are investing their marketing spend rather than traditional media and when you get those three elements working in harmony you have a very strong marketing perspective.

So I think that is one of the things our marketing has left behind is that a number of our sponsors have invested in legacy programs, whether it be sustainability, whether it be sporting legacy and those will continue after the games are finished.

ATR: Are there any surprises you can tell us about? Anything that didn't come out the way you expected to, in a bad way or in a good way?

CT: I think that the biggest surprise that we had was the overwhelming demand for tickets when we launched the ticketing program. A core part of the ticketing program was to set up a database to see who was interested in tickets. We had about 4 million people sign up for that database in a short period of time. We had some indication that there would be a substantial demand for tickets but when we launched the ticket ballot process we were surprised, pleasantly surprised for the overwhelming demand we had for tickets.

And of course that led to one or two people being disappointed when they weren't successful in the ballot but from our perspective seeing that level of demand certainly to me was a surprise.

ATR: One of the major part of the sponsorship activities was the hospitality center that is held on the Olympic Park during the games. What can you tell us about it? What's it being called?

CT: The Olympic Hospitality Center. And we set out to build what we hoped would be the most exciting and the best Olympic hospitality center the movement has ever seen. We aimed to provide a five star center with five star service and we certainly believe we will provide that objective. We are just now finishing the roll out and our sponsors are pleased with the build. It’s in a great location. It's very close to the stadium, it's got a great view and facilities and it is we think the best and largest that the Olympics has seen but also any large sporting event has seen.

At this point in time we've got 90 percent sold out and we've reached our initial targets and you know we are very, very pleased with what we've achieved and they are very, very pleased.

It's got a great location it's literally 100 meters from the stadium and it’s got the canal right there right to the left of the stadium.

ATR: Any advice for Rio de Janeiro as they get ready to crank things up besides getting a chief marketing officer?

CT: My guess is that people really underestimate the power of sponsors. It’s not just the cash that they bring. It’s the experience as I mentioned earlier and the products and services they can bring to the organizing committee and the polish they bring.

So my recommendation is to really bring as many key sponsors on board as soon as possible and get the full marketing program off the ground. And that was certainly our big focus in the first two years and it served us well and it created the platform for a successful commercial program.

Any advice I'd give to any organizing committee is get the sponsorship program up and running as soon as you can.

ATR: Do you agree that it is time for the IOC to sit down and evaluate where the TOP program is going and how it needs to work?

CT: I've worked in a lot of businesses and in the marketing sector for over 25 years and whatever sector you look in and the businesses that sit down and look at themselves and evaluate themselves are the ones that succeed. You can never be too complacent you can never just sit on the existing business model no matter what sector you're in and there are plenty of examples of where that's happened. The IOC will be having a review at some point soon and I will be delighted to be a part of it.

Conducted in London by Ed Hula

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