P&G says first ever Olympics sponsorship proving its worth

LONDON (Reuters): U.S. consumer goods giant Procter & Gamble, which issued a profit warning last month, still expects its 2012 Olympic sponsorship to generate $500 million in additional sales, said Marc Pritchard, the company’s global brand building officer.

The London Olympics opened on Friday and are the first Games sponsored by the world’s largest maker of household products after it signed a 10-year agreement in 2010.

They come at a tough time for the company. P&G is in the midst of a $10 billion restructuring program and activist investor William Ackman has recently bought into the business, raising pressure on management to turn it around in the face of slowing demand in China, the United States and Western Europe.

Speaking during a visit to London for the Games, Pritchard said the Olympic campaign was money well spent by the 175-year-old company, the world’s largest advertiser.

“This is the largest and most ambitious campaign that we have ever done and it’s one of the highest returns on investment campaigns that we have done,” Pritchard told Reuters in a telephone interview.

He did not put a figure on the cost of the sponsorship and marketing around it but said much of it had come out of existing budgets.

“We took lower return spending, we shifted it over to higher return activities so there was very little that was extra,” he said. “That’s going to generate ... an extra $500 million in extra sales over the course of the year.”

The Olympics are funded in part by 11 global sponsors who pay an average of around $100 million each for worldwide marketing rights over a four-year cycle, covering a Winter and Summer Games.

P&G, whose brands include washing powders Ariel and Tide, Pampers nappies and Gillette razors, spent $9.3 billion, more than 11 percent of sales, on advertising in its last financial year.

After London, the Games go to Sochi in Russia for the 2014 Winter Olympics before Rio hosts the 2016 Games. Brazil and Russia are among the developing economies where P&G is seeking to target growth.

The Olympics gives P&G an opportunity to reach more women than would be the case for other sports with more narrow appeal, Pritchard said.

“It is one of the most highly watched - if not the most highly watched - sporting event by women,” said Pritchard.

“It allows us to be able to reach them at a time when they are very highly engaged. It is different than what we see at other sporting events,” he added.

P&G has played heavily on this with its global “Thank You Mom” advertising campaign, which highlights the role played by mothers in nurturing Olympic athletes.

Pritchard dismissed criticism that the campaign played to outdated stereotypes of family roles.

“We took this around the world and we asked moms from around the world, and people from around the world, how they felt about that and it was universally appealing,” he said.