The Death of Advertising, Sports Edition

The BBC World Service’s show Newshour had an interview yesterday with an advertising executive. The hook was the troubles US swimmer Ryan Lochte has been having with his sponsors. But along the way, he may have given away the entire masquerade. Here’s the interview. OBJ stands for Owen Bennett-Jones, the BBC presenter. PA stands for Pedro Avery, the executive in question.

OBJ: Warren Buffett once said, It takes 20 years to build a reputation, and five minutes to ruin it. And then, of course, the question comes, How long will it take to rebuild that reputation again? Well, the US swimmer and six-time gold medalist Ryan Lochte was dropped by four sponsors including ones that sound quite lucrative like Speedo and Ralph Lauren at the beginning of this week. But then 24 hours ago a maker of throat lozenges said, Yeah, we’ll take him on. Lochte lied about being robbed at gunpoint in Rio and that’s why his reputation is in such trouble. So, has the throat drops company got him on the cheap?

Pedro Avery is global CEO at Havas Sports & Entertainment, an expert in brands and sports.

PA: I wouldn’t say they got him cheap. I would say they probably paid the fair price for what he’s now valued at. I mean, in our business we spend a lot of time advising brands on what is the right price to pay for these types of endorsements and sponsorships where they work together. I would say that after the escapades in Rio recently, that his market value would have come down significantly. So I would imagine he’s just– They paid the right price for the man that he is now.

OBJ: When you’re putting these financial numbers on people, it works does it? They can bring that money to the company?

PA: Absolutely. We work, for example, with a number of football clubs, and we advise those football clubs on… even pre-transfer now, in terms of the commercial value (not just on the pitch and the performance there, but off the pitch), and you can very directly see the relationships between a particular athlete and endorsement, and the sales that come from it.

OBJ: And when you’re trying to work out that value, quite a difficult job, I’d think. You’re not just throwing darts at a darts board or sort of coming up with a number.

PA: No, you’re looking at, sort of, direct sales, but also you’re looking at some of the intangible values. One thing that I think is very interesting for sponsors is that the athletes themselves are probably held in higher regard, and more often more trust, than brands themselves. The reality is most consumers probably don’t really care much about a brand anymore, if truth be told. And our research demonstrates that if 75% of all brands were to disappear tomorrow most consumers wouldn’t care. {emphasis added}

OBJ: But they do go with the sports stars.

PA: They do go with the sports stars. Because the sports stars invariably have higher trust, have higher value. And they are a very efficient form of communication for a brand. So for a brand that’s looking for goodwill, and are looking for things that come from those associations, they work very hard.

OBJ: And you’re looking for charisma? Ability?

PA: Each brand will be looking for different things.

OBJ: Not lying about being held up at gunpoint?

PA: No, I don’t think so. And, you know, a lot of people are humans and we’ve seen relationships like Tiger Woods or even recently Maria Sharapova, etc., where those relationships have broken down with their sponsors. Each sponsor takes, I think, a very dim view on these.

OBJ: And that was Pedro Avery there, global CEO at Havas Sports & Entertainment.