Stage Set for FIFA World Cup: 2 Sponsors in Focus - Analyst Blog
The FIFA World Cup 2014 has almost arrived and the world is
waiting with bated breath for the kickoff of the month-long
sporting extravaganza in Brazil. As the stage is set to get the
ball rolling, 32 participating teams along with 22 corporate
sponsors are fine-tuning their plans to make this mega event a
The quadrennial soccer tournament arguably has the biggest television audience compared to any other sporting events in the world. Conservative estimates by FIFA reveal that the in-home television coverage of the 2010 edition reached to over 3.2 billion people around the world or nearly half of the global population. The data is based on the viewership of at least a minute of the live coverage. Considering all the audio-visual media platforms, the global viewership reached a cumulative tally of 55 billion people in the last edition.
The global viewership is expected to increase manifold this year with broad proliferation of digital and social media channels. As such, sponsors are likely to pull every possible trick in the game to showcase their products for maximum brand exposure and top-of-the-mind recall to persuade football lovers to spend cash on their brands.
World Cup Football: The Money-Minter
According to a Forbes estimate, FIFA is expected to generate $4 billion revenues from this World Cup, which is around 66% more compared with the 2010 edition held in South Africa. About $1.7 billion is expected to come from the sale of TV broadcasting rights to media companies like The Walt Disney Company ( DIS )-owned ESPN, DIRECTV ( DTV ) and Rogers Communications Inc. ( RCI ).
FIFA is expected to rake in an additional $1.4 billion marketing revenues from its three-tier sponsorship strategy (See: Goals Galore for FIFA World Cup Sponsors ) that includes The Coca-Cola Company ( KO ), Adidas AG ( ADDYY ), Sony Corporation ( SNE ), Visa Inc. ( V ), Anheuser-Busch InBev SA/NV ( BUD ), and McDonald's Corp. ( MCD ) among others. While the FIFA Partners are likely to spend $730 million, the FIFA World Cup Sponsors and the FIFA National Supporters are expected to shell out $500 million and $170 million, respectively, for the event.
Furthermore, approximately $900 million is anticipated to come in from the sale of other rights such as tickets, merchandise and video games from software providers like Electronic Arts Inc. ( EA ) and Konami Corp. ( KNM ).
Integrated Marketing Campaign
In order to capitalize on this huge opportunity, marketers are developing an integrated campaign to engage more people across social media platforms like Twitter, Inc. ( TWTR ), Facebook, Inc. ( FB ), and Google Inc. ( GOOG )-owned YouTube. These platforms offer an emotive and interactive platform for fans to interact and share experiences. That Brazil is the second largest market for Facebook and provides YouTube with its second highest number of unique visitors make it more attractive for the sponsors.
Even non-official partners are trying to cash in on the FIFA World Cup through subtle ambush marketing strategies. Coca-Cola's rival Pepsico, Inc. ( PEP ) has launched its biggest integrated marketing campaign with its own "superstar 2014 football squad". Soccer players including Argentines Lionel Messi and Sergio Agüero, Englishman Jack Wilshere and Brazilian David Luiz will be part of its 'Live for Now' campaign. In addition to Pepsi's global television commercials, selected players will also be featured on a limited-edition attractive packaging and point-of-sale merchandise across the globe.
Adidas competitor Nike, Inc. ( NKE ) is also expected to generate high sales on the back of the event. Nike has manufactured team jerseys for 10 soccer teams this year - the most from all suppliers, while Adidas has made jerseys for nine teams. Nike's latest commercial featuring soccer superstar Cristiano Ronaldo is already a huge hit in digital media. In addition, Nike has further improved its supply chain network to enhance its retail presence in the host nation.
Twin Sponsors in Focus
Amid the entire melee, the investors' gain here is a couple of sponsors carrying a decent Zacks Rank. Let's take a closer look at these companies that appear to be well positioned to benefit from this sporting event.
Yingli Green Energy Holding Co. Ltd. ( YGE )
Headquartered in Baoding, the People's Republic of China, Yingli develops photovoltaic products across the globe. The company aims to use the World Cup platform to increase the awareness toward the functionality of solar energy in day-to-day use. Yingli has installed solar panels on at least two main stadiums, including the Maracana Staduim in Rio de Janeiro, where the final is slated to take place.
This Zacks Rank #3 (Hold) company has also installed solar panels on the parking structure in the Pernambuco stadium. Analysts have been moving their quarterly and full year estimates higher of late, further suggesting a solid earnings momentum for Yingli in the upcoming quarter.
Johnson & Johnson ( JNJ )
Based in New Brunswick, New Jersey, Johnson & Johnson is engaged in the research and development, manufacture, and sale of various products in the health care field worldwide. As the exclusive Official Healthcare Sponsor, the company anticipates to utilize the FIFA World Cup to reach a worldwide audience in order to spread its global movement of caring.
This healthcare company has developed a global platform titled CARE INSPIRES CARE to encourage selfless acts of care and engage more people with the goal of making the world a more caring place. Earnings estimates for this Zacks Rank #3 (Hold) stock have mostly moved up for the current year, implying bullish sentiments for the long-term growth of the company.
It remains to be seen whether such hefty investments translate into healthy ROI. However, regardless of the chances of sponsors achieving a strong ROI, sponsorship from big-ticket events like the FIFA World Cup generates engagement and online interaction that improves brand recall and extends the shelf life. For the time being, let us all join together to celebrate the Brazilian spirit with the official slogan " All in One Rhythm ".
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