Farewell to a summer love?

In many years to come people will be telling stories of the incredible coming together of the nation in the summer of 2012. At a recent memorable Marketing Society event Sir Keith Mills, Deputy Chairman of LOCOG, spoke of how the Olympics had put the ‘Great’ back into Britain and enhanced its world standing.  

LOCOG research found 93% of the population were engaged with the Games. The medal success of Team GB has resulted in millions of people being inspired to become more active and to follow the example of the Games Makers and become volunteers. One of the key research findings from the Games was of its great social inclusiveness, bringing together young and old, and of the ‘haves’ and ‘have-nots’ across the country.

A ‘can do’ mood seemed to envelope the nation proving to millions of doubters that the UK is indeed a leader in global event management.  Building on this positive mood is the challenge for all engaged with creating an Olympics legacy; both business and government will need to use sport as central to future planning, given its role in peoples’ lives and its ability to change lives.

A factor in the economy moving out of recession in Q3 was the impact of consumer spending on the Olympics. The ONS calculates that ticket sales added 0.2% to GDP in Q3, while other spending on activities such as the creative arts and entertainment, hotel accommodation (especially in London), food and beverage services and transport all may have had an Olympics effect.

Research by GfK/JGFR estimates that consumer spending on tickets and merchandise will be around the £2 billion level that LOCOG were budgeting for. While the social benefits from the Olympics have been enormous – compare the summer of 2012 with the riots of summer 2011 – the economic benefits from the Olympics/Paralympics will extend out over the coming years and be a major part of the legacy.

In the two and a half months since Coldplay closed the Paralympics the autumn has seen reality return. Consumer confidence weakened in October to fall to its lowest (-30) since last April (-31) and at this level points to the economy remaining in no/low growth mode.

Among the groups that saw confidence bounce higher in the summer were people in part time work (up 6 points July-September), the unemployed (up 7 points) and the retired (up 4 points). Unusually among these groups confidence was higher than among full time workers (down 2 points) who were generally less engaged with the Games, although not higher earners (up 7 points).

Having time to be part of the Olympic/Paralympic experience – with many free events to attend or join others in front of a big-screen – is a likely reason for the summer bounce.

In the October survey confidence levels among most of the groups boosted by the Games has fallen sharply lower- interestingly the only group to show a gain in confidence in October are housewives / househusbands  (up  4 points to -22), second only to students (-20) whose confidence has slumped by 12 points over the past year.

With Bank of England Governor Sir Mervyn King in gloomy mood in presenting the November Inflation Report – describing a ‘zig-zag’ economy in prospect with low growth – households continue to be under pressure to cut outgoings where possible. The JGFR Financial Well-being Index in October fell to its lowest in 4 years, 117 points below its 12 year average.

More positively, unemployment expectations continue to fall with employment up some 500,000 on a year ago, pointing to some improvement in household income in the coming months. The GfK / JGFR Q4 Financial Activity Barometer of housing market confidence jumped 20 points to a 2-year high with recent housing market data reflecting the improvement in demand that may help to boost sales of major household goods. The October European Commission economic sentiment reading for the UK (97.1) was at its highest since July 2011, well ahead of European competitors.

For marketers the economic outlook for 2013 is highly uncertain. The re-election of President Obama and the smooth transition of power in China provide political stability in the two leading economic nations. Indeed US consumers are at their most confident since 2007 which should lead to increased consumer spending and feed into better growth – assuming US tax and spend budget issues are resolved.

German elections, the on-going euro-crisis and the UK relationship with Europe will be major issues in 2013 and force many marketers to look more to China and the emerging markets where growth prospects are better.

Two key trends from the summer games provide some inspiration.

With a decade of sport to look forward to including the 2014 Commonwealth Games in Glasgow and 2015 Rugby World Cup in England / Wales as well as the 2014 World Cup and 2016 Olympic Games in Brazil, marketers have plenty of opportunities to partner with sport in brand building. This may be in supporting top class professional sport but also increasingly using sport to improve the lives of disadvantaged people through CSR initiatives.

A majority of the public felt that Olympics/Paralympics sponsors played a major role in the success of the Games and already sponsors are seeking to partner with Games medal winners to promote their brands. Marketers have a major role to play in helping the Olympics legacy to succeed. For around 60% of the public such success will be dependent on corporate sponsors understanding the role sport plays in the lives of their customers, employees and communities.

A second trend is the growth of social media in enabling the creativity of people to be instantly shared. All the summer events including the Diamond Jubilee, Torch Relays, Cultural Olympiad, Olympics and Paralympics will have provided the opportunity for the young especially to use their experiences and creative talent to prosper and be showcased. Social media is set to transform the power of the young in business and marketing.  The ‘experience economy’ came of age this summer.

Whether the Team GB effect can continue at home seems unlikely. The decision to go ahead with a Scottish referendum appears at odds with the summer national togetherness. Where Brand Britannia may still rule is abroad and will be a challenge for all marketers to jet off (bikes on the ground in Team GB colours and the 007 number) and boost UK exports.

Farewell to this summer’s love but the legacy will remain as the road to Rio gets underway and a new sporting love emerges.