How do companies 'circumvent' Olympic advertising copyright laws?

Olympic sponsors are spending tens of millions of dollars to get this advantage, but other advertisers are also trying to "get around it" by sponsoring individual athletes - a much more cost-effective way.

Under Armour is not an official sponsor of the Rio Olympics, but the company is associated with some of the most prestigious names in sports, such as Michael Phelps, Andy Murray in tennis, Jordan Speith in golf and Kelley O'Hara in soccer.

Instead of spending a large sum of money to sponsor Phelps's Olympic performance, the company cleverly used social media to connect them with the Olympian at a very low cost by using creative ways to congratulate the swimmer.

“What you do in the dark will lead you to the light,” read a tweet posted minutes after Phelps won his record 20th gold medal. Under Armour tagged Phelps in the post, along with its ‘Rule Yourself’ slogan, an American flag and a cheering emoji.

Michael Phelps is always in the sights of advertisers. (Source: Getty Images)

At the Olympics, companies are now operating under newly relaxed sponsorship rules, passed after years of lobbying by athletes and their agents.

Under Armour doesn't pay a dime to the USOC or the IOC for these great promotional opportunities. The company isn't an official sponsor of the Games. That sponsorship has cost companies like Nike, Visa, and McDonald's tens of millions of dollars, including the rights to use the Olympic rings, the word 'Olympics', and other intellectual property.

However, Under Armour's campaign represents changes to the so-called Rule 40, which ends the ban on advertising during the games for companies that sponsor athletes rather than the Games.

Under Armour gained an estimated $200,000 in brand value from the brief moments NBC cameras captured the company’s logo on Phelps’s swim cap and jersey between competitions. But when Phelps walked to the podium to accept his medal, viewers could only see the Nike logo.

However, Under Armour designs the uniforms of several strong Olympic teams, including the U.S. gymnastics team, meaning its logo will appear every time the team competes.

Phelps is the highest-profile athlete on Under Armour's roster. The company sponsors around 250 athletes — from celebrities to lesser-knowns — and has used a variety of creative tactics to connect its brand to the Olympics.

The apparel company has rented a series of outdoor gyms along 80km of Rio’s coastline to house advertising towers and hold daily workouts for fans during the Games. It has also hosted VIP guests in a penthouse where they can meet its sponsored athletes.

Naturally, official sponsors have expressed concern that the rule change could damage their huge investments and are keeping a close eye out for any moves by other companies to violate the rules.

John Lewicki, who oversees global Olympic sponsorship deals for McDonald's Corp., said his company will use this year's Games to evaluate whether to continue signing other Olympic sponsorship deals in the future.

“I wouldn’t say we’re all happy about it,” Lewicki said. “If we find that Rule 40 is impacting the value of our sponsorship, we can always look at it and renegotiate for future contracts.”

McDonald's current deal expires after the 2020 Tokyo Summer Olympics.

"The USOC relies on the support of our partners and is committed to protecting their Olympic rights, but at the same time, we seek to expand opportunities for Team USA athletes," Lisa Baird, USOC marketing manager, said in a statement.

The IOC said in a statement that it takes the issue of 'ambush marketing' very seriously and will protect the exclusivity rights of Olympic sponsors.

"If there is an attempt to create an unauthorized commercial connection with the Olympic Games or the Olympic properties, we will respond quickly," the IOC said in a statement.

Before the rule change was approved last summer at the IOC meeting in Malaysia, athletes had long complained that they were not getting enough commercial attention and income during their most marketable moments.

Companies that sponsor individual athletes or teams must submit promotional plans to the USOC or other national committees months in advance to ensure that their campaigns do not infringe on Olympic copyright.

To take advantage of Rule 40, athletes must find sponsors at least six months before the Games to allow time for brands to file for exemptions.

“As long as you don’t use the intellectual property of the Olympics, like the five rings or the word ‘Olympics,’ you can still create something beautiful,” said Lowell Taub, head of sports marketing at CAA Sports, which has worked with Olympians like gymnast Gabby Douglas.

Top global sponsors spend around $25 million a year on rights, or around $100 million for a four-year period covering the Winter and Summer Olympics.

The IOC hopes to double the fee to $200 million for four years starting in 2021.

Under Armour, on the other hand, is likely to spend a much smaller amount. It has opted to sponsor national governing bodies—the entities that oversee specific sports in various countries, such as USA Gymnastics, USA Boxing, Canadian Football, and beach volleyball in Switzerland and the Netherlands.

The company did not disclose how much it invested in its Olympics marketing campaign, but in a report it reported a 14% increase in marketing expenses — from $107.6 million to $122.5 million — in the first quarter ended March 31 compared to the same period last year.

Peter Murray, Under Armour's vice president of sports marketing, doesn't rule out the possibility that the company will become an official sponsor at some point.

"As we look to grow our brand and business globally outside of the United States, the Olympics will continue to play a key role in that. We're really just getting started," Murray said.

According to Vietnamplus