Do Olympic Sponsorships Make Sense?

Knowledge @ Wharton has a special report on Olympic sponsorships this week.   Do these sponsorships make economic sense?   Some experts argue that sponsorships don't offer an immediate benefit, but they have a positive long term effect on brand equity.   That may be the case, but hopefully, firms would experience beneficial short term effects as well.  Unfortunately, that may not be the case. University of Nebraska-Lincoln Professor Kathleen Farrell and her co-author W. Scott Frame conducted a study of the impact of sponsorships on the market value of firms.  They found that stocks tended to fall slightly during the period in which firms announced that they were sponsoring the 1996 Olympics. 

Perhaps even more interesting are two reports by marketing firms.   Gallup and Robinson found that most people cannot identify the official Olympic sponsors.   Another report by marketing agency Jam found that Nike was the brand most mentioned by consumers as an Olympic sponsor, but the firm actually is not sponsoring the London Olympics!