Toyota and the Olympic dilemma

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One hundred days before the opening of the Paris 2024 Olympic Games, Toyota began its promotional campaign for the games by posting an inspiring “farewell” video on social media.

The heartwarming 60-second video comes from an automaker that has been a top-tier Olympic sponsor since 2017 and is rumored to have spent $835 million on the effort. Sadly, after more than a month online, at the time of writing the charming build hasn’t even had 6,000 views on Toyota’s official YouTube channel. At scale, that’s how many cars the company sold worldwide every 4.5 hours in 2023.

It seems that enough is enough. The Olympics have changed because the audience has changed and it takes moments like this to appreciate that and rethink it. Toyota’s record contract for four Olympic Games (two summer and two winter) with the International Olympic Committee will end when the torch leaves Paris later this year. Toyota, company sources say, has no plans to renew.

The decision says a lot about Toyota, more about the Olympic Games and even more about how far content consumption has advanced since the contract began. Young people, advertisers say, do not watch the Olympics with the enthusiasm of previous generations. The next eight years could make Toyota’s decision look very smart.

Clearly, there are significant risks in abandoning an inherently globalized marketing company that, in theory, brings billions of global eyes to its brand every two years. These are message-driven times, and a gigantic summer piece is not something to be quickly dismissed.

This is especially true for Toyota, whose messaging problems are already bedeviled by its determination (for now) to back all the horses. It is sending 3,000 hydrogen fuel cell vehicles to the Paris games, has revealed real progress on a solid-state battery for electric vehicles, but has also just revealed plans for a new generation of internal combustion engines. For investors and customers alike, the company has a lot of explaining to do in the coming years and may need a big platform to do it. As Tesla and the emerging ranks of Chinese electric vehicle manufacturers launch increasingly competitive products, the Japanese heavyweight is perhaps their juiciest and most defeatable enemy. Wouldn’t it be disastrous for Toyota if BYD, Hyundai or Nio filled the top Olympic spot left vacant?

Possibly. Both Fomo and the threat of a rival stealing the show are real, say advertising executives who have worked closely with Toyota and other top Olympic partners. But these are outweighed by a catalog of greater risks.

The first of them is the cost. Toyota would never say this out loud, but it didn’t get $835 million from a sponsorship deal that spanned the Covid-ruined 2020 games in Tokyo and the 2022 winter games in Beijing. And while that crisis was beyond anyone’s control, the nature of blame-sharing by both traditional media and social media means that major sponsors are now routinely questioned as accomplices as the IOC reels between scandals and Host nations are questioned for everything from human rights abuses to sustainability failures. .

The second risk is the extent to which the Olympic Games are both hostages of geopolitical fortune and a showcase of fissures. They always have been, of course (three were canceled because of the war, and were ruined by boycotts in 1980 and 1984), but the grim odds seem greater today than at any time in the past 40 years. Should a potential sponsor wait for sport to work its conciliatory magic or accept that eight years is no longer a predictable geopolitical horizon?

The biggest source of concern, however, is that the Olympics can no longer deliver on the promise of billions of eyeballs, especially among those under 35. The IOC may imagine it’s solving that problem by introducing skateboarding and breakdancing to games, but advertisers know that engaging a modern audience requires a lot of effort in an extremely fickle environment.

The problem, says a senior advertising executive who has worked closely with several top Olympic sponsors, is that the fragmentation of media consumption and the increasing offerings of live sports and other content mean that viewers are not feeling as connected to games like they used to. The difficulty for a sponsor is that while there may be millions of people watching the pole vault and, by extension, the sponsor’s brand in the background, millions more (the next generation of potential Toyota owners, for example) are watching the unbranded TikTok of the pole vaulter. Video of what they had for breakfast.

Toyota has decided not to participate in the next phase. Others may soon follow.

leo.lewis@ft.com

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