Ambush Marketing

With the Vancouver Winter Olympics just ahead, the action on the slopes, links and half-pipes won’t be the only competition. For every Olympics, and other high-profile sporting events, ambush marketing often provides a sideshow. Ambush marketing refers to when an advertiser that is not an official sponsor of an event tries to associate itself with the event without paying any sponsorship fees, and every Olympic provides a new venue for creative ambush marketers. This is frustrating for the advertisers that pay millions of dollars to be official sponsors and it can weaken an event organizer’s bargaining position when trying to line up sponsors for future events. Like most events, sponsorship fees are a big part of the Olympic budget. The Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games announced that it had already secured over $720 million in sponsorship fees for the 2010 Winter Olympics.

In exchange for those sponsorship fees, official sponsors typically get exclusive rights to certain advertising opportunities such as banners on the race course, naming rights to tournaments or event locations, being the official provider of a team’s uniform or shoes, merchandise tie-ins, and VIP tickets. Examples of ambush marketing include: advertising on billboards that are near the sporting event, for example, outside a stadium or along a marathon route; flying airborne banners or huge inflatable over the event; handing out freebies such as t-shirts, flags or caps near the event so that those inside a stadium are wearing or waving the logos of an ambush marketer; creating ads that reference the sporting event, usually in generic terms to avoid liability for trademark infringement; sponsoring individual players at sporting events so that they are wearing the ambush marketer’s logo; sponsoring a news conference where team players are invited to speak; advertising a sweepstakes which will award tickets to sporting events as prizes; and running ads after an event congratulating the teams or players.

There have been many well-known ambush marketing skirmishes at the winter and summer Olympics involving big name brands such as Kodak and Fujifilm, American Express and VISA, and Reebok and Nike. Just recently, Major League Soccer filed suit against Black & Decker, accusing the company of engaging in several ambush marketing tactics surrounding games featuring the Mexican national soccer team. MLS claims that, as part of Black & Decker’s marketing strategy to reach more Hispanic consumers, the company set up booths near soccer matches featuring the Mexican national team to advertise its products, used MLS logos and trademarks in promotional flyers, and gave away tickets to MLS soccer matches to consumers who purchased $600 worth of Black & Decker tools. MLS has an exclusive power tools sponsorship with Makita, a Black & Decker competitor.

Although ambush marketing may be more prevalent at high-profile events like the Olympics or World Cup, action sports events are certainly not immune. As action sports grows, ambush marketing will no doubt be a problem for event organizers and the time to combat ambush marketing, for all event organizers, is well before the event starts.

One of the difficulties in dealing with ambush marketing is it often does not violate any laws, unless the ambush marketer uses the trademarks of an event organizer or an official sponsor or otherwise engages in unfair or deceptive conduct. State and federal laws prohibit a company from using somebody else’s trademark without permission in a way that causes confusion, for example, including another’s trademark on a company’s product or to advertise the company’s own product or service. There are many state and federal unfair competition and false advertising laws that prohibit companies from competing unfairly or engaging in deceptive behavior to market or sell their products.

However, many ambush marketers are sophisticated enough that they know not to use an event sponsor’s trademark and their behavior, while annoying, usually doesn’t rise to the level of being deceptive or unfair. Because ambush marketing might not violate any laws, it can be difficult for event organizers and official sponsors to prevent or mitigate the damage caused by ambush marketing. But there are a number of strategies available:

• The event organizer can maintain strict control over tickets by using language prohibiting unauthorized uses, such as giving away tickets as part of a sweepstakes.
• The event organizer can buy all advertising space that is close to the venues where the sporting events will take place and sell that space only to official sponsors.
• Official sponsors and/or the event organizer can launch a public education campaign that emphasizes that sponsorship fees are used to help athletes train for events and an aggressive strategy of publicly identifying ambush marketers (although some ambush marketers will welcome this exposure).
• The event organizer can emphasize what it can offer official sponsors, such as VIP passes and special events that only official sponsors can invite fans to attend.
• The event organizer can assemble “teams” to monitor the areas near the venues for ambush marketing activity and have a command center ready to deal with ambush marketing activities.
• Anticipating that ambush marketing will occur, the event organizer can have a legal team in place and be prepared to seek an injunction immediately upon learning of ambush marketing that violates trademark or unfair competition laws.

Conclusion
Although ambush marketing may be perceived as a harmless competitive “event” between mega-companies, those sponsors that pay the huge sponsorship fees know that it is a serious problem that dilutes the value of their sponsorship. To protect the official sponsors, event organizers and the sponsors should spend time and money in advance of the event planning on how to combat ambush marketing. If nothing is done until the ambush marketer’s inflatable appears overhead at the event, or the t-shirts have been distributed just outside the arena, the damage will already have been done.

Brian R. Socolow is a partner at Loeb & Loeb LLP. He represents organizations in the sports industry and other businesses. He is based out of the New York office.

Permission for article reprint has been granted.