P&G: Olympic Sponsorship Should Pay Dividends

American corporation Procter & Gamble are expecting to make $500 million in additional sales through the London 2012 Olympics even though they issued a profit warning last month.

The London Olympics open on Friday and are the first Games sponsored by the world’s largest maker of household products after it signed a 10-year agreement in 2010.

They come at a tough time for the company. P&G is in the midst of a $10 billion restructuring programme and activist investor William Ackman has recently bought into the business, raising pressure on management to turn it around in the face of slowing demand in China, the United States and Western Europe.

Speaking during a visit to London for the Games, Marc Pritchard, the company’s global brand building officer said the Olympic campaign was money well spent by the 175-year-old company, the world’s largest advertiser.

“This is the largest and most ambitious campaign that we have ever done and it’s one of the highest returns on investment campaigns that we have done,” Pritchard told Reuters in a telephone interview.

He did not put a figure on the cost of the sponsorship and marketing around it but said much of it had come out of existing budgets.

“We took lower return spending, we shifted it over to higher return activities so there was very little that was extra,” he said. “That’s going to generate … an extra $500 million in extra sales over the course of the year.”

The Olympics are funded in part by 11 global sponsors who pay an average of around $100 million each for worldwide marketing rights over a four-year cycle, covering a Winter and Summer Games.

P&G, whose brands include washing powders Ariel and Tide, Pampers nappies and Gillette razors, spent $9.3 billion, more than 11 percent of sales, on advertising in its last financial year.

After London, the Games go to Sochi in Russia for the 2014 Winter Olympics before Rio hosts the 2016 Games. Brazil and Russia are among the developing economies where P&G is seeking to target growth.