Octagon's Carling expects new World Cup sponsorship structure post-Russia
By Simon Ward
Fifa is likely to restructure its sponsorship programme for the World Cup after this year’s tournament, but the brands involved should not suffer any reputational damage from their association with the event in Russia, according to Phil Carling, the head of football at sports and entertainment agency Octagon.
From a public relations point of view, soccer’s international governing body has endured a difficult four years since the 2014 World Cup in Brazil, as various corruption scandals have tarnished its standing, and are likely to have deterred some prominent companies from wanting to align themselves with the sport’s biggest event.
In addition, the federation is now having to witness international condemnation of Russia, the country it chose to host the 2018 event, now just two months away.
The government of Vladimir Putin is facing censure from the west for its alleged interference in the 2016 US presidential election, its support for the controversial administration of Syrian president Bashar Al-Assad in an ongoing civil war, and claims that it was involved in the recent poisoning of the Russian ex-spy Sergei Skripal, and his daughter Yulia, in the UK.
However, although the confluence of events is not ideal in the year of the World Cup, Octagon, which is working with five sponsors of the tournament, including brewing giant AB InBev, believes that enthusiasm for the matches will outweigh any antipathy towards Russia and Fifa.
In an exclusive interview with Sportcal, Carling (pictured) said: “It’s not the best time for all of this to be happening, that’s certainly true. But I don’t sense any appetite for anyone to be boycotting the World Cup. Secondly, from a brand perspective, I think people tend to say, ‘This is the World Cup, this is different’. It sits in its own ecosystem, immune to all the brickbats that are going on, and it is the greatest show on earth.”
He added: “The brands coming to this World Cup are either very established [tournament] brands like AB InBev and of the west, and already knew what they were buying into, or are new brands that are almost exclusively Asian, and Chinese in particular, or from the Middle East.
“For those types of brands, all of the political dimensions and the reputational issues that have clouded Fifa and its properties for the last few years don’t really matter.”
Although it failed to attract new sponsors in the 18 months following the last World Cup, as senior officials were implicated in the Fifa-gate corruption investigation in USA, and president Sepp Blatter was ousted in a separate case, the governing body has made up for lost time to a certain extent, with deals with the likes of China’s Wanda and Qatar Airways, both on board as top-tier ‘Fifa Partners’.
Last month, Fifa reported a loss of $191.5 million for 2017, but said that it had achieved 98 per cent of its revenue target of $5.66 billion for the current World Cup cycle, and should now exceed that conservative figure comfortably.
The federation, now headed up by Gianni Infantino, said it "is well on track" to exceed its target of $1.45 billion for the sale of marketing rights for 2015 to 2018, but its aspirations will have been checked to a certain extent by a lack of third-tier regional sponsors, with only four of the envisaged 20, from five different continents, signed up to date.
Carling has sympathy for the department of Philippe Le Floc’h, the former Uefa marketing director, who became Fifa’s chief commercial officer in October 2016, pointing out that the present structure was devised much earlier and on the premise that digital replacement technology would be in place for the Russia World Cup.
This technology allows different brands to be advertised in different markets during matches via virtual perimeter advertising, but was deemed not ready for this year's tournament.
Carling said: “The sponsorship structure was conceived in the full expectation that digital replacement technology would be fully operational by 2018, and [the lack of] that is almost an albatross around the current sponsorship team because they’re committed to these 16 additional regional brands and also the traditional Fifa model with Fifa Partners, [second-tier] World Cup Sponsors and local market sponsors.
“Frankly, it’s a bit of a mess, but I don’t think you can lay that at the door of the current regime. I think their ambition is to get this World Cup out of the way, make the best fist of it they possibly can, from a structural perspective, and then revisit it pretty quickly once it is over.
“I would anticipate post this World Cup that there will be a pretty fundamental review of the deal architecture for the World Cup.”
Asked why DRT will not be place in Russia, Carling said: “I think it’s proof of concept. Some competitions and some rights-owners have been prepared to take it on. LaLiga have taken it on, and it’s quite well established in some of the American sports now.
“I think those rights-owners that set the very highest standards are still not satisfied that it doesn’t still have glitches, and therefore they believe that the broadcast experience could be compromised by the use of DRT.
“That’s not to say that they’re not improving the system all the time. It’s better than it was last year, and it will better in a year’s time, so that it will become a tried-and-tested part of the sport’s commercial landscape is a given. It’s just not quite there yet and I don’t think Fifa were prepared to take the plunge on introducing it yet, just as Uefa haven’t been with the Champions League.”
Octagon's Russian operation In addition to long-time partner AB InBev, best known for its Budweiser brand, Octagon will be working with Fifa Partners Gazprom, the Russian energy giant, and Hyundai-Kia, the Korean car manufacturer, regional sponsor Alfa-Bank, and Hublot, the Swiss luxury watchmaker that is the official timekeeper of the World Cup, at Russia 2018.
As it did in Brazil, Octagon has adopted the model of using an existing partner agency in the local market, in this case ADV, a company long aligned with its parent Interpublic Group, as the basis for its tournament operation.
It then “parachuted” in a senior team led by Matthieu Fenaert, who was previously co-managing director of Octagon Brazil at the time of the last World Cup, before adding specialist account teams, including Russian speakers, closer to kick off.
Carling said: “We’re now thinking that the model would probably work for Qatar  as well. With a little bit of luck and a little bit of judgement we’ve come up with a very nice model for dealing with major events in countries that can be quite challenging.”
Because of the size of Russia and lack of infrastructure in some areas, Octagon’s activation strategy will be centred on the major host cities of Moscow and St Petersburg.
Carling said that learnings to date and the experience of last year’s Confederations Cup, the dress rehearsal for the World Cup, were that “outside of the major centres, the more difficult it is to actually get things delivered.”
“A city like Volgograd does not have many four- or five-star hotels. Once the media, the sponsors, Fifa and the federations have booked the hotel rooms, you’re going to be struggling to deliver a quality event.
"The thought process has come down to very much focusing on certain cities and certain events, although some clients are quite happy to activate throughout the country. You need to have a lot of arms and legs. The focus will definitely be on Moscow and St Petersburg.”
For instance, AB InBev will have a 'Bud Boat' on the Moskva River and a 'Bud Hotel' through the rebranding of the InterContinental in the Russian capital, while also activating in other cities, and in 83 different markets worldwide.
Despite some negative reports, which have centred on the potential for hooliganism, Carling is confident that its clients and other visitors will have a positive time in Russia, and that any challenges can be overcome.
He said: “They’re mostly issues of logistics, but also of infrastructure, basic things like hotel rooms, availability of transport, linguistic issues. Once you get outside of Moscow and St Petersburg there wouldn’t be so many English speakers, for example in Yekaterinburg, but this is not insurmountable.
“With some of the relationships we wish they’d happened earlier because planning is always difficult if it’s at the 11th hour, but I think broadly speaking our experience has been that the Russians have it pretty well organised, so, with things like accreditation, ticketing, visas, getting people around, security, our view is that there’s not too much to be worried about.”
The World Cup starts with the hosts taking on Saudi Arabia at the Luzhniki Stadium in Moscow on 14 June, and concludes with the final at the same venue on 15 July.