Who Will Call Sohu’s Bluff?

Olympic Logo and UnbrellasSo it looks like it might be true that Sohu has the exclusive rights to the any web-marketing inside of China, which can be read about in this Wall Street Journal report. At least that’s what Sohu is telling ad agencies… Here is an excerpt:

In 2005, Chinese Web company Sohu.com Inc. outbid fierce competition to become the exclusive Internet sponsor of the Beijing Games. For an estimated $30 million, Sohu bought the right to create the official Web site for the Beijing Organizing Committee and to use the Beijing Games logo of a runner in the company’s marketing.

And earlier this year, ad agencies say, Sohu started telling them that online ads from other sponsors that carry the Beijing Olympics logo can appear only on Sohu.com.

One would have to ask the question: does this cover any representation of the logo? All sponsors of the Olympics have a special Olympic logo with the company logo juxtaposed with the “Running Man” Olympic Games logo and I’m sure this would seriously hinder their marketing campaigns within greater China.

Now only this but it would seem to give Sohu a bit of a monopoly on the Olympic marketing pipeline, at least inside the country. For a county with over 162 million internet users this could represent a major coup.

You can see why some current sponsers have been “loath to comment”.

Here’s the one of the main cruxes of Sohu’s claim:

Sohu’s ad claim extends only to partners and sponsors of the Beijing committee and not to international participants in The Olympic Partner (TOP) program, who can use the Olympic rings in ads around the world. It also affects only Web sites based in China — including the localized versions of Yahoo Inc., Google Inc. and Microsoft Corp.’s MSN — because only the Beijing committee’s sponsors are allowed to use the running-man logo inside China.

Sohu is even saying that they will have exclusive access to events, further sweetening the potential for online ad revenue. Of course this is probably a PR ploy aimed at creating buzz where there is no honey.

“Sohu only got the right to run the official Web site, and except for that, they have no other exclusive rights,” says Chen Tong, rival Sina Corp.’s executive vice president and chief editor. Sina, which operates a heavily news-driven site, claims the alliance already has a team putting together content about the Games.

At this point I would like to get a hold of that agreement and see for myself.

Update:

I’ve pasted the full text of a Wall Street Journal article which sheds some light on the situation.

Olympics Organizers Back Sohu in Ad Dispute
By Geoffrey A. Fowler and Juliet Ye
22 August 2007

Organizers of the Beijing Olympics have thrown their support behind Sohu.com Inc.in a feud between the Chinese Web portal and its rivals over advertising during the 2008 Games.

The Beijing Organizing Committee, known as Bocog, confirmed a statement by Sohu, its Internet-content sponsor, that the site has the exclusive right to post advertisements by Olympic sponsors who are using the Games’ official logo of a running man.

Beijing-level sponsors are “only allowed to release their Olympic-related online advertisements on Sohu,” Bocog said in a statement to The Wall Street Journal.

Beijing-level sponsors include partners and sponsors of Bocog, not international participants.

In 2005 Sohu bought, for an estimated $30 million, the right to create and run the official Web site for the Beijing Organizing Committee and to use the Beijing Games logo of a runner in the company’s marketing.

Other Chinese Web sites, which have formed an alliance to counter Sohu, have said Sohu’s sponsorship of the Games bought it the right only to manage the official Games Web site and to use the Games logo in its own ads. There is little precedent for the issue, as the Games have never had an Internet-content sponsor like Sohu.

Bocog says the ruling doesn’t apply to international sponsors of the Games, which are allowed to use the Olympic rings in any market and in any media around the world they choose.

Lawrence Wan, China director of Omnicom Group Inc.’s OMD Digital, says the announcement answers one question — but raises new problems for marketers. “Now the use of logos becomes an issue. Strategically, do we want to have a split personality online?” he asks, using the logo on Sohu but not elsewhere. “Will brands still promote the Olympics when they can’t use the logo?”

Du Hong, marketing and sales manager of Web site Sina.com, owned by Sina Corp., says the alliance of Sohu’s rivals is still waiting for a public statement from Bocog and continues to challenge Sohu’s claims.

Bocog was less clear about another claim by Sohu: that it would get preferential access to report on the Games for its own commercial use. “Bocog welcomes all media coverage on the Olympics,” it said in a statement, without specifically commenting on Sohu’s claim. Generally, Chinese Web sites say they haven’t been granted access for their journalists to cover the Games.

Even without the exclusive coverage right it looks like the best spent $30 million dollars in a long time… I see litigation in the future. Maybe not in China but definently at future Olympic Games. With the promise of a more connected world populace in the future this is likely to grow into a bigger issue or at least needs to be better defined in the years to come. $30 million dollars just seems a little low to me for what they are claiming.

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