The last two decades of major events in sports (Olympics, World Cup events, and other international classics) have seen a huge influx of sponsorship producing billions of dollars in revenue for the sports industry.  New forms of technology allow the capacity to transmit worldwide broadcasts to mass audience through television, satellite-radio, the internet, and cell-phones.

Companies recognize these events are opportunities to reach consumers on an unprecedented level.  Investment in the commercial sponsorships has produced two types of company:  First, companies who pay sanctioned organizations, IOC for Olympics, FIFA for soccer, etc., to obtain “sponsorship rights.”  These companies are granted authority to promote their product as ‘official sponsors’ of the event.  Secondly, some alternative companies who engage in what is called “ambush marketing.”  This is defined as “A company seeking to associate with an event without making payment to the event owner and often in direct conflict with a competitor who is a legitimate and paying sponsor.”[1]

Companies who engage in ambush marketing have recently been caught in a host of ethical and legal battles concerning the legitimacy of their actions. How can we assess ambush tactics as legitimate versus unethical practices? To debunk the validity of ambush marketing tactics, an analysis of issues is required, including (1) how to prevent or reduce ambush situations, (2) the impact ambush marketing has on parties involved (company, competitors, event owners, and consumers), (3) and ethical and legal considerations.

In 2006, The Sports Lawyers Association annual conference discussed some issues attached to preventing and reducing ambush marketing by competitors. “Negotiate strong ambush marketing provisions and make sure the property has specific affirmative duties to protect you.”[2] The legal contract between ‘official sponsors’ and the event owner or ‘property’ is integral to protect corporate interests against an ambush marketer’s efforts. Sponsor companies are encouraged to manage ambush marketing as a first step, when sponsorship rights are sold. Contractual obligations like category exclusivity (only one brand per product can be official) and actions of recourse to prevent non-sponsors from advertising should already be in place between sponsors and properties to minimize ambush efforts.

Another method to prevent or deter ambush marketers is effective leveraging; according to Kim Skildum-Reid, a twenty-two year veteran of corporate sponsorship, “One of the key factors in whether a sponsor is ambushable is whether they have effectively leveraged their investment. If they have succeeded in making their brand and the sponsorship meaningful to their target market, they will be difficult (but not impossible) to ambush.”[3] Not only must the contract between sponsors and properties include clauses to combat ambush tactics, but the company must also effectively leverage their sponsorship dollars to sway consumer preference for their company’s brand in product. Prior to the advent of ambush marketing, effective leveraging practices were often overlooked by companies. But now, Reid says, companies can no longer simply rely on their association with an event, but must create bonds with their target markets. “Leverage is what creates the results. If a sponsor invests in potential and doesn’t exploit it, then it’s their own fault if they get ambushed.”[4] Two ways to combat ambush marketing from the start are: 1) solid contracts and 2) leveraging.

The impact ambush marketing has on companies, their competitors, event owners, and consumers, all of whom contribute to these major sporting events, can be assessed in some concrete examples. Stephen Yates, a thirty-five year veteran of the media and advertising industries, recounts some prime examples of ambush marketing’s power to skew perceptions of the consumer. At the 1992 Olympic Games, official sponsor Reebok was ambushed by Nike:

The recognized greatest ambush to date was at the 1992 Barcelona Olympics, which saw Nike bankrole the major press conference with the US basketball team despite the fact that Reebok was the official games sponsor. Then Nike’s major sponsored athlete Michael Jordan accepted the gold medal with a Nike logo on his basketball uniform covering the official Reebok one. By the time Nike was finished with running adjacent TV ads and having their billboards near the main stadium, most attendees and TV viewers thought Nike were the major sponsor when in fact they did not pay a cent to the Olympic Committee.[5]

In this example, Nike outmaneuvered Reebok by buying up advertising space Reebok had failed to reserve contractually or through leveraging, and also via their preexisting relationship with Michael Jordan as an exclusive Nike athlete. Impact of Nike’s ambush marketing against Reebok’s official sponsorship of the Olympics, was the false depiction that Nike was affiliated with the Olympic Games, thereby undermining Reebok and grabbing a share of market exposure arguably, fairly due only to Reebok.

            Another instance where ambush marketing grabbed attention away from an official sponsor was the 2002 Salt Lake City, Winter Games. In this case, Anheuser-Busch paid $50 million for rights to use the word “Olympics” and the five-ringed Olympic logo. However, rival company Schirf Brewing advertised their product, “Wasutch Beer -- The unofficial beer of the 2002 Winter Games” while paying nothing to the Olympics. “In addition to this tactic, the brewer made sure that their name was in-shot at the finish of many events by hiring a small army of people who wore very brightly coloured parkas carrying the message. These people pushed into the background at the end or start of an event, with the result that their beer outsold the “official” brew five-fold.”[6] The ambush campaign run by Schirf Brewing against Anheuser-Busch in 2002 was both ingenious and hugely successful, but the consequences resulting from this kind of outcome is twofold: 1) The company that paid for official sponsorship rights is deterred from future official sponsorship because successful ambush marketing diminishes their perception of value in holding the official title. 2) Successful ambush marketing devalues the event itself because official sponsorship is less desirable to companies who form the opinion that, official sponsorship is worthless if ambush marketers can gain the same beneficial association at no cost.[7]

Since protecting the value of major sporting events is integral both to sponsors and event owners, the practice of ambush marketing gives rise to questions both ethical and legal. When is ambush marketing ethical and when not; also, what legal recourse is available to official sponsors and event owners who oppose actions of ambush marketers? In every ethical debate there are two sides; these standpoints are explained illustratively by Michael R. Payne: “Inspired marketers, neutralizing the competitive advantage by confusing the consumer as to who is the legitimate sponsor of an event… Who have successfully avoided paying the excessive demands and rights fees asked by event organizers and mangers for their properties—all is fair in the cut and thrust of the marketing battlefield,” describes ambush marketers as freethinking pioneers of advertising. [8] Conversely, ambush marketers are also viewable as pariahs, “Thieves knowingly stealing something that does not belong to them?... Parasites? Feeding off the goodwill and value of the organization they are trying to deceive the public into believing they support? Like leeches they suck the lifeblood and goodwill out of the institution…”[9] An ethical discussion demands criteria to determine which picture of ambush marketing is applied. Are ambush marketers creatively ingenious or just unethical?

Ethical criteria used to make such a determination are found in Ambush Marketing: The Ethical Issues, by Paul O’Sullivan and Patrick Murphy. Utilitarianism and duty-based ethics are two important categories that explain when ambush business practices are ethical and when they cross the line. Utilitarian theory says, decisions should bring the greatest good for the greatest number, and when applied to businesses, the theory recognizes the consequence of actions that generates the greatest possible revenue. “Thus, the greatest financial good is gained by offering multiple, even competing, organizations an opportunity to sponsor some aspect of a sports event.”[10] For this reason, it is sometimes difficult to get properties to contract to exclusivity rights or to assure they expend effort to reduce the presence of competing ads. In instances where the governing sports association may benefit from ambush marketing, the practice seems ethical.

However, a non-business view of utilitarian theory recognizes the individual fan’s and general public’s “greatest good.” “If the ambusher’s marketing message causes confusion or cynicism on the part of the fan, the goodwill that is assumed to exist may be undermined.”[11] In this case, ambush marketing would seem unethical because it negatively impacts the event through which it is trying to gain advantage. In utilitarian theory, ambush marketing is deemed ethical or not based on the consequences of actions and according to a business or non-business interpretation of who achieves the “greatest good for the greatest number.”

Duty-based ethics are resolved in the intentions of ambush marketing. That is, if ambush marketing’s intention is to create confusion or miscomprehension in the consumer to reap benefits of an exclusive sponsor or to devalue an official sponsor’s market share, then the practice is unethical. On the other hand, if ambush marketing comes as a result of being “denied the right to participate in an important promotional opportunity due to the inability to meet the cost of official sponsorship and further that their duty to stockholders demands that ambushing activity be undertaken,” then the practice could be deemed ethical.[12] In duty-based ethical theory, ambush marketing is deemed ethical or not based on the reason ambush marketing tactics are used. In two relevant ethical criteria, utilitarian theory and duty-based ethics, there exists room for either a good or bad interpretation of ambush marketing, and therefore, the ethical formula must be applied on an instance-by-instance basis.

Finally, an assessment of ambush marketing including future implications can be obtained from a description of laws and legal considerations that impact ambush marketing. The law is a powerful tool to fight ambush marketing, but countries like the US, UK, and Germany, to name a few, has no specific laws or statutes on ambush marketing.[13] According to analysts on the subject, legal efforts to curb ambush marketing exist only within contract law including licensing rights, and trademark and copyright laws at the state, federal, and international levels. Unless ambush marketing violates contract contingencies, misappropriates trademarked symbols, or recreates copyrighted material in the course of a campaign, no laws are currently available to cease the practice of ambush marketing as such. The article, Ambush Marketing: A Critical Review and Some Practical Advice, extracts the implications for official sponsors and event owners, concluding the onus of responsibility to combat ambush marketing rests on the sponsors and event owners, not lawmakers. “Controlling ambush marketing involved buying up all ‘rights to all the teams, or all the broadcast rights, or all the space for 10 miles around… if you won’t or can’t do that, then you open the door to [ambushers].’”[14] Continuing, “The law as it now stands seems unable to accommodate the concerns of official corporate sponsors. There is no limit to human ingenuity. As such, ambush marketing at the margins will arguably always occur.”[15] Although some applicable laws are codified to apply directly to major sporting events, such as the “Olympics Insignia Protection Act”[16], the specific laws that apply to ambush marketing are still only implied in legal protection of contracts, trademark status, and copyright infringement.

Ramifications of the absence of legal firepower against ambush marketing is a recent move to increase fines and penalties, including prison time for those who break applicable laws during ambush marketing campaigns. South Africa, who hosts the World Cup of Soccer in 2010, and also Brazil and France, are currently experimenting with increasing the stringency of laws when violations occur in the course of ambush marketing.[17]

            Ambush marketing is stratified by diametric ethical dilemmas, applicable by-association legal mechanisms, and the struggle for corporate sponsors and event owners to protect their marketable interests amidst a newly emerging and quickly growing force of ambush tactics that move at the pace of human ingenuity. Contracts between sponsors and event owners are the first and perhaps best line of defense against ambush marketing. Also, leveraging is of increased import for sponsors to protect their fair market share. In most cases, ambush marketing operates within the law and when it is smartly executed, is very effective in promoting the ambusher’s brand. Nevertheless, acquiring and applying ethical arguments as well as reworking contract, trademark, and copyright laws to apply directly to ambush marketing, are methods for gaining ground against companies who use ambush marketing as a strategy.

Crow, D. & Hoek, J. (2003). Ambush Marketing: A Critical Review and Some Practical Advice. Marketing Bulletin, 14, 1-14. Retrieved March 7, 2009, from JSTOR database.

Jack, L. (2008, August). Ambush Marketing: ‘Bush-wackers’. Marketing Week, 18. Retrieved March 7, 2009, from Proquest.com.

Jeffery, N. (2007, April 24). Olympic Logo Laws Review. The Australian (Australia). Retrieved March 7, 2009, from lexisnexis.com.

Kent, A. & Campbell, R. (2007, June). An Introduction to Freeloading: Campus-Area Ambush Marketing. Sports Marketing Quarterly, 118. Retrieved March 7, 2009, from Proquest.com.

O’Sullivan, P. & Murphy, P. (1998). Ambush Marketing: The Ethical Issues. Psychology & Marketing, 15, 349-366. Retrieved March 7, 2009, from JSTOR database.

Skildum-Reid, K. (2008, January) Ambush Marketing. Promo Magazine, 37. Retrieved March 7, 2009, from lexisnexis.com.

Sports Lawyers Association Annual Conference. (2006). Dude, Where’s My Category? Legal and Ethical Issues in Sports. Northwestern University.

Yates, S. (2008, February 13). Major events ambushed by guerillas. Sunday Territorian (Australia). Retrieved March 7, 2009, from lexisnexis.com.

(no author given). (2006, February). Kick-off to ambush marketing at World Cup. Managing Intellectual Property, 1. Retrieved March 7, 2009, from Proquest.com.