Acer Olympic marketing lost tens of millions of dollars sponsorship fee or will be skipping

Time to fall back to December 4, 2007.

The same day, Lenovo Group announced the 2008 Beijing Summer Olympics after the exit top sponsorship program. 2 days after Lenovo's announcement, Acer, Taiwan's PC maker, announced it was the top sponsor of the 2010 Vancouver Winter Olympics and the 2012 London Olympics.

While the industry expects Acer to hit 70 million ~1.2 billions of dollars in marketing over the next four years, Acer's chairman, Wang, said confidently that it was not a problem for Acer to pay for the investment.

That year, Wang was confident because it was Acer's most beautiful time, with several acquisitions, Acer becoming the world's third-largest PC maker after Hewlett-Packard and Dell.

But four years later, the industry is unpredictable, and Acer's situation is less than satisfactory. Acer suffered its first big loss in 2011. In the 2012, Acer had to cut back on its spending and lose its voice during the Olympic year, when it was supposed to spend heavily on marketing.

Olympic marketing lost its voice

Acer, the top sponsor of the London Olympics, is "low-key" compared with the sponsorship influence of Lenovo in the 2008 Beijing Olympics.

2008, Lenovo as the top sponsor of the Olympic Games, not only planned the Olympic torch hand selection, Olympic torch relay and other activities, but also signed the CCTV Olympic medals list and a number of television, radio programs.

In China, the world's largest PC market, Acer has barely seen any other marketing campaign this year except for the Chinese diving team and the release of four products with Olympic five-ring markings.

According to people familiar with the matter, Acer Europe and other regions for the Olympic Games have a certain marketing activities, but the marketing costs are paid by the region, Acer at the group level did not deliberately allocate Olympic marketing costs.

Getting top Olympic sponsors is just a guarantee that Acer has the right to use the Olympics for marketing, but if it is to get a bigger brand, it needs to put in more marketing campaigns to match. There is a point of view, to invest more than 3 times times the funds in order to achieve better Olympic marketing effect.

According to Acer's results in the first quarter of 2012, Acer's marketing costs dropped from NT $9.227 billion in the first quarter of last year to NT $8.387 billion, not only not yet but a year-on-year decline of 9%.

Industry insiders believe that Acer's "lost Voice" in Olympic marketing could lead to the tens of millions of of dollars it had previously paid to get top sponsors.

As the top sponsor of the Olympic Games is expensive, the IOC has a secret system for top-level sponsorship, but a widely cited figure is that Lenovo spends 65 million of dollars on the title of Beijing Olympic Games. If a conservative estimate of 15% to 20% per sponsorship fee increases, Acer could spend $80 million on sponsorship.

Be in a bad situation

The inability to pay more Olympic marketing fees is just one microcosm of Acer's plight.

In the past two quarters, Acer has managed to make a profit, but net profits remain low. Acer's net profit and revenue fell in the first quarter of 2012 over a year earlier, with net profit of $11.2 million falling 72% from a year earlier, while revenue fell 11.4% per cent year-on-year.

But that's not the worst-case scenario. July 13, Acer announced that its PC is expected to grow by up to 5% per cent this year as a result of the worsening global economic environment, compared with a forecast growth rate of 10%.

Fitch, a prominent rating agency, downgraded its credit rating to "junk" levels less than 1 weeks after Acer downgraded its full-year growth forecast. Fitch also downgraded the long-term credit rating of Acer's foreign currency and local currency from BBB to BB and gave a negative outlook, meaning that further downgrades would be possible.

"This is a structural problem because the company is very focused on the PC market and does not perform well in non-PC areas such as mobile phones, tablets or corporate customer service," said Kevin Chang, a credit analyst at Fitch International in Taipei, Kevin Zhang.

Lack of strategy

Wang most miss should be 2007 years. Acer successfully overtook Lenovo as the world's third-largest PC maker by acquiring the fourth-largest personal computer maker Gateway Company in the United States.

In the deal, Acer also gained control of Packard Bell, a European computer company headquartered in Paris, France. Acer has also become the world's second-largest laptop manufacturer, thanks to the best-selling products such as netbooks.

However, the launch of the iphone smartphone, ipad tablet and other products hit the netbook market, which has significantly affected Acer's performance.

2011-Gianfranco Lanci, Acer's former CEO, Gianfanco Lanch with Acer's directors in a move-and-globalisation-focused strategy. The Lanci was interested in changing Acer's development strategy to focus on such areas as mobile phones and tablet computers.

But Wang does not endorse the strategy proposed by Lanci. Wang even said that Lanci's business strategy had deviated from its normal trajectory and could even hurt Acer's roots.

"The PC business remains our core business, and we have built a solid foundation that will continue to expand in this area, especially in the area of business PCs," Wang announced. In addition, we will gradually enter the new mobile device market, but in this area our investment will be very prudent and hope to become an important force. ”

Under the Wang of prudent investment, Acer set up a touch group in April 2011, which is responsible for the two major business of tablets and smartphones, by Acer Global President Wong. But 9 months later, the Acer Touch group began to cut its production. Acer's employees have even said that the touch group is in its own business.

The smartphone sector, though Acer has been involved in the takeover of Taiwan 5 years ago, has not been much improved. Wang, two weeks ago, had low-key visits to senior domestic operators to seek cooperation from Acer's smartphone and operator, but had not received positive feedback from carriers, sources said.

A report published by IDC, a market research firm, showed that PC shipments began to show negative growth. Acer is still clinging to the PC sector, seeing the opportunity to miss the mobile-Internet bandwagon. Perhaps Acer's most dangerous moment has yet to come.