How the IOC's Rule 40.3 Guidelines Changed the Advertising Game For Rio 2016

Remember back in March hearing how Michael Phelps cried the first time he saw the Under Armour "Rule Yourself" commercial featuring him? This beauty - and Under Armour's entire "Rule Yourself" ad campaign - never would have been made had the International Olympic Committee (IOC) decided not to change a longstanding rule that limited Olympics-related marketing to official sponsors like Nike and McDonald's.

Under Armour is not an official sponsor of the 2016 Rio Olympic Games, but the athletic apparel brand does sponsor 250 Olympic athletes (at least before some started to declare that they were opting out of competing in these Games) and is one of the most prominent market players benefiting from the rule change You may be asking what Rule 40.3 is and why the IOC is relaxing its stance on marketing now as opposed to earlier. Well, let's talk about it.

What Is Rule 40.3?

Except as permitted by the IOC Executive Board, no competitor, coach,
trainer or official who participates in the Olympic Games may allow his person, name,
picture or sports performances to be used for advertising purposes during the Olympic
— Olympic Charter Rule 40, Bye-law 3

The basic concept of Rule 40.3 was that only official Olympic sponsors could advertise with anything touching the Olympics, including the Olympians' themselves for a period of time surrounding and during the Games. From nine days before the Opening Ceremony until three days after the Closing Ceremony, the athletes, coaches, trainers, and officials participating cannot allow their name, image, or likeness (i.e., "NIL", an intellectual property concept) to be used by non-Olympic sponsors. Technically, this would apply to something as little as a person mentioning it in one sentence of an interview or giving a quick shout-out on social media with or without a picture. This rule naturally applies to any sort of media campaign that a company who sponsors an athlete but not the Olympics may launch during the time frame as well.

Rule 40.3, in general, is intended to protect the official sponsors' exclusive rights to use the athletes' intellectual property. Moreover, the IOC claims that the rule's purpose is threefold: (1) to prevent overcommercialism of the Games and try to maintain its unique spirit; (2) to keep the focus on the athletes' performances rather than on business (since there have been some issues with ambush marketing in the past); and (3) to keep the funds flowing because "USD 3.25 million every day goes to the development of athletes and sports organisations at all levels around the world."

Now you know what Rule 40.3 was and what its purpose has always been. Now, the rule has relaxed so that non-official sponsors can advertise using athletes' NIL so long as the campaigns comply with certain extra provisions. When you change a rule, especially when it is a change meant to expand the market, many new rules and guidelines are bound to follow.

If an Olympian's personal sponsor that is not an official Olympics sponsor wants to run a campaign using the athlete's NIL, the personal sponsor may do so subject to the following:

  • The advertising cannot create any commercial connection to the Olympic Games or Olympic property. This use is still exclusively for official sponsors.
  • Personal sponsors must submit their campaign applications for IOC (or the country's National Olympic Committee) approval six months before the formerly exclusive time frame begins. So, personal sponsors had to submit their applications and the media schedules for which the campaigns will run back on January 27, 2016.

If an Olympian's personal sponsor that is not an official Olympics sponsor wants to refer to the athlete's participation in Rio, the personal sponsor must follow these rules:

  • Non-official sponsors cannot use terms related to the Olympics in their advertisements and marketing campaigns alongside a participant's name or image "whether it is an existing campaign or not," (e.g., Olympic, Olympics, Games, Olympiad, Olympiads, "Citius, Altius, Fortius").
  • Non-official sponsors cannot use certain terms related to the Olympics when the context is meant to imply a relationship (e.g., 2016, Rio or Rio de Janeiro, Gold or Silver or Bronze, Medal Performance, Sponsors, Victory, Summer Games). 

Click here to read the full Olympic Charter where Rule 40 is on page 79.

Click here to read the IOC's Updated Guidelines for Rule 40.

Click here to read the full Updated USOC Rio Games Participant Advertising Guidance.

Why change the rule now?

The rule made a lot of sense as it was written and enforced. On the other hand, the world, the media, and the market have different factors and players than they did even two or four years ago when the last Games took place. When all was said and done, it was probably two classes who dissatisfied with this quite unfair rule that provoked the rule change: the Olympians who were sponsored by non-official Olympic sponsors and the non-official Olympic sponsors themselves.

Expanding the market gives the Olympic Games that much more opportunity for exposure, and these guidelines allow the IOC/NOCs to have a hand in carrying out the rule's original intention. In theory, expanding the market also gives smaller personal sponsors that much more opportunity for exposure, given they commit to their campaigns well in advance of the Olympic Trials.

I say "[i]n theory" because the rule was not published without criticisms. For one thing, requiring sponsors to apply with an entire ad campaign half a year before they know whether an athlete will and, furthermore, to put the campaign in use shortly thereafter almost automatically excludes many smaller sponsors from a market that they were already excluded from in the first place. Changing Rule 40 might not have the applauded change that many had hoped for because the requisite high and semi-risky investment acts like a barrier to entry.

The market's middle ground players that have been emerging in the past few decades, though, have a lot to be optimistic about. These are the interested parties who have high revenue (but not as high as the traditional, stereotypical official sponsors) and a high at least national appeal but for whatever reason have not been able to expand internationally in the same way. For example, Under Armour is a big market player here in its native country, but relative to its international competitors, it is very young and small. It has enough revenue to invest in big name US Olympic athletes who have either won in the past or who were almost sure things to make it through Trials, but it has not been able to get onto the international platform. Not only that, but the athletes will be able to post on social media, tweet from the Games, and talk about their personal, non-official Olympic sponsors to create global trending hashtags when they participate and win (given they comply with Rule 40, of course).

Courtesy of the new Rule 40.3 guidelines, Under Armour will be able to reach a $270 billion global market for the very first time. THAT is the change in the advertising game. THAT is the middle ground making moves. THAT is exciting stuff. Let the Games begin!