Branding: Holograms Score in Protecting Sports Merchandising

Published: August 13, 2009

Sports merchandising is big business and increasingly has benefitted from the application of hologram-based security tags over the past 15 years. However, there can be pitfalls for the unwary. Here, Glenn Wood of the International Hologram Mfrs. Assn. (IHMA) offers advice to security providers looking to tap into this lucrative market and looks at how holography can protect brands and revenue streams from the threat of counterfeiters.

Undoubtedly, the greatest global sporting events are the summer and winter Olympics and FIFA Football World Cup. Virtually every Olympics event since the Atlanta Games in 1996 has had its licensed product merchandise—from caps, tee-shirts, and tracksuits through books, programs, badges to bags, scarves, and cuddly toys—protected and tracked with holographic technology.

Most recently was the Beijing Olympic Games, where visitors were advised that the best way to avoid counterfeits was to buy Olympic merchandise only at licensed stores. There, they were able to find inside the packaging of all licensed products an anti-counterfeiting label featuring a small security hologram attached to an official Olympic Games’ emblem.

And this tradition, established back in Atlanta, GA, more than 13 years ago, is to be carried forward at least until 2012 because the organizing committee of the London Olympics has indicated that all the merchandise on sale will be subject to anti-counterfeit tagging, which historically has been in the form of holograms affixed to labels, tags, or similar.

Before then, meanwhile, are the 2010 Winter Games in Vancouver (), the merchandise for which—complete with hologram—recently has gone on sale.

The official merchandise for that other great sporting occasion—the FIFA World Cup—also will continue to benefit from holographic technology. This was first used for the World Cup in 1998 in France, followed by the 2002 World Cup in Tokyo and Seoul, and then in 2006 in Germany. The supplier to the latter, De La Rue Holographics, recently has been re-selected to provide protection for the merchandise for the 2010 World Cup, which is being held in South Africa. 

Benefits for All
The solutions offered by the holographic companies are similar in concept and comprise not only the production of uniquely numbered security labels and hang tags complete with holograms (and, increasingly, a range of other security features as well) but, critically, a fulfillment and tracking service. These labels are called off by the licensees and data on the quantities provided to each, including the unique number of each label, is provided to the licensors who then bill the licensees (the contracts generally involving an initial licence fee and then a royalty per item of merchandise sold).

This system offers benefits to both parties. It enables the licensor to protect their brand, which is not only an important marketing tool for raising awareness and generating loyalty, but is also a major revenue-earner. It enables them to collect the royalty payments from their licensees based on the number of labels purchased—and hence the number of merchandised goods intended for sale.

The system provides a strong deterrent for preventing not only counterfeiting, but also grey market diversion, as under-reporting becomes highly visible and out of territory sales are easily traceable. And, through the use of enforcement teams, the authenticity of official merchandise can be checked and verified in the field.

Licencees, meanwhile, benefit because their investment in the brand is protected from counterfeits. And with merchandised products typically commanding a premium price (which makes them an immediate target for counterfeiters), another group to benefit are the consumers themselves.

But a cautionary word: Although all this offers great opportunities for a security provider, the financial success of any contract can be as uncertain as for the event itself. The provider usually is granted a non-exclusive license to provide labels and hang tags but all other licensees will be referred to the supplier for these security features. The downside is that the quantity of labels and tags cannot be guaranteed, a situation exacerbated by the right of the licensor to exempt certain licensees at the last moment. This can be true particularly of printed material, such as event programs, which may or may not be required to have a secure label applied.

There may be other geo-political forces that influence the success or otherwise for the security supplier. For example, the Women’s World Cup Soccer in 2003 was to have been held in Beijing but the event was devastated by the outbreak of SARS in China during the run up. The switch of venue to the US had a serious impact on all licensees, many of who had already produced shirts, caps, pins, etc., with the Beijing logo. Overall, it is unlikely that anyone profited from the licensing arrangements at this event. The ever-present threat of boycotts also adds to the risk factor.