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Why the biggest business story of the Rio Olympics is this marketing rule change

More than a year ago, in June 2015, the International Olympic Committee quietly announced a key change to its infamous Rule 40. Now, days before the Olympics, the impact of that change is coming to the fore.

Rule 40 is a by-law in the official Olympic Charter, and it states that “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 Games” without the express consent of the IOC board.

Under the original rule, only official Olympic sponsors—big consumer brands, like Coca-Cola, McDonald’s, Panasonic and Visa, that have paid about $200 million each—get consent.

For brands that are not official Olympic sponsors but do sponsor Olympic athletes, there was a blackout period, starting nine days before the Opening Ceremony, during which they could not do any advertising involving those athletes. The athletes themselves also couldn’t publicly mention their sponsors if those sponsors are not official Olympic sponsors.

That was all before the change.

The blackout period remains in place (this year’s runs from July 27 to August 24) but the guidelines have been slightly relaxed. Non-official sponsors, for the first time ever, can now run ad campaigns during the Olympics that use their Olympic athletes—as long as they don’t overtly link it to the Olympics.

That means they can’t use words like “Olympics,” “Summer Games,” or even generic words like “games,” “gold,” or “Rio.” It’s not unlike the rule during the Super Bowl that non-sponsors cannot say “Super Bowl” in their marketing. Instead, they use phrases like “the big game,” and everyone understands what they’re talking about.

Non-Olympic sponsors that wanted to run campaigns had to submit the proposals to the USOC way in advance, by January 27, and the campaigns had to start no later than March 27. Because of this, and the restrictions on using certain words, many have argued that the rule change doesn’t really change much, and that non-sponsors still have their hands tied. But it isn’t true—the change is significant.

With advertising, there is always a way in, says Bob Dorfman, sports marketing expert with Baker Street Advertising. “You’ve seen ambush marketing before, and you’ve seen it be successful and clever,” says Dorfman. “Yes, there are hashtags you can’t use, there are images you can’t use, but I still think you can come up with a compelling message and a sellable message, given the parameters. It’s a small door that has opened a crack, but you can still get your foot in there—maybe even more than that.”

Indeed, the change is already rearing its head in all kinds of ways, allowing new campaigns by non-Olympic sponsors like Under Armour, GoPro, and Virgin.

Under Armour released a long TV ad spot with Michael Phelps, way back in March, that showcases his grueling training regimen. It never mentions the Olympics, but it shows him in a pool. Viewers know what he’s training for.

GoPro launched a YouTube series called “Two Roads” that shows the Olympic journeys of nine athletes, including the Bryan Brothers of tennis, and pole vaulter Allison Stokke. Virgin Media released a new ad, all about speed, using Jamaican sprinter Usain Bolt. These companies weren’t able to run these ads at this time during any prior Summer Olympics.

The rule change also applies to the athletes. In the past, Olympic athletes could not say anything publicly during the blackout period about their sponsors—no tweets, no shout-outs in media interviews, nothing. Their frustrations with this came to a head during the London Olympics in 2012, when many started using the hashtag #WeDemandChange.

Now they’ve got change. Athletes can tweet about their non-Olympic sponsors during the Games, as long as they follow the same rules as the brands. To wit: Michael Phelps could tweet, “Working hard in the pool tonight– thanks, Under Armour.” He can’t tweet, “Training real hard for Rio — thanks, Under Armour.”

To be sure, requiring that distinction may look rather silly and petty of the IOC. No one on the planet won’t understand that Phelps is referring to the Olympics. But if an athlete or brand wants to try breaking the rule, it risks punishment.

There is some debate over what that punishment could realistically be, beyond an angry letter. Oiselle, a women’s athletic apparel company that sponsors some Olympic athletes, got in trouble with the USOC after Kate Grace, a middle distance runner sponsored by Oiselle, won the women’s 800-meter at the U.S. Olympic Track and Field Trials in July. Oiselle posted an Instagram photo with the caption, “She’s going to RIO!” USOC promptly sent Oiselle a letter asking for removal of the post. But some legal experts say it’s questionable whether the IOC could really bring legal action against an athlete or brand over a tweet.

“The relaxed Rule 40 is a joke,” Oiselle CEO Sally Bergesen told Adweek. “You had to have submitted your campaign in January, before anybody’s qualified for anything. Then, you need to start running your campaign in March, so you don’t get any timing benefit with the Olympics.” There is even a vocal Rule 40 awareness campaign (it grabbed the Twitter handle @rule40 and the domain name rule40.com) gathering support for “the fight to end Rule 40.” The Wall Street Journal reported that the marketing director of Berkshire Hathaway-owned Brooks Running (not an official Olympic sponsor) is behind the campaign.

While the restrictions, even loosened, make athletes and brands angry, it’s understandable why the IOC (and USOC) feels it needs to protect its business—for itself and for sponsors. “The IOC has to walk a fine line,” Dorfman says. “They’ve got sponsors spending millions of dollars, so they can’t allow anything that’s going to hurt them. On the other hand, they do have to be a little less restrictive than they have been in the past. So, maybe the value of being a top sponsor has diminished a sliver. There’s plenty of room for others to get in now.” A 2012 AdAge survey questioned the value of paying to be a top Olympic sponsor; consumers identified brands like Nike and Google as sponsors, even though they were not.

Dorfman raises another point about social platforms that allow for disappearing content. Just this week, Instagram rolled out Stories, a feature that works just like Snapchat, allowing for videos or photos that vanish after 24 hours. Instagram touted tennis star Serena Williams as the first athlete using Instagram Stories. If Williams posts a video to her Instagram Story in which she mentions her sponsors and the Olympics in the same breath, will the USOC even notice?

Might athletes or brands test the waters by breaking Rule 40 on those platforms? It will be interesting to see—or to not see, if you don’t catch it in time.

Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite. Sportsbook is our recurring sports business video series.

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