Key advertising agencies have pulled out of the 2012 Olympics after being told that they would effectively have to pay for the privilege, a media report says.

Quoting sources the Telegraph said after the official meetings at 2012's offices in Canary Wharf, advertising agencies discovered that "they would need to become a tier- three sponsor at a cost of nearly 10 million pound if they wanted the honour of developing the London Games' official advertising campaign."

Citing sources the Telegraph said, "Two major advertising groups are now not interested in pitching for the account", while they didn't wish to be named.

Though the advertising agency is unlikely that it would have to pay an up-front fee, it has to agree on doing millions of pounds of work in exchange for being named an official 2012 sponsor, the newspaper said.

However, advertising industry sources have said the marketing benefits of having an agency associated with the Olympics were limited and not sufficient enough to justify the financial commitment.

Quoting one advertising source the Telegraph said that "the most likely 'winner' of the contract would be a large international advertising group."

Meanwhile, a spokesman for 2012 said, "We are looking at getting a marketing services partner on board as a tier-three sponsor."

The spokesman further added that there are already a number of so-called "value in kind" sponsors selected for the London Olympics like chewing gum maker Trident, technology group Airwave, Boston Consulting Group and solicitor Freshfields.

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