With so much negative press attributed to Bank of America’s activation of its NFL/Super Bowl sponsorship rights, I think its important to be clear on why companies sponsor events. Critics of the banks have every right to be upset with them for a number of reasons, and I’m not going to spend any time defending the banks or Wall Street. But sponsorship doesn’t represent corporate greed and frivolous expense accounts, as many in the media seem to believe – or at least want to infer. Instead, sponsorship is simply one of several powerful strategies a brand uses to achieve its marketing and sales goals; that is, along with advertising, promotion, PR and web/social media, sponsorship is a key segment of a fully integrated campaign.
To better understand how the marketing industry considers the rationale for sports sponsorship, I’ve pulled several key points from a comprehensive July ‘08 Economist special report entitled “The Business of Sport: Sponsorship Form“:
- There’s big money at stake here, but keep in mind that the worldwide sponsorship of events, teams and athletes (estimated at $38 billion) is less than 10% of what is spent on advertising (at $449 billion). That said, sponsorship has grown by 11% annually the last 10 years – the best testament to the belief of how effective it can be.
- Though there are many sponsorship opportunities out there, sports is the dominant player (the example here was MasterCard, where sports account for 85% of sponsorship dollars).
- There are 3 main reasons which make sports sponsorship valuable: the emotional connection with fans (passion); the ability to more effectively reach/target a specific demographic (vs. advertising); and the movement by the events themselves of “less is more” (i.e., less sponsors makes valuable sponsorships even more valuable, a notion often credited to the NBA back in the early 90’s, I believe).
- In contrast to traditional advertising (but much like product placement and social media), the key benefit here is that sponsoring brands enjoy direct association with the sponsored event, team or player.
- While brands have “access” to the sponsored event, they must activate that sponsorship to fully realize all of its benefits – often to the tune of two-to-three times the amount of the sponsorship.
- In today’s environment, the goals (sales/client entertainment, advertising, promotion, PR) are often measurable – necessarily so in most cases, to justify the big dollars spent. That’s not to say that other benefits such as employee incentives and community outreach aren’t important, but they’re not ultimately driving these purchases in 2009.
So what’s all the hub bub about here? The bank’s marketing department entered in to a binding, multi-year agreement with one of the most popular sports leagues on the planet to sponsor the most-watched game on television in America. To maximize the benefits from that sponsorship, the bank activated that sponsorship. Should I be sympathetic to the media’s “perception of impropriety” that arises when bank executives partake in the “festivities” by “schmoozing” with clients? To a point. Perhaps every effort should have been made to keep costs down by staying in more modest hotels or substituting local or regional executives, but as hospitality and client entertainment are significant and proven tactics to achieve pure sales goals, the answer is simply”no”. And the idea of the bank raffling off the suite/tickets that is required as part of the sponsorship package is appreciated for its intent to “give back to the people”, but ultimately inane when you consider it’s core business purpose.
The point is even clearer when you consider the lengths to which the media (from ABC News to Michael Moore) went to deride Bank of America’s activation of the NFL’s “FanFest”. Aside from the fact that B of A had contractually agreed to the sponsorship prior to the meltdown, the activation of FanFest was arguably the most significant aspect of their sponsorship as it allowed the bank to speak directly with more than 200,000 NFL fans over the week-long period – thereby reinforcing relationships with existing customers, and more importantly creating relationships (i.e., accounts) with potential customers (memories that last a lifetime). Yes, it costs a lot of money to build a major tent, but they’re investing in a necessary product they’ll amortize over the life of the sponsorship. And might I remind everyone that it costs $30,000 these days just to run one :30 national spot on basic daytime programming when not a heck of a lot of people are supposedly viewing. Yes, all this costs a lot of money, but an organization’s ability to effectively reach consumers is undoubtedly getting tougher and tougher as media outlets expand and we, the consumer, take more control – never mind that every marketing department now has to consider how the media is going to interpret its efforts in doing its job and fulfilling its contractual obligations.
Interestingly, I’ve yet to hear the media directly attack a struggling brand’s advertising, promotion and PR “campaigns”. Those elements seem to be “acceptable” as good business practice. Indeed, along with the Bank of America scrum, much of the news has been about the retreat of Buick’s sponsorship of Tiger Woods, Honda from Formula One, and NASCAR’s troubles.
Perhaps that provides the true takeaway we should take from all this: sponsorship really is the most effective at drawing attention. Just make sure your brand can stand all the attention its going to get.
