SBJ: Sponsorship In-depth

September 29, 2009

The Sports Business Journal released its highly anticipated sponsorship issue this week. The in-depth feature is highlighted by a roundtable discussion with numerous marketing executives from several big name companies including A-B Inbev, Pepsi, Turnkey Sports Management, and others.  

Here’s a snippet, but make sure you run over to the website and check out the entire thing:

SBJ: The economy and its impact on sponsorship and marketing budgets is foremost on everyone’s mind. Where are you relative to a year ago, when so many marketing and media budgets were just frozen?

 

Mark Wright (Anheuser-Busch InBev): In terms of sports and media in general, we are not backing off. There have been a lot of changes, but the new ownership believes, as we always have, in the value of investing in sports, sponsorships and media. Everyone around this table is in an environment where they have to look at cutting costs, but to get real top-line growth, we have to continue investing.

 

Ray Bednar (Bank of America ): I’m in the banking business and things have changed there, but we aren’t backing off either. We are starting to pay off the government, so we can get free of the TARP “embrace.” Specific to budgets, we are not spending any less; we are spending a little bit differently. With what has happened in financial services and some of the big brands like us and Citi Group, marketing is more important now than ever. We are investing quite heavily — more so than in the past.

 

SBJ: During the recession, sports marketing became a whipping boy. Does that notion have to change before spending in your industries resumes at prior levels?

 

Bednar: The peak in the February-to-April time frame is well off, but it was horrible. Companies that were most abused have changed quite a bit of what they do, especially on the b-to-b side of things. Overall, there has been a fundamental shift in sports. We had a bubble that was going to burst and it did. Some of the unrealistic things that were going on in sponsorship, mostly led by the biggest financial institutions, since they were among the biggest spenders, caused it to implode. What’s fundamentally changed is that now we have premier, iconic properties coming to us asking how they can drive our ROI. Now they don’t want to renegotiate contracts [up], they want to trade out assets — which is something we’ve engaged in quite a bit recently. The pricing of sponsorships is finally adjusting to more reasonable levels that better reflects their value.

 

Bill Glenn (The Marketing Arm): There’s just more scrutiny on where you are spending your dollars and how deeply you can pursue individual engagement with consumers. Are you really building a higher likelihood of them purchasing your brand? There’s more pressure on properties to deliver that and more pressure on us to ask for that. Measurement has moved well beyond awareness and our clients are looking at purchase consideration, purchase intent, purchase and use.

Payout Perspective:

I’ve been waiting on this issue for nearly a month, and the wait proved worthwhile. The roundtable confirmed a few of my assumptions about the sponsorship market, but also underscored some interesting points that I hadn’t heard or read anywhere else.

MMAPayout.com has made an effort to highlight the latest news from the sponsorship and advertising markets in the last few months, because of the impact that these segments have on the business of MMA. While advertising is generally down across the board, it was nice to get a confirmation that sponsorship has remained steady over the last year.

Perhaps the biggest takeway from the roundtable, however, was the new industry focus on measurement. It’s no longer a completely one-sided negotiation where clients are pursuing sports properties and doing everything they can to lock down exclusivity. Sponsors are now coming to the table with the expectation that properties can deliver measured value, and not just ROI but ROO (return on opportunity).

I’ve had the good fortune to read some of the UFC’s surveys and sponsorship material over the last couple of months, and I’ve observed the organization to be trending towards a more wholistic sponsorship approach. They appear to be working with potential clients to give them feedback about UFC consumers in order to help customize and tailor their partnership to be a more fulfilling, mutually beneficial experience.

It’s really important, too, and Mark Wright of A-B Inbev summed it up perfectly:

Wright: We still get a lot of properties, especially local ones, telling us things like “most of our adult fans drink Bud Light.” We’re glad they do, but most of America does, so that’s not really information we want or need. We still get a lot of sales pitches based on the property’s business model, as opposed to our business needs or strategy. That may be starting to break down; in a recent NBA team pitch they showed us sales taken from the team’s playoff run. So maybe they are starting to get what works for us and tie it to our brand and sales health.

If MMA can adopt the new, more co-operative sponsorship approach it’s going to pay dividends. Then again, I’m not convinced that it’s much of an “if” as much as it is a necessity; the operating environment for many of these companies has changed, and thus so too much the approach of MMA organizations looking to bring sponsorship.

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