Sponsorship and Revenue Generation

Popularity and Recall of Celebrities

• Quiz to illustrate brand and celebrity power.
• Examples:
  • Drake (Musician).
  • Will Smith (Actor).
  • Jaymond Green (NBA Player).
  • Simone Biles (USA Gymnastics).
  • DeMaurice Smith (NFL PA Executive Director).
  • Randy Ambroshi (CFL Commissioner).
  • Neil Liebman (President, Texas Rangers).
  • Sheila Johnson (President, Washington Mystics, BET Co-founder, CEO of Salamander Hotels and Restaurants, First Black Woman Billionaire).
  • Joe Shane (GM, New York Giants).
• Most recognize athletes, fewer recognize executives.
• Goal: to become sports business practitioners and recognize industry figures by reading sports business journals for foundational knowledge.
• Celebrity endorsements impact recall, linking to the value proposition of sponsorship for brand awareness and consideration.

Evolution of Sponsorship

• 1975 Philadelphia Flyers Stanley Cup Final: Minimal signage.
• Modern Dallas Stars Game: Dasher boards filled with ads (Dr. Pepper, Bud Light, GEICO), ice also branded (Dr. Pepper, Bud Light, Toyota).
• Toronto Maple Leafs: Uber Eats ads in corners, a new revenue stream due to camera angles focusing on these previously blank spaces.
• Finnish Ice Hockey League: Advertising on ice, jerseys, skates, and pads, potentially representing the future, but may lead to clutter thus diminish effectiveness.
• Sponsorship’s potential to cut through advertising clutter must be balanced with the risk of over-saturation compromising value.

Motivations for Sponsorship

• Ego: CEO's personal interest in golf leads to tournament sponsorship providing exclusive experiences.
• Philanthropic: W. P. Carey's $50,000,000$ donation to ASU to provide educational opportunities based on his own positive college experience.
• Business Focused:
  • ROI (Return on Investment): $\text{ROI} = \frac{\text{Gain from Investment} - \text{Cost of Investment}}{\text{Cost of Investment}}$. Measures specific sales tied to sponsorship.
  • ROO (Return on Objective): Focuses on broader objectives like driving awareness, measured through surveys before and after sponsorship.

Size and Scope of Sponsorship

• Global Sponsorship Spend: Between $65$ and $75 billion$.
• US Sponsorship Spend: Approximately $25$ to $26 billion$, over a third of the global total.

Sponsorship as Part of Integrated Marketing Communication (IMC)

• Sponsorship is a promotional tool.
• It has a synergistic impact on promotional efforts.
• IMC Channels: Sponsorship, Advertising, Personal Selling, Sales, Public Relations.
• Using all five channels together has a greater cumulative impact than using them in isolation.

Sponsorship vs. Advertising

• Sponsorship:
  • Passive (e.g., State Farm Stadium).
  • Establishes a relationship.
• Advertising:
  • Active (e.g., Gatorade's persuasive message).
  • Communicates a specific message.
• Sponsorship provides sustainable competitive advantage via VRIO (Valuable, Rare, Hard to Imitate, Organized).

Advantages of Advertising

• Definition: Paid, nonpersonal communication through various media to inform or persuade a target audience.
• Advantages over Sponsorship:
  • Persuasive Message: Communicates specific product information.
  • Standardized: Consistent message delivery.
  • Guaranteed Reach: Priced in rating points, ensures a specific audience size.
  • Easier Evaluation: Facilitates ROI and ROO tracking.
  • Turnkey: Requires less activation effort post-agreement.

Examples of Advertising in Use

• Tesla Advertisement:
  • Highlights benefits like $0$ to $60$ in $3.7$ seconds and $400$ Newton meters of torque.
  • Targets high-end car users.
  • Features: $400$ newton meters of torque, $3.7$ seconds from $0$ to $60$.
  • Need: Performance with zero emissions.
• Standardized Message:
  • Sporting events utilize carefully orchestrated messaging controlled by advertising agencies.
• Guaranteed Reach:
  • During the pandemic, advertising used ADUs (Audience Deficiency Units) to ensure guaranteed reach despite cancelled in-stadium attendance.
• Phoenix Suns Ratings:
  • Example: $0.64$ rating represents $12,800$ households.
  • Calculation: 2,000,000 TV households x $0.64\% = 12,800$ households tuning in.
• Make Goods:
  • If Suns promised $1.2$ rating, they need to make up $918,000$ viewers (1,000,000 actual viewers vs. 1,918,000 promised).
• Evaluation of Effectiveness:
  • Tied to reach, using measures like CPM (Cost Per Thousand).
• Turnkey Advertising:
  • Once the ad is set, it requires no activating, unlike sponsorships which would require activation.
  • \$10,000,000$ sponsorship may require additional \$2,000,000$ to \$5,000,000$ in activation costs.

Definition of Sponsorship

• Sponsorship is a relationship between a marketer (sponsor) and a property (sponsee).
• The sponsor pays a fee (cash or in-kind) for access to exploitable commercial potential.
• Key Terms:
  • Relationship: Can be favorable or unfavorable.
  • In-Kind Fees: Goods or services provided by the sponsor (e.g., equipment from Rawlings to a Little League).

Advantages of Sponsorship over Advertising

• Credibility: Third-party endorsement impact.
• Image Change: Association with star athletes or winning teams (brand image transfer).
• Internal Morale: Employee engagement through association and access to events.
• Sales Opportunities: Access to fans and live audiences, pouring rights, distribution rights.

Advantages of Endorsements

• Persuasion:
  • Recommendations from people, brand sponsorships are considered credible communications platforms.
• Appeal of Sports:
  • Professional athletes can be very influential.
• Credibility Questioned: The fit between the sponsor and sponsee has to be credible.

Credibility Example

• Final Four sponsored by Vitaminwater and POWERADE, but teams might use Gatorade in POWERADE bottles.

Sales Opportunity Example

• Pepsi Center: Only Pepsi products are available, but Coors Light is also available due to defined category exclusivity.

Internal Morale

• Skipped for later section.

Access to Live Audience Example

• Fiesta Bowl: Tostitos gave away product samples.

Conclusion

• Summarizing the pros and cons of advertising and sponsorship and how the two can be used as effective promotional tools.

Key Sponsorship Concepts

• Sponsorship Categories:
  • Sports (~$70\%$, largest share).
  • Entertainment, Tours & Attractions (~$10\%$, example- Vans Warped Tour).
  • Cause-Related (Susan G. Komen Race for the Cure).
  • Festivals, Fairs, and Annual Events (Beer Gardens, Renaissance Festival).
  • Arts.
  • Associations and Memberships.
• Money Follows Media: Sports have the largest audiences.

Key Sponsorship Terminology

• Sponsor: Party Seeking Association (e.g., Visa).
• Sponsee: Property Owner (e.g., FIFA).
• Exchange of Cash or In-Kind Goods: Provides Visa the right to use FIFA's exploitable commercial property.

Linkages - Sponsorship Connection

• Goal: Establish a credible sponsor to create a strong brand image.
• Classifications:
  • Strategic Linkages: Shared target market between sponsor and sponsee. EX- FIFA and Visa sharing a demographic of males aged 25-35 who like to travel.
  • Self-Evident Linkages: Supports the operation of the event itself (e.g., Rawlings sponsoring Little League), provide what property needs to operate.

Examples

• US Open Sponsors (Grey Goose, Esurance, Heineken): Strategic linkage due to the affluent demographic of tennis viewers.
• Team Sky & Pinarello: Self-evident linkage, cycling team needs bicycles.

Activation (Leveraging)

• Definition: Effort to support sponsorship with additional strategic initiatives, EX - event-oriented advertising.
• Objective: Diminish the value of the actual sponsorship by having the consumer recognize a non-sponsor as a sponsor.
• Beer Company Sponsorship:
  • Replaced dugout with a beer can to be shown on TV and in person.
• Volkswagen Sponsorship:
  • Had a remote control driven car bring a ball to the referee before the game.

Ambush Marketing

• Volkswagen Sponsorship

  • VW had a remote control driven car bring a ball to the referee before the game

• Olympics Sponsorship Cost:

  • $300-350 million - cost over a four year cycle

• Apple Ambush: Sent national flag-themed Apple Watch to each athlete, hoping that they would tweet the product, thus creating the sense that apple is a sponsor.

• Sponsorship = Relationship: Must protect by actively thwarting against it.

• Team USA Olympic

  • Showed Adidas players obfuscated, which reinforced Nike’s contribution.

• Ambush Marketing Examples

  • Sponsoring an individual country/athlete, Getting a former athlete or celebrity to market brand, with a basketball.

• The Association:

  • It’s difficult to achieve true perception of association and will require effort to show messaging against competitors to reinforce association.

• Application

  • What are 3 brands targeted to improve sponsorship of Fiesta Bowl?
  • How would activation create value and protect it from ambushing?

Types of Sponsorships

• Cases-Endorsements, trademarks, building sponsorship all have equal importance in marketing and pros and cons.
• Defining Sponsor vs Sponsored to distinguish between payer and payee to distinguish
• Nike (Sponsor), Wayne Rooney (Sponsee).
• Common sponsorship = sports/ brand endorsement
  • May have a celebrity or athlete associate to build trust.
• Mastercard (Sponsor), LeBron James (Sponsee).
• Statistics / Facts

Endorsement Earnings from 2014:

• Shows how important endorsements are.
• May reflect a specific geographic location.

Earnings:

• #1 Christiano Ronaldo, Formula One Racing
  • He may make 3 times his actual salary through his endorsements.

Endorsement Goals

• Psychology:

1. I use it so you should use it.
2. I’m an expert, you will be smart to use the brand
3. I think it’s cool, so you should use it.

• Celebrity branding should fit the product.
• Examples

Celebrity

• Pitbull advertisement-Family of Immigrants, hard work
  • Geared to his public.
• Doctor Pepper Ads - with Taylor Swift, coke. More for casual consumer.
• Wrangler Ads - geared to rural customer- Base to show a consumer what kind of lifestyle this brand represents
• Ciroc Vodka Commercial P. Diddy represents brand-Geared towards consumers to imagine having wealth.
• Celebrity personality plays a big role for the products to be recognizable.

Sponsorship Driving Revenue

• Creates - sales, image, awareness, and goodwill, and employee satisfaction.
• These are all components that SMART goals address.
• Visa (Sustainable competitive advantage through sponsor association.).
  • VRIO- Value, Rare, hard to Imitation, Organize to exploits
• Visa Sponsors World Cup or coke (Olympics Partner)
  • Are more likely to drive opportunity versus direct competition.
• Coca-Cola merchandise opportunity.
• Nike and the NFL (Distribution)
• How Buick and Tiger woods shaped consumer attitudes
• Marlboro cigarettes.

Ways to Cut Through Advertising- Sponsoring

• Allows to reach small niche marketing instead of main TV spots.
• Local festivals may draw targeted communities.
• Helping Sponsee may improve one brand: Little League sponsorships improve AutoZone, attorney firms, which may yield the impression of good community partner.
• WM open sponsors contribute good deeds in charities locally.
• The donation allows public to have the idea of improving image.

Dunkin’ Donuts Sponsors Liverpool

• Partnerships allowed it to be a brand for Liverpool

Brand Image Transfer - Improving Relationship

• NFL image relationship with Nike is supposed be positive however issues change the point.
• NFL Image - Nike may be positive or negative
• Tiger woods and NFL had problems when it came to light his past actions in the image transfer and therefore caused problems for Nike/ other relationships.
• Accentivie wanted to improve brand with change wanted to use visibility to introduce new changes.

Hospitality- Entertaining prospects

• Opportunity- give masters or WM to clients who cannot attend events but reinforcing relationships
• Enhance employee morale.

Benefit of Sponsorship

• Driving-Sales can have effect with great advertising

Sponsorship Components:

• Help to drive sustainable competitive advantage.
• Create exclusivity.
• Signage opportunities.
• Trademarks and logos.
• Distribution or powering rights.
• Hospitality Opportunities.
• Ticket inclusions.
• Right to renew.
• Guaranteed sponsor competitor to is not involved with the product.

Signage Opportunities

• Virtual signs opportunity to place and promote in the venues.
• Diminish Clutter
• Rights to trademarks and Logos
• SuperBowl must be a registered/sponsor in order to get a logo associated. Used in packaging and distribution.
• DistributionRights- to be a venue
  • Allows samples to be handed to the customers.
  • Creates a venue opportunity especially if tickets at the event are sold out so they can attend from being a customer.
• Ticket inclusions and digital media link.

Sponsorship Level

• Level is tied to designation so consumers realize who is a partner.
• Traditional media promotion.
• Accesses to mail lists from sales to marketing- Data protection and has privacy concerns.
• Right of first refusal- allows for renewal so strategic analysis can continue.
• Category of exclusivity, sustainable competition, and high sign placement are important according a survey.
• Value is associated within branding.