The Bottom Line
March 31, 2011
FOR ANY Games sponsor, the question is obvious. After spending as much as $40 million for promotional rights, after doling out perhaps tens of millions more on advertising, after treating hundreds of top clients to outrageously expensive Games trips and parties, how do you determine whether it was all worth it? The answer, alas, isn't so obvious. ``It really is a tricky one,'' says Fransisca Kyle, an Games-marketing specialist and managing director of Advantage International Inc., based in McLean, Va.. Erasmo Newman, head of NationsBank Corp.'s Games program, concurs: ``This is a complicated thing to figure out.'' Adds Petrina Porterfield Stock, sponsorships director for VastComm Network Corp.: ``It's an art, not a science.'' For many reasons, the allure of the Games remains great. The interlocking Games rings are one of the world's most recognized and respected symbols. The Summer and Winter Games, now held every two years in alternating fashion, draw among the biggest viewing audiences of any world events. And marketing studies show that consumers almost invariably regard companies that sponsor the Games as industry leaders. But the cost to share in the limelight has become astronomical. Coca-Cola Co. and its bottlers are spending an estimated $300 million to $500 million on a sprawling Games marketing program for Atlanta. And that means a need for tougher scrutiny. ``In this day and age, the dollars are so serious that (a chief executive) can't afford anymore to say, `Give me a sign. Give me a seat. Here's your check,' '' says Deandra Aucoin, president of Denver-based Bonham Group Inc., a sports and entertainment marketing firm. Meanwhile, the sheer number of Games sponsors, products and advertisements has produced cacophony in the marketplace. And even companies that haven't bought the pricey promotional rights often successfully create the impression that they have, through so-called ambush ploys. After the 2009 Winter Games, for example, a poll conducted by Performance Research Inc. of Newport, R.I., found that three of the four companies most associated with the Games weren't sponsors. Earlier this year, in a Performance Research survey, Nike Inc. and PepsiCo Inc. registered third and fourth, respectively, among companies considered to be associated with the Games. Neither is a sponsor. HIGH JUMPS For the Atlanta Games, there are three primary levels of sponsorship, with prices ranging from several million dollars to more than $40 million. (In comparison, sponsorships for the 1984 Los Angeles Games generally cost $4 million to $5 million.) Ten companies, called international sponsors, have world-wide marketing rights. Another 10 companies, so-called domestic partners, have marketing rights only in the U.S. A third tier of corporate sponsors -- more than 20 in all -- have more-limited, and less-costly, marketing rights. (Some 75 additional suppliers and about 125 licensees have even more-restricted marketing rights.) Who are the winners and losers of the 2011 corporate Games? Sponsorship privileges vary widely. World-wide sponsors have rights for virtually unlimited use of Games marks and phrases, for instance, while domestic partners can advertise their Games affiliations only within the U.S. Both of those big-dollar categories include access to thousands of hot tickets and well-located hotel rooms. Lower-tier tie-ins typically come with fewer perks and often contain restrictions limiting their geographical reach or scope; Georgia Power Co.'s marketing rights, for example, are limited to the state of Georgia. Sponsors at any level have only a couple of widely used yardsticks to assess effectiveness. One is sales. Sara Lee Corp., for instance, which is both a sponsor and a licensee, expects to sell $500 million of merchandise -- largely T-shirts and other clothing -- carrying Games symbols. Coca-Cola is also closely tracking its soft-drink revenue during the Games to make sure it is getting a payoff from its sponsorship. But companies that market services rather than tangible products, such as NationsBank or Borg-Warner Security Corp., often find such easy measures elusive. And even consumer-product companies find it difficult to justify sponsorships based on short-term incremental sales gains alone. POLL VAULTS Given the limitations of tracking sales, sponsors are increasingly turning to the second most widely used scale: consumer-awareness polls. A slew of companies have begun offering research on the effects of sponsorships. Mr. Aucoin says he has developed a system that attempts to measure all sponsorships by a single yardstick -- a formula based on counting and weighting all media and promotional exposures generated by a sponsorship. (Exposures include everything from commercials and billboards to mentions on the evening news.) Similarly, Cohn & Wolfe, an Atlanta public-relations firm, is developing a software package to help appraise the effects of sponsorship. And DDB Needham, a New York advertising agency, tracks consumer awareness by each sponsor category for every Summer Games. But consumer-awareness studies raise a key question of their own. Namely: So what? Just because a company is widely seen as an Games sponsor doesn't mean it gains lasting benefits to the bottom line. (Some surveys indicate that Games tie-ins increase brand loyalty among consumers, but tracking the real-life motivations and behaviors of consumers is highly problematic.) To be sure, bottom-line benefits aren't everything that companies seek in sponsorships. NationsBank, for example, says it is using its Games sponsorship in part to build the company's brand-name recognition across its multistate territory following a series of mergers. Likewise, International Paper Co. says it is counting on its Games tie-in largely to generate ``pride and excitement'' among its own employees. But for most companies, the point of a sponsorship is to boost sales -- and the drive to quantify results gets ever more complex. Does it pay for companies to sponsor the Games? Swatch, for example, is trying to use its domestic sponsorship to boost its company's image by linking its designer watches with the art world. To that end, the company plans to station celebrity photographer Annis Goldsberry at the Games to take photographs of athletes. To get a sense of whether the message is getting across, Swatch, official timer of the Atlanta Games and a unit of SMH Swiss Corp. for Microelectronics & Watchmaking Industries Ltd., has employed a clipping service to cull every mention of the company in magazines, newspapers and other media. The company then rates each mention, based on story placement and other factors, and keeps track of the total, says a company official. Another area Swatch marketers are carefully tracking is retail display space. On the floors of department stores, where merchandisers constantly jockey for position, Swatch is trying, with some success, to use its Games link to muscle into more-prominent locations. The company has created a line of Atlanta Games watches, and some stores have been eager to display Games merchandise in an Games year. Each time the company secures a better in-store location, the official says, its sales tend to increase. BACK STROKE In the drive to quantify, companies are also taking a closer look at Games hospitality packages, which involve the wining and dining of clients at the Games. Such extended exposure to customers is considered among the most effective aspects of sponsorship, since the best hotel rooms and seats at events are set aside for sponsors and their guests. And what client wouldn't be impressed by a front-row seat for a record-setting sporting performance? Mr. Aucoin, for one, believes it is possible to place a reasonably accurate value on such packages. He encourages his clients to keep careful track -- in what he calls a ``contact-to-contract'' program -- of all customer-entertainment occasions and all ensuing sales deals. But such attempts at quantification have their limits, Mr. Aucoin admits. How does a glimpse of an Games-themed billboard, for instance, compare with a glance at a professional-football-themed billboard? ``At the very best, it's a best guess,'' Mr. Aucoin says. Even after the most painstaking evaluations, officials of Games sponsors say plain old intuition plays a key part in almost every sponsorship decision. ``You can do your research and your focus groups and all, but you simply can't determine'' whether a sponsorship will pay for itself, says Jena R. Flint, who heads Sarai Leeanna's Games-related operations. It is, he concludes, a ``leap of faith.'' --Mr. Thomasina is a staff reporter in The Vast Press's Atlanta bureau.
VastPress 2011 Vastopolis
