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Brand Sponsorships

Event Sponsorships: Forgetting The ROI?

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Event Sponsorships: Forgetting The ROI?

It all started with a flash of American superiority and a bruised royal ego. In 1851, a yacht owned by the New York Yacht Club easily beat 15 of the fastest British yachts in a race around the Isle of Wight. Surprised at the result, Queen Victoria was reported to have asked who had come second and was politely informed: ‘There is no second, your Majesty.’ The America’s Cup had begun.

After 156 years and 38 contests, the finally returned to Europe. In April of last year, yachts from 11 nations  began competing in Valencia to see who would eventually race the current holder, the Swiss yacht Alinghi. It always is a massive event, but arguably those with the most to lose are not the yachtsmen or countries involved. In fact they play an almost peripheral role compared with the companies spending nine-figure sums to associate their brand with the event.

As I walked around Valencia, Spain’s newly designed marina it could easily be likened to visiting an exotic menagerie of big brands with some of the fattest marketing budgets on the planet. BMW and Oracle had joined forces with Allianz to sponsor the American yacht. A few meters away the French boat sponsored by Areva, the French nuclear power company. For reasons that weren’t immediately obvious, New Zealand’s entrant was sponsored by Emirates. Most companies pay upwards of $100m to be a sponsor. Meanwhile, supporter brands such as Vodafone (the official phone network), Nespresso (the official coffee) and Adecco (the official HR supplier) were also stumping up millions to be a part of it.

With stunning locations adorned with glamorous yachting fraternity, it would be all too easy for marketers to lose their focus and fall into the ancient trap of assuming anyone spending this kind of money must know what they are doing. It is exactly these big-money events at which a marketer must maintain their ROI focus. How, we should ask, can a B2B software company such as Oracle justify spending that kind of money on a yacht race? What, we may wonder, is the link between nuclear power and yachting? And what has Emirates got to do with the Kiwis?

The answer is in the two elements of brand equity. To create a strong brand, marketers must first build awareness among the target market to establish its existence. Then they need to build the right associations that will ensure differentiation and strong relationships with customers.

While it is true that most of the sponsoring brands gained significant awareness from the event, it is hard to justify their investment simply with media mentions. There were 11 boats competing for attention on the water and soon 10 of them would be out of the race.

It is even harder to prove ROI in terms of brand associations. Most of the sponsoring brands had no legitimate connection to yachting or the Cup itself, so their marketing teams were working overtime to highlight their ‘authentic’ role in the event. Alcatel-Lucent showcased the race live at its Second Life stall. BMW went to great pains to point out that four of its engineers advised on their yacht’s hull design. Apparently, researchers from the Allianz Center for Technology developed a more robust spinnaker pole for the same boat. According to Bjoern Widemann, global sponsorship manager at Allianz, ‘Allianz’s partnership with the BMW Oracle Racing Team is more than just sponsorship; we draw on our core competencies to offer specialist support that gives the team a competitive edge out there on the water.’

The real message remains much clearer. Forget marketing ROI and brand positioning and have some old-fashioned marketing fun. Girls in bikinis, sea and sunshine, millions in unmeasured marketing spend and, in the distance, the magical sound of clinking champagne flutes. All aboard!

30 SECONDS ON … AMERICA’S CUP

– The Americas Cup trophy was designed in 1848 by Garrard & Co and yachtsmen colloquially refer to it as ‘the auld jug’.

– The most famous person to have competed in the event was Sir Thomas Lipton. The Scottish tea baron tried and failed five times to win the Cup. While the Cup eluded him, his reputation as the world’s most cheerful loser built the Lipton tea brand in the US and Britain.

– Mirko Groeschner, marketing director of the BMW Oracle team, made capital out of the fact that the VIP section at the event offered an area where the team had breakfast and lunches. ‘Guests can actually see the team eating. You don’t get that with Formula 1.’

– The ultimate VIP seat was a spare 18th seat on one of the 25m sailboats alongside the crew. At least one team is considering selling the seat to raise money – the price tag is rumoured to be 1m.

– The 2007 race was won by the Swiss yacht Alinghi in the 7th race.

– Currently the sailing community has shifted its focus from the race to this nasty lawsuit.

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9 Comments

Editor on September 01st, 2008 said

What year are you living in?

What is the ROI of sponsoring a bunch of lawyers who insist that the idea of sportsmanship and competition is arguing over the original deed instead of getting out on the water? What kind of brand association is changing the rules to ensure winning?

Where did this post come from? Is it just lazy regurgitating of old material, or does the writer actually believe that we are interested in something that happened in the distant past?

Nicholas on September 01st, 2008 said

Sponsorship should work at more levels than just awareness and brand associations.

There is probably a considerable amount of sponsor appreciation by the target segment. Yacht racing is something quite a few people are passionate in.

This appreciation towards sponsors can be highly effective for a marketing outcome especially for B2B.

Derrick Daye on September 01st, 2008 said

‘Editor’ and Nicholas, thanks for your perspectives. Each of your businesses are directly linked to event sponsorships – yacht sponsorships in particular in your case ‘Editor’. Opposing/alternative views are always welcome here. ‘Editor’ I’m surprised you did not make a stand regarding the essence of Mark’s post – ROI for yacht sponsorships.

This blog appeals to the marketing profession – your target audience. They deserve a point don’t you think? A first name wouldn’t hurt either.

Best,

Derrick

David (Editor) on September 01st, 2008 said

Actually I agree with Mark. The days of awareness and association being the measure of ROI for sponsorship are long gone. While important, sponsors undertake such activity with a wide range of goals.

Take David Beckham’s shirt…. has that done anything for awareness of the sponsor? I’m quite happy to argue the case for sailing sponsorship as a great mechanic for delivering marketing goals. Volvo, Hugo Boss and others gain real value from their sailing sponsorships, however I am not sure the same could really be said for any of the America’s Cup sponsors at this point in time.

There are plenty of examples you could have used – the Extreme 40s for example, got 50,000 spectators over the weekend. My objection is to the currency and relevance of the example you used, not with whether or not sailing provides ROI.

Nicholas on September 01st, 2008 said

I’m in the business of measuring sponsorship ROI (research) as opposed to event management so I don’t have a bias towards properties.

In this case, I would agree with you that the awareness case isn’t so strong here for brand building as these are known brands. However, target customers may well have a strong emotional connection with the property here and that could work well with a planned sponsorship activation programme for a sponsor.

I would not dismiss it so readily without some more hard evidence.

Stephen on September 03rd, 2008 said

It doesn’t appear that your article supports a “value for money” proposition for major America’s Cup sponsorship. I am a sailor and enjoy the Cup (when it’s on) and that some worldwide attention is focused on sailing. (Maybe that’s the appeal… worldwide attention at a sport’s richest event.)

Still, there are 2 further questions that fall out from this…

One, why is sailing sponsorship so much more easy to come by in Europe than North America (at all levels)?

And two, do other events like the Volvo Ocean Race and Vendee Globe (both are around the world races, the Volvo being with a team of 11 or so, the Vendee is single handed and non-stop!) really generate the marketing return / exposure some claim? I’ve even seen some mention that the last Volvo event received a “sponsorship of the year” or some similar award in Europe.

Thanks

Stephan Kandler on September 03rd, 2008 said

Usual exageration about America’s Cup…
As founder and CEO of K-Challenge which became Areva-Challenge, I needed to react to your article which contributes like usual to mislead people with wrong figures about the America’s Cup as marketing medium.
If this event has not always been “reasonable”, that is what makes it special and it has gone through 3 centuries and is still alive where many trophies and sports did not survive.

Without approving the current legal situation of the event and neither Alinghi’s or BMW Oracle Racing’s attitude, we must admit that the event has raised its level with Alinghi and ACM from 2004 to 2007. There is probably a lot to improve but I disagree with the usual comments surrounding the event, the budgets and the ROI.
– NO sponsor paid hundreds of million Euros even to the big teams. The truth is probably a maximum of 50 million Euros, which represents 12.5 Million Euros per year maximum (which is the budget of a middle range cycling team).
– ROI is measured like in every sport and is probably higher for “small” teams sponsors. At least I can speak of Areva which has spent 12,5 million Euros split over two years and probably spent in total less than 20 million all included for a ROI in media mentions of 150 Milion Euros (Comperio Resarch). Some can argue that these studies can always be discussed but why should it be in the America’s Cup and not soccer or cycling, where companies seem not needing to justify their investment because it is commonly admitted that this kind of sponsorship is guaranteed success…

– Things like hospitality and internal communication have also to be considered as part of the ROI, as it is specially efficient for a sponsor in the AC, because an AC team is working like a company and has many similarities with usual business and employees’ day to day life (We hosted more than 4,000 employees and customers on site and the Areva internal fan club reached 12,000 registrations!). Please let me know what kind of values you communicate and special relationship the sponsor builds and justifies with its employees and customers when sponsoring a soccer or cycling team?
– It is often considered as a billionaire’s hobby but it is a piece of cake compared to soccer where Manchester and Chelsea alone cumulate 2 billion Euros of debts covered by their owners! If Formula One did not have the richest industries behind it (cars, oil & tyres) the sponsors could not afford the real price (If 10 boats are disappearing from the race in the AC, the F1 season is limited to 2 or 3 competitive teams, while the others are struggling).

To conclude: more deep researches shall be made on the marketing of the AC rather than only rely on journalists’ reports which are often reproducing the same ideas since decades.

America’s Cup is not the Olympics or the Soccer World Cup, but is at least competing with all the other international events behind, with its own strengths and targets. It is still virgin in many areas and has there for a lot of development potential compared to other sports especially in those days where sustainable development becomes a priority.

If you consider the real figures it offers much higher ROI than many sports, and is affordable. And it has no competitors in terms of excellence and prestige.

Nicholas on October 13th, 2008 said

I think the problem here is statements like “for a ROI in media mentions of 150 Million Euros (Comperio Resarch).”

Most marketing Directors, brand consultants don’t think of ROI in terms of media mentions.

They may as well be speaking two different languages.

Hannah on November 06th, 2008 said

This may be a little bit off subject but I need some assistance finding an accurate way to calculate ROI for marketing events, specifically sports boxes/tickets for existing and new customers. Can anybody help me out?

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