Activation, accountability vital to future of jersey sponsorships
Published June 22, 2009 : Sports Business Journal, Page 13

Back in 2006, Amplify was advising XanGo, a premium mangosteen beverage company, on its jersey sponsorship deal with Real Salt Lake. We realized then that XanGo’s partnership represented a breakthrough: the first jersey advertising deal in U.S. sports history.

We knew it was only a matter of time before the concept, so widely accepted in the global soccer community, would soon find its place in other professional sports leagues. For some time, other leagues had taken notice of what MLS had accomplished, with marquee brands like Volkswagen, Best Buy and Microsoft committing long-term revenue for jersey deals.

Recently, the WNBA announced its Phoenix Mercury franchise had sold advertising space on the front of its jerseys to identify theft protection company LifeLock. The Los Angeles Sparks followed that with a jersey sponsorship deal with Farmers Insurance.

With leagues and their franchises developing innovative inventories to either trade up existing partners or procure new ones, creative solutions will go a long way toward insulating sponsorship from the declining economy. However, with this new asset comes a different set of activation challenges. How will brands like LifeLock and Farmers optimize their jersey sponsorships when activation strategies (in support of this type of partnership) are such a new concept in the U.S.?

Below is a list of recommendations for any brand marketer considering a jersey sponsorship.

Turn the road trip into a home game
The biggest difference between venue naming rights and jersey deals is a sponsor can’t take its building equity with it when the home team plays on the road. With a brand’s name on a jersey, however, the sponsor could create instant activation platforms in league markets. For example, XanGo created recruitment events for distributors and rewarded attendees with game tickets and hospitality. Since the objective was to increase distributors, it wasn’t hard to inspire prospects by introducing them to jersey-wearing advocates expounding the financial merits of distributorship. In the first year, 8 percent of new distributors in MLS markets cited the sponsorship as their reason for joining.

One of our clients, Volkswagen, is leveraging its D.C. United jersey sponsorship by executing dealer and customer hospitality events during the team’s road games. Players will also make dealer appearances throughout Salt Lake City during the MLS All-Star Game.

Appearances/community initiatives yield incremental publicity
One of the biggest advantages of owning a jersey sponsorship is the incremental publicity it yields. It is important to partner with teams that are community oriented. Most community initiatives, appearances and charitable endeavors are covered by the media. Many of the players, coaches and front office staff are interviewed, especially offseason when team access is limited. All these opportunities increase the partnership’s media ROI as print and broadcast images will typically capture the sponsor’s name. During the negotiation phase, push teams to develop sustainable community platforms and ensure those representing the team wear their jerseys publicly.

Implied endorsements
Other benefits include the implied endorsements brands receive as a result of players wearing their team’s jersey. For most fans, a logo on a jersey has a much stronger impact than a sign 100 yards away. Loyalty between NASCAR fans and the brands that adorn their favorite drivers (and their cars) has been well-documented.

If a sponsor is negotiating with a team that has an iconic player on its roster, it should be prepared to pay more. However, the benefits should outweigh the incremental cost over the league average. One may recall the quantum leap in price paid to the Los Angeles Galaxy by Herbalife for the rights to splash its name across the chest of David Beckham. The Galaxy went on to sell a record 250,000 Beckham jerseys by July 2007, before he even joined the league. This represented an astounding 780 percent increase over the entire 2006 season, and created an evergreen home run for Herbalife as their walking billboards generated millions of impressions during Beckham’s first MLS season alone.

Accountability
With accountability and measurement in vogue, it is critical to plan for measurement nuances not typically found in traditional deals. First, the partnership announcement should garner tremendous publicity simply on the basis of the novelty of the jersey concept. Keep in mind, it’s only penetrated two professional sports leagues. Announcements will deliver media exposure as the sports business community continues to follow these deals. Therefore, a sponsor should work closely with its PR reps to monitor publicity with a sustainable tracking program. Keep in mind all press events, community programs, CSR initiatives and player appearances add to the ROI equation.

The final piece of the measurement puzzle is the in-game experience. Whereas our industry has become savvier in measuring the value of on-field signage, so too should they measure and weigh the value of the jersey. It is also imperative teams provide a full media analysis at the conclusion of the season. Companies such as Image Impact and Repucom provide proprietary digital recognition technology that captures the aggregate brand exposure and delivers media valuations after filtering data through proprietary algorithms.

As an industry we’ve been wrapping our collective heads around the economy’s impact on the future of sponsorship. True partnership between brand and property is more critical than ever before. As important, innovative thinking is key, and sometimes the best ideas come from simply accepting change.

Michael A. Neuman (mneuman@ampfirm.com) is the founder and president of Amplify Sports and Entertainment and an adjunct professor at Columbia University in the Graduate School of Sports Management and the NYU Tisch School of Hospitality, Tourism and Sports Management.

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Once upon a time, the sports marketing and sponsorship industry was thought to be recession-proof. At the Sponsorship Symposium in New York only a few months ago, industry experts proclaimed calm waters ahead – and some even foresaw growth.

Unfortunately for all, it was the naysayers in the room who were proven correct. Team passions and loyalties may remain strong among fans, but sponsorship spending has been severely hit by the downturn. Well, maybe “hit” isn’t the right word. Try “decimated.”

In recent weeks, the sports industry has seen reversal after reversal of sponsorships. Brands that previously agreed to march forward with sponsorship commitments, renewals or extensions were suddenly re-examining their decisions. Sponsorships that properties and brands both thought would continue well into 2009 were eliminated as budgets fell victim to austerity mandates.

As the tough news of program cuts was made known, marketers found themselves in no position to challenge management with retention arguments, since they lacked prior success metrics. Where was the evidence? Where were the metrics to define and defend the power of sponsorships? This lack of metrics represents the industry’s greatest challenge – and quite possibly our greatest opportunity.

As an industry, sports marketing has enjoyed substantial year after year growth. The onus is now on those in sports marketing to improve the metrics used to measure the impact of sponsorships. It starts with the brands becoming more demanding of their agencies. They need to actively collaborate on enhancing their current processes, setting benchmarks and milestones, and communicating exactly what success looks like. They must emphasize the importance of strengthening the bridge that links strategic business objectives to their sponsorship assets, as well as to their subsequent activation programs.

However, the biggest change agents will be the “trio” – the leagues, teams and properties that interact with brands and agencies on a daily basis.

Most brands active in sponsorship have multiple relationships and interact with numerous partners. They rely on them to provide valuable insight during the review process. If we can agree that brands fluent in sponsorship will streamline partnerships to only those proven to be successful, wouldn’t it behoove the “trio” to recognize they can improve their negotiating positions by going on the offensive? By taking matters into their own hands, the “trio” demonstrate they want to be part of the solution. Let’s face it, closing sponsorship deals is a lengthy process, and each category is not as deep as it once was. Losing a sponsor doesn’t ensure a quick and easy replacement from a competitor. Those days are in the past, at least for now.

For the next 18 to 24 months, there will be great pressure on advertising and marketing budgets. That means the time is now for measurement and accountability. Properties that make this a priority will better insulate themselves against the winds of change. Simply put, if brands don’t measure impact, they won’t be able to justify sponsorship when budgets are being even further scrutinized.

Here are some recommendations to strengthen the case for sports sponsorships:

Know the Business Objectives: Make sure there is sound understanding of a company’s business objectives. Since sponsorship is a big part of the marketing mix, sponsorship assets need to link strategically with overall business objectives. Develop key performance indicators that demonstrate the link between the two.

Involve the Sponsor: Somehow, sponsors have been forgotten in the process. They hire agencies to develop metrics but rarely participate. Their lack of involvement means they don’t engage business colleagues who manage horizontal and ancillary marketing initiatives. Without this input, key measurement metrics are missed.

Identify Measurement Filters: Since sponsorship is more inclusive in the marketing mix and integrated across numerous brand platforms, it is imperative that success criteria are shared throughout the system. As we all know, “if you can’t measure it, you can’t manage it.”

Boost Data Accountability: We all agree there is no “holy grail” when it comes to measurement, but this is where the industry remains asleep at the wheel. Although we’ve made remarkable progress with digital recognition technology, we need to catch up in other areas of accountability. Agency and brand partners must share the job of achieving outcomes and should be equally responsible for delivering information in a timely fashion.

Develop Processes: Accountability is actually a two-part process. Once the responsible party is recognized, it is imperative that they train in the art of data collection. The difference between incomplete analysis and great analysis is this step. We’ve all asked for results at the conclusion of a sponsorship – only to be told the information is unattainable. The counter approach is to identify these parties and teach them to analyze data throughout the sponsorship.

Upgrade the Delivery: It’s time to move past a fragmented approach where objectives and ROI are measured in mostly incomplete detail. Sports marketers need to resolve to make a stronger commitment to metrics that deliver robust, comprehensive analysis in a neatly wrapped package.

Look at it this way: A CFO looking at a brand’s breakdown of revenues and expenses sees sponsorship only as an expense with no direct correlation to revenue generation. It is the responsibility of sports properties to justify those dollars, to provide the metrics necessary to connect sponsorship to revenues. It is critical that we introduce accountability into the system and show sponsorship as an asset, not a liability. Focusing on accountability today opens up a world of sponsorship opportunity for years to come.

-Michael A. Neuman (Founder & President of Amplify Sports and Entertainment, LLC)

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We found it fitting to include our agency’s first white paper of ‘09 to kick off the start of our brand new blog! The document is titled: “The Growing Role of Accountability: how comprehensive analytics have changed the way we measure sponsorship” and should serve as a call to action for those marketers and rights-holders who are serious about preserving their marketing dollars in the face of the current state of the economy.

The paper was written to serve as a point of optimism in that there are several key ways which industry professionals can insulate themselves through smart and strategic sponsorships. In our experiences with past clients, we have witnessed first-hand the power of valid and reliable sponsorship measurement and in this document, we briefly discuss several key points and metrics which our agency utilizes on a daily basis.

Enjoy!

The Situation

By the end of 2008, roughly 1.1 million Americans were facing unemployment due to recessionary pressures. Yet, when surveyed as part of Sports Business Journal’s inquiry of top sports executives, a surprising number of respondents expressed high levels of optimism and confidence in their industry and its ability to come out of the current economic crisis unscathed. Even as late as fall of 2008, the majority of industry professionals reported a sense of exclusivity and insulation within their field. Unfortunately, we can no longer hold such high levels of optimism as we are now beginning to realize the vulnerability of our industry to external economic forces. Where companies are… (click here to read the full document)

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