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SBJ/March 26 - April 1, 2001/Marketingsponsorship
Ad firm stakes its pay on Oakland A's success at gate
Published March 26, 2001
If the Oakland A's surpass 2 million in attendance this season, the team won't be alone in profiting from the increased fan interest.
FCB Worldwide, the A's advertising agency, will notice a difference in its paycheck. In an unusual arrangement, FCB is taking a significant part of its pay — perhaps as large as 50 percent — in the form of an attendance incentive. If the A's hit the 2 million mark, FCB earns a bonus. The agency continues to get bonus payments for each 100,000 in attendance above 2 million.
What's remarkable about this deal isn't that the A's would agree to such a contract. After all, commission payments aren't a new concept in sports. It is unusual, however, that FCB would agree to base a large part of its compensation on the success of ticket sales. Advertising campaigns usually don't come with an agency-backed guarantee of success.
"This arrangement really helps solve one of the problems that exists between teams and agencies," said Keith Bruce, the San Francisco-based director of sports marketing for FCB Worldwide. "Most agencies view a sports account as an opportunity to do some great creative. However, because sports teams use a lot of bartered media, they aren't very profitable."
So FCB decided to put a good part of its paycheck on the line and prove that an ad campaign can be compelling while it also moves the needle on ticket sales. The agency gets a small base retainer that's based on hourly staff fees for a full-time account executive, a part-time account director, Bruce's time on the account and creative development. The rest of the agency's compensation is based on box office sales.
In the first two years of this arrangement, FCB earned bonus payments. Last season the A's drew 1.7 million fans on the way to a division title. Anticipating strong interest in the team in 2001, the A's increased the attendance bonus threshold slightly to 2 million. The last time the A's surpassed 2 million was in 1993.
There's more to the relationship between the A's and FCB than just creative development and media placement. Bruce's group is a year-round marketing adviser to the club. The agency consults with team executives to develop marketing strategy, conduct research surveys and focus groups and get involved in selling sponsorships for the team. FCB earns a commission on any sponsorship sales.
"The fact that we are integrated across the board with the club really helps," Bruce said. "It certainly makes us feel confident in basing a good part of our pay on the team's success. We have a chance to contribute in more ways than just the development of an ad campaign."
The structure of this deal also helps the A's get the services of a worldwide ad agency. Not many agencies that service multimillion-dollar accounts look to take on clients with a $3.5 million ad budget. FCB's size, however, is a plus for the A's. The agency's media-buying clout helps the team extend its ad budget for the non-bartered portion of the media placements.
While a winning team certainly helps sales, an effective ad campaign helps define the brand. The continuity of having FCB involved in three marketing campaigns is part of the reason why A's season-ticket sales are up 40 percent over last year. And that's a strong indication that the A's and FCB are both on the way to having a good year.
Alan Friedman (firstname.lastname@example.org) is founder of Team Marketing Report.