SBJ/December 17 - 23, 2001/Marketingsponsorship

Economy provides an opportunity to feed your brand, not starve it

The Bush administration recently admitted something that most of us already knew: The U.S. economy is in recession. It will be perceived to be getting worse during the next few weeks as companies release their fourth-quarter earnings.

That's why now is the time for corporate America to get off its wallets and spend on sports again.

As these poor Q4 results are posted, we may be sure that the mainstream media will be screaming "The sky is falling!" But not so fast. We've already turned the corner. Barron's recently reported that securities analysts are projecting a jump of at least 14 percent in 2002 stock earnings. A spokesman for Citigroup said the company expects stocks to climb 10 percent to 15 percent next year and continue climbing in single digits each year for the next five. Most are saying the breakthrough will come in the second or third quarter next year.

The anemic economy certainly has taken its toll. It's tough to maintain reasonable marketing and advertising budgets when sales are down and marketing executives are afraid of losing their jobs.

The Sept. 11 terrorist attacks have also had an effect. Americans may be psychologically inclined to stay closer to home these days.

Also, many CEOs have loosed on the marketing industry a plague of slash-and-burn accountants who don't understand marketing or branding. All they see is next quarter's bottom line. They know nothing about brand equity. They don't care how much damage this does to their companies' long-term competitive positions because they won't be with those companies this time next year.

Here is my argument to invest now, as the cyclical economy is starting back toward the top. Rights fees, which were inflated by the turbo-charged economy and the dot.com boom during recent years, are reasonable again. Properties offer more benefits to sponsors than ever before. Companies that are planning to introduce new brands, products and services have tremendous opportunities to engage sponsorships at reasonable fees.

As the sponsorship market has been thinned out over the last year, the opportunity to grow a brand through sports is better now than ever because there is less clutter. The opportunity for sponsors to lock down wider categories of "official" sponsorships at low costs is unparalleled. Opportunities to form new strategic alliances and to build an integrated brand-marketing platform comprising sponsorship, advertising and sales promotion are better than ever.

The news from the marketing front isn't all bad, no matter how the mass media portray it:

Merrill Lynch and Cheerios expanded their LPGA sponsorships.

Reebok announced a long-term, $10 million-a-year sponsorship of NBA MVP Allen Iverson.

NBA rookie Shane Battier locked down Casio, Oakley, Sprite and EA Sports.

EA Sports signed Arizona Diamondbacks left fielder Luis Gonzalez.

BMW joined Compaq and Tag Heuer as sponsors of the 2003 America's Cup effort fielded by Oracle chairman Larry Ellison.

Motorola re-upped its NFL deal for $105 million.

MasterCard pitched another $81 million into baseball.

Wendy's cooked up a $10 million ESPN sponsorship/advertising package.

Coca-Cola threw another $30 million into NASCAR, extending its sponsorship five more years.

When the economy returns to full throttle, these brands will look like geniuses because they acted now. It's time to retake the brand-building high ground and invest again in sports.

Strong national properties such as NASCAR — with its high TV ratings, crowds, fan loyalty and licensing revenue — frequently require a premium price to participate. Yet the state of the economy has dictated that this is not the case today. NASCAR, like all sports, has faced sponsor losses, and competitive pressures are keeping NASCAR sponsorship rights fees reasonable despite deliverables that are skyrocketing.

Marketers must anticipate the cyclical nature of the U.S. economy. They should look in their crystal balls and ask themselves where they want their brands to be in 2003. Good opportunities await companies aggressive enough to fund sports sponsorships.

Reebok, Motorola, Merrill Lynch, Coca-Cola, EA Sports, Cheerios, MasterCard, BMW and others have made the statement that they believe there is a future beyond the next fiscal quarter. It's time for the rest of the marketing industry to follow.

Mel Poole (mp@sponsorlogic.com) is president of SponsorLogic, a consulting, management and events agency.

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