SBJ/March 13 - 19, 2006/SBJ In Depth
Chasing airline sponsorship dollars? Good luck
Published March 13, 2006
For any team or venue seeking sponsorship dollars from airlines, the only good news is that the search needn’t be exhaustive — there’s only a handful of carriers spending on sports sponsorships. The bad news is that since airlines are still largely unprofitable and some of the largest carriers have sought bankruptcy protection, dollars are about as plentiful as meals on domestic flights.
|Southwest has been one of the few bright spots
in the airline sponsorship category.
Continental and Southwest are easily the two biggest airlines spending in sports sponsorships: The dichotomy is striking. While it has more than 25 team deals, outside of United’s long-standing USOC affiliation Southwest is the only carrier investing in national sports sponsorships; it’s got deals with the NBA and NFL.
“Our sports sponsorships are media-driven and ratings are really the most important measurement,” said Tena Griffith, manager of sports marketing at Southwest, one of the only profitable carriers flying. “We don’t have any team relationships that don’t have a media component because sports fans and sports TV viewers mirror our frequent customers.”
Supporting Griffith’s contention that media is of paramount concern at Southwest are the latest sports media spending figures from Nielsen Monitor-Plus. They show Southwest moving to ninth from 16th in 2005 sports media spending, at $85.6 million — a 9.4 percent increase from 2004. Southwest’s sports media budget puts it ahead of traditionally big sports spenders such as McDonald’s, Coke, Visa and all but two automakers.
|Fans enter a drawing at the Continental Airlines
booth at the U.S. Open.
“We don’t say it directly in our marketing, but we try to be New York’s hometown airline, with sponsorships there that are iconic,’’ said Wes Reese, manager of sponsorship marketing at Continental.
Since it primarily targets business travelers, Continental also counts on its properties to supply unique experiences that its millions of One Pass frequent fliers can bid on. Some of the priciest examples were the 565,000 miles redeemed by one frequent flier in exchange for the opportunity to throw out the first pitch and host a suite during a Houston Astros game. Another man exchanged 350,000 miles to buy his daughter a walk-on role in a Broadway production of “Chicago.’’
Other airlines playing in the sports sponsorship game are: Frontier, which has sponsorships with the Nuggets, Avalanche and Pepsi Center, five Colorado universities and a number of Vail Resorts to reinforce Denver as its home; United, whose Olympic ties are more than 25 years old and run through the 2008 Beijing Games; Delta, which has sponsorships with MLB clubs including the Cincinnati Reds, New York Mets, Boston Red Sox and Atlanta Braves; and Midwest, which has deals with the Brewers and Bucks in its Milwaukee home and with the Royals and Chiefs in Kansas City.
Affixing their brands to the cities in which they have hubs or are headquartered is such an integral part of airline marketing, it explains why the industry has a penchant for building entitlements.
“Being local or seeming so is often the most important marketing objective,” said Jeannie Goldstein, executive vice president and managing director at WPP’s 141 Worldwide marketing agency. Goldstein worked on United Airlines’ business for seven years, while she was at fellow Chicago agency Frankel.
Nothing’s more local than a piece of local real estate. Accordingly, Chicago’s United Center, the American Airlines Center in Dallas, AmericanAirlines Arena in Miami, US Airways Center in Phoenix, Milwaukee’s Midwest Airlines Center, Salt Lake City’s Delta Center, the Air Canada Centre in Toronto and the Continental Airlines Arena in New Jersey are among the biggest expenditures in airline marketing.
“We needed to look and feel big in the market; we needed to show people we were here to stay and a naming rights deal is a very permanent thing in people’s minds,” said Reese, when asked to explain the rationale behind Continental’s 11-year-old entitlement to the arena that houses the New Jersey Devils and Nets.
Conversely, the other big spender in the airline category eschews building deals. “We’ve never had an interest in naming rights,” said Southwest’s Griffith. “It’s a lot of money and our sports sponsorships are media driven, so it just hasn’t made sense to us.”
Southwest also has its own formula when it comes to paying for its sponsorships. While many, such as United’s Olympic deal, are all barter, Smith said Southwest pays cash for all but its smallest sports sponsorships. Other carriers pay a combination of barter and cash, which can lead to disagreements on whether an airline is basing its barter deal on pricey “day of departure” fares or more routine discounted fares.
“The negotiation really gets down to how you value that ticket,” said Rob Prazmark, who’s helped negotiate USOC’s United Airlines deals as Olympic sales and marketing president at IMG. While some tie in procurement of air travel to a sponsorship, that’s not always the case.
The fact that airlines are so regional means there are few national deals. “They do deals where they have hubs,” said MLB sponsorship chief John Brody. “We’ve been offered deals with short money, so we send that business to our clubs.”
Since airlines’ Web sites are their principal means of ticket distribution, driving traffic there is another important rationale behind sponsorships.
“Sites like Expedia and Travelocity are often airlines’ biggest competitors,” said Andrew Judelson, NHL group senior vice president of corporate marketing. The NHL lost Southwest as a client after four years because of the lockout, disappointing ratings and a move by the airline to shift dollars from national to local media.
The financial condition of the airline category makes some avoid it altogether. “Some properties are hesitant to do a deal with any airline because of the shape of the industry,” Goldstein said. Indeed, several property executives said they insisted on upfront cash payments as a prerequisite to deals.
Still, a carrier’s market entrance can spur more overall business. Southwest has gone hard after US Airways in Pittsburgh and Washington, where it signed recent deals with the NHL Caps, NBA Wizards and WNBA Mystics. After Southwest started servicing Philadelphia, US Airways, long-established in the market, signed a seven-year, seven-figure “founding partner” level sponsorship with the Philadelphia Eagles in 2004.
“Timing is important in any sponsorship, but especially in this category,” said Mark Donovan, senior vice president of business operations for the Eagles. Donovan had a hand in Southwest’s original deal with the NFL, when he worked at the league.