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SBJ/May 19-25, 2014/Marketing and Sponsorship
For Ganassi and Target, 25 years of teamwork
Strong ties — and free first year — pay off in longevity
Published May 19, 2014, Page 6
“I made [Target] an offer they couldn’t refuse,” Ganassi said recently from his office in Concord, N.C., recalling the day he pitched Target. “If they said no to that deal, they weren’t interested in being in racing.”
Executives at Target weren’t sure about racing, but they saw an opportunity to add another marketing asset to the advertising circulars and end caps that they sold to brands featured in their stores. They also saw an offer they couldn’t refuse.
Scott Dixon notched victory No. 100 for Target Chip Ganassi Racing in at Pocono in 2013.
The program’s longevity is a testament to both its design, which offers brands sold in Target both race team assets and retail assets, and the partnership between the team and the retailer, which extends to everything from Target advising on human resources to its IT structure. The two are so interwoven that Target helped find the land, design the building and secure the contractors for Ganassi Racing’s 185,000-square-foot shop in North Carolina.
“It’s rare when sponsor and property relationships become real partnerships,” said Tom Garfinkel, president of the Miami Dolphins and a former executive vice president at Ganassi Racing. “It only happened because Chip championed it, and the CEO of Target championed it. That’s the reason it lasted 25 years.”
The program has been around long enough for both Ganassi and Target to grow considerably. Ganassi Racing has gone from a single IndyCar team to fielding four Indy cars, a Sprint Cup car and a United SportsCar road-racing entry. Over that same period, Target has gone from roughly 400 stores to more than 1,900.
It’s the type of growth that Ganassi never imagined.
Alex Zanardi wins ‘97 CART title
Rolex 24 at Daytona victory in 2006
Scott Dixon wins IndyCar last year
Dixon on the track in Houston
NASCAR’s Kyle Larson
The program’s success is rooted in its start. That Target was able to begin its sponsorship for free gave the company a year to set up a program to offset its sponsorship costs.
Working with its agency at the time, Frankel & Co., Target developed a plan to sell decal space on the race car to brands it featured in its stores. If it sold enough supporting sponsorships, Target would recoup the $4 million it began spending in year two on the sponsorship, and Target would still get major exposure on the track.
The challenge was getting those brands to sign on for a new program, especially considering that Ganassi Racing was fielding a new team and had no track record of success.
“Initially, it was hard,” said Brenda Heikes, a marketer at Target who worked on the program. “Those were the days we were lucky to finish a race, much less make the podium.”
Target invited brands like 3M, Pepsi, 7Up, Rayovac and others to a pitch event at the Detroit Grand Prix in 1990. They rented a ballroom near the race, and Target, Frankel and Ganassi executives made a presentation that afternoon outlining the opportunity. Target offered the brands space on the car, advertising in circulars, prime retail positions in stores, inclusion in coupon books and more.
“It wasn’t about advertising on a car,” said Jeff Knapple, the current president of Van Wagner Sports who led the effort at Frankel & Co. at the time. “It was about promotions and aisle displays and retail positions.”
3M signed on to be the first sponsor. A host of other blue-chip brands followed. By the start of the 1991 season, Target had found enough support to completely offset the sponsorship fee it began paying in the second year of the partnership. But the brands didn’t mind. They soon saw the value of being part of the program.
“If it was equal price, equal service, same consumer demand, [brands that sponsored the car] would get the nod for better space at Target over a competitor,” said Henry Rischitelli, the founder of Next Marketing and a former IMG executive who worked on the Target program for Ganassi. “They could have no signage on the car and get enormous value from the lift they got and partnership they had with Target itself.”
It became so popular that vendors started asking to be on the car so they could improve their relationship with Target.
“We didn’t have to talk people into it,” Ganassi said. “They always seemed to have a bench, for lack of a better word, of people that wanted to be on the car.”
There was enough support that Target Chip Ganassi Racing added a second team in 1994. The team also began winning. It won its first race that season, and followed that with its first of 10 CART/IndyCar championships in 1996. It went on to win the first of its four Indy 500s in 2000.
Ganassi brought Target into NASCAR in 2002. Around the same time, the team restructured its Target sales program.
It shifted from a program where all the supporting brands got the same assets to a three-tiered program where the pricing and mix of assets varied. Tier-one sponsors paid more than $5 million and began receiving a primary paint scheme on Target’s Sprint Cup car. Tier-two sponsors paid more than $3 million, and tier-three sponsors paid more than $1.5 million. They all continued to receive hospitality at races and assets in stores.
The team began signing more multiyear deals, as well. Current partners, which include Clorox, Pepsi, Unilever and Kraft Foods, have been with the program for years, and it’s rare for someone new to join the fold.
Energizer has been a tier-one sponsor for more than a decade, and former Energizer President and CEO Joe McClanathan credits the company’s race-program sponsorship with helping the battery brand have a 58 percent share of the battery market in Target stores — a huge increase over the 30 percent share of the market it has at mass retail.
“It helped us dominate the merchandising in-store,” McClanathan said. “We got great positioning. We got front-end placement. We got checkout location. We were always strong there, but we became stronger as a result of the program.”
McClanathan explained that being part of the program didn’t give Energizer better display space, but it gave the company a chance to spend time with Target executives and merchandisers outside the office. That time together allowed them to plan and create concepts for displays in Target stores that wouldn’t be created otherwise, he said.
“You don’t get anything for free, but when you commit to the team and Target and put the resources into the business, they like that, and they want you to be successful because they want to keep that racing program strong and healthy,” McClanathan said.
Neither Ganassi Racing nor Target executives will discuss when the sponsorship is up for renewal. In 25 years, a sponsorship renewal has never been reported. The deal just keeps going without hype or fanfare, and there’s no sign that will change any time soon.
“You think about the great ad campaigns and designer partnerships [Target has had], but this is the one that’s lasted longer than any relationship,” said Dan Griffis, vice president, experiential marketing and alliances, at Target. “It continues to deliver on all the objectives started at the beginning.”
Ganassi Racing President Steve Lauletta hopes that continues to be the case.
“We hope this goes on forever,” he said. “Will there be a shift in the way we operate? Yes. But everything I’ve seen has been done with an eye toward making things stronger and turning 25 years into 50 years.”