SBJ/June 9-15, 2014/Opinion

How brands stand out? Spend, spend, spend

Don’t underestimate the pressure that brand marketers face today. Here’s a sample of what they are forced to deal with on a daily basis: how to stay ahead of the dizzying pace of technological change; how to at least keep pace with that change through effective activation; how to really stand out; and finally, getting the buy-in on the investment to pay for it all. Those were the major takeaways I had from the SBJ/SBD Intersport Activation Summit that we presented at The Ritz-Carlton in San Francisco. 

It was a refreshing change of pace to have a conference in Silicon Valley, and the vibe over the two days was like the sports market — upbeat, with palpable energy. But from the start of the event, what struck me was the increasing investments that brands are forced to make to deliver authentic, compelling experiences around their brand and how frightful and disruptive it is to do long-term planning with the  rapid technology advancements. Can we please disregard the oft-cited “spending multipliers” on what brands should pay to activate on top of their rights fees? They are bogus. The smart and successful brands spend what they need in order to accomplish objectives. We can all point to any number of brands that sit on their sponsorship and spend nothing on activation. The good marketers realize their deals are not truly unique. The next brand in a different category likely has the same IP rights and assets, minus category-specific activation rights. So the smart marketers have to invest heavily to get noticed above the activation noise. 

One brand marketer after another expressed just how much more they are spending beyond the rights fee to make a powerful and memorable impact. That’s the reality of their environment, where they swim in a sea of noise. It’s also evident in how fluid these large-scale activations, especially in stadiums and venues, can be. Before, a brand could invest in a large-scale activation and be confident it could remain relevant over a couple of years. But now, the rapid rate of new technologies, digital offerings and signage — and the pressure to stand out and avoid the noise — makes every build-out far more dynamic but also quickly outdated.  

One top marketer told me he was just finishing an inaugural installation and was already looking at “ripping it all out” next year. He also admitted that his activation costs have now hit three times more than budgeted. 

A couple of other takeaways: Have your organization’s CIO/CTO involved in the front end of all your sponsorship negotiations. It saves time and planning and gives a rooted sense of reality in what can get done. One team official who opened a new building by signing a number of top technology brands also wished he had a building/design representative at the table during the sponsorship sales and post-sale/planning process. Such expertise would have alleviated design/space issues that come up as sponsors build out their activation footprint. 

> GIVE A LITTLE BIT: While the onus is on the brands to pony up, there were the traditional calls for more flexibility by properties. Steve Haener, General Motors national sales promotion manager for Cadillac, noted the problems when a property “creates sponsorship packages that are so rigid that they’re just trying to hit their sales number versus delivering assets that a company or a brand like myself would need.”  He expressed the desire for sponsors  to be “able to amend (our) packages to deliver on the brand objectives. There’s nothing worse than when you end up with a pile of assets in a sponsorship where you throw out 75 percent of it because you only need the other 25 percent.” 

Steve Gaffney, Sprint’s vice president of corporate marketing, said it’s a big issue for Sprint, considering its ever-changing segment: “You hammer out a deal that has very specific rights and very specific limitations,” he said, speaking specifically of the brand’s NBA deal. “I would love to know that we would constantly revisit over the course of a deal: working, not working, more important, less important. … The league isn’t static, but the league’s business is not changing as aggressively as some of our businesses are changing.” SAP’s Chris Burton echoed the sentiment, saying, “I’m going to put my chips on that ‘Let’s re-evaluate as we go along.’” Sitting onstage with them, the NBA’s Emilio Collins responded, “We pride ourselves on … making sure that we continue to re-evaluate where we are.”  

> LIVES OF LARRY: My colleague Tripp Mickle conducted a revealing interview with Larry Probst, chairman of the U.S. Olympic Committee and executive chairman of Electronic Arts.  Probst offered an honest self-assessment as he looked back at the criticism he faced after joining the USOC in 2008. “I quickly learned that I was not ready for [the position of chair]. I didn’t understand the relationship between the [International Olympic Committee] and the USOC. I didn’t understand the relationship with the other Olympic constituencies,” he said. “That first 15 to 18 months was probably the most miserable time of my career. There were a lot of people saying, ‘Get rid of this guy.’ In that case, one can either run or stick it out. I decided I was going to stick around and make this work. It started with hiring Scott Blackmun [as CEO] and then building a better relationship with the IOC. … I will tell you, it was not fun. It was really painful. But I am glad I have stuck around. It’s now been a lot of fun.” 

It was clear that Probst has succeeded at the USOC through flat-out hard work and long, demanding travel. He admitted that improving the USOC’s relationship with the IOC came only after he and Blackmun were dedicated to hit the road at a grueling pace. “There’s no other way around it,” he said. “It’s all about the relationships, and the only way to build that is by spending time with these people.” The hardship of travel was obvious when he talked about the changes he’d like to see within the Olympics. “Less travel,” he said. “Seriously, the amount of time that people spend traveling to [IOC headquarters in] Lausanne [Switzerland] for three to four hours of meetings is outrageous. Sooner or later we have to embrace modern technology, and do some of these things through video conferencing.” 

> WELTS SEES TALENT CHALLENGE: Golden State Warriors President Rick Welts spends a lot of time thinking about where to find strategic and service talent for the organization. “The challenge we’re having is finding the right people on our side of the table to execute,” he said. “It’s not only the salespeople, but finding the right real marketing professionals to activate the deals that we make. It’s a talent issue for us. We’re out there looking not only in our industry, but looking in other industries for people who can bring that kind of marketing savvy.” Noting the complexity of deals today, he added, “It’s a lot harder work than it used to be, and finding people that have the creativity and innate innovation to do that, I think, is our biggest challenge.” 

He also said the “burden” of handling strategy, evaluation and analysis of a brand sponsorship now falls on the property. “There used to be sports marketing departments at a lot of the companies that we were doing business with where that was really their job,” he said. “Over time, that shifted very much back to the property to be the creative resource for how these rights are going to be used, to take them to the customer, and to be the measurement tool for how those activities are going to be evaluated. There’s been, over 30 years, a huge shift back to the properties, an obligation on the properties, which I think is nothing but a great opportunity for the teams that are willing to invest in that, and be able to demonstrate they can do that.”

> WALK INTO SPLINTERED SUNLIGHT: Asked about the learning curve for fans using all the in-stadium technology at Levi’s Stadium, 49ers President Paraag Marathe said the team is hiring about 150 “Nine-Nerds” from Stanford and Cal whose sole job will be to help fans adopt the mobile functionality offered at Levi’s. … Steve Ballmer’s $2 billion deal for the Los Angeles Clippers was the talk of the halls and group dinners. Wells Fargo’s Tim Collins said, “I’m concerned as a brand [that] the prices will be jacked up to justify that business model.” Farmers Insurance’s Chuck Browning added: “We’re all going to pay the piper. A brand’s going to pay the price. A consumer’s going to pay the price. Somehow, someway, we’re all going to pay something.”

> BONJOUR, FRANCE! My six siblings and I are taking my parents to France later this month where we will celebrate our mother’s 80th birthday. We will have a few days in Paris and then be in the small village of Loudun, in the Loire Valley. If you have any favorite sites, towns or villages to hit, or most importantly, restaurants not to miss, please shoot me an email. I’d love to hear from you.

Abraham D. Madkour can be reached at amadkour@sportsbusinessjournal.com.

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