Up Next with Rich Luker From The Executive Editor Attitudes toward global sustainability Cartoon: Birds on a wire Sports Media: NFL’s streaming experiment From The Executive Editor: Innovations ‘Moneyball’ approach in marketing Cartoon: King me Athletes and issues of social justice Why the NCAA still matters
SBJ/Aug. 11-17, 2014/Opinion
Use CEO’s strengths to win support for sports sponsorship
Published August 11, 2014, Page 11
The best chief executive officers share common qualities that have helped drive their personal successes: Integrity, mission focus, vision, the ability to direct complex organizations and communications skills.
Understand these perspectives, incorporate them into your sports marketing programs, and you will win their support.
Integrity requires transparency throughout the organization. This means clearly accounting for each component of your sports marketing program: How much are you spending on elements such as naming rights, hospitality, advertising and staffing?
Understand that each of these elements represents a broad category. Within hospitality, for example, you should clearly understand and be able to communicate how much you are spending on travel, lodging, food and beverage, gifts, etc. Further, you should understand how each cost component relates to the goals you are trying to achieve.
For one of our clients, a global electronics manufacturer, the first step in optimizing results of a multimillion-dollar sponsorship investment was standardizing the company’s budget definitions. They were then able to link their efforts to finite goals and begin to redistribute resources more effectively.
Only by clearly defining what you are doing, how much each component costs and what you hope to achieve can you deliver the type of transparency that will satisfy the CEO. Simply taking this one step will likely free up 10 percent to 20 percent of your sponsorship marketing budget that is currently nonproductive.
According to a report by the consultants McKinsey & Co., only 36 percent of chief marketing officers use analytics. That represents a 64 percent opportunity for you to stand out.
The CEO’s focus on the mission means every initiative must be relevant to the overall strategy. One of the first steps in achieving sports marketing by objectives is defining your goals, in line with the corporate strategy. In order to obtain CEO support, you must then communicate these goals and get executive buy-in.
Understand that broad objectives such as “brand awareness” and “share of voice” will carry relatively little weight because they are not closely tied to the bottom line — sales and profits. The CEO is looking for what the executive suite calls KPIs: key performance indicators. These are metrics that every department in the organization uses to define performance. For example, in manufacturing operations, quality will be an important goal. KPIs for quality may include metrics on tolerances, returns, third-party ratings, etc.
For your sports marketing program, you should be looking at components of return on investment, sales, cost per sale, customer acquisition cost, customer retention cost, etc.
One of our clients, a global firm with business-to-consumer and business-to-business sales, found during the course of our analysis that ticketing costs were out of line with best practices. It turned out that ticketing had been rolled into naming-rights negotiations, with insufficient consideration for the implications. Separating these two components to eliminate unused and essentially unwanted tickets saved the company millions of dollars and significantly reduced cost per sale.
Your goals should demonstrate both short-term and long-term vision.
The CEO will be very focused on short-term results, particularly those that deliver to the bottom line, while taking into account how actions contribute to sustainable growth. Components of your sports marketing program very likely will be geared toward this longer-term objective, especially if you have a multiyear naming-rights deal in place.
In this case, you are thinking toward future results, such as preserving and increasing marketing share. This can be termed “marketing mix modeling”: How much of your sports marketing budget is going toward short-term results? How much is building toward a strong market position in the future?
One of our clients, a global manufacturer of office supplies, signed a long-term sponsorship with one of America’s best-known universities. Short-term, the deal delivered an immediate win in terms of access to the university’s significant office-supply needs. Longer term, the deal offered benefits well beyond the ivy-covered walls, as the corporate B-to-B sales force was able to leverage the sponsorship assets nationwide, and even globally, given the university’s renown in the sports world. The resulting ROI on this sponsorship was very high in context with other deals of this magnitude.
Complexity quickly becomes unmanageable without proper controls. Once your spending is well-defined and clearly attached to both short- and long-term goals, you can (and should) confidently communicate to the CEO the controls that are in place to achieve and consolidate savings.
Help to define a set of parameters that will guide your staff to monitor expenses and alert them when any component goes out of whack.
Another area to consider is how your spending compares with industry best practices. For example, assess your spending with the various agencies that are helping to execute your programs. Are their costs in line with each other and with industry norms? If not, start negotiations toward more favorable rates, or look for a new agency.
In one relevant example, our client, an automotive manufacturer, ran simultaneous consumer-focused activation programs on both coasts to support launch of a new hybrid-electric vehicle. By defining appropriate spending per consumer, we were able to ensure that both launch teams were working efficiently to deliver the type of impact that the carmaker required.
Internal communication relies on the ability of various departments to collaborate toward the common good.
The university sponsorship provided a good example of how collaboration can drive ROI by linking marketing with sales. We saw similar success with a major beverage distributor. We worked with them to define relevant KPIs, including shelf space and end-cap placements, that would drive sales, and linked them with sponsorship assets that could be leveraged at the retail level, including silhouette “stand-ups” of celebrity athletes.
In another case, a sponsor was able to score millions of additional consumer “eyeballs” by providing their top-line products as part of a fast-food chain’s sweepstakes. This value pumped up the sponsorship ROI by delivering marketing value at very little cost. The lesson: Collaborate internally and externally to maximize your results.
Raymond Bednar (firstname.lastname@example.org) specializes in advising and implementing optimization strategies for investments in marketing channels at Hyperion Marketing Returns - Rockefeller Consulting.