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How good sports investments go bad (in the eyes of the CEO)

AAfter being retained to perform many emergency surgeries on bad sports investments, we have discovered a curiously consistent pathway.

In one old humorous paradigm, there are six basic phases to these projects:

1. Wild enthusiasm
2. Total disillusionment
3. Widespread panic
4. Search for the guilty
5. Punishment of the innocent
6. Praise, honors and promotions for the nonparticipants

Our experience in the ecosphere of sports has revealed that there are predictable stages that bridge the gap from wild enthusiasm to total disillusionment as noted above. Our hope is that by pointing them out, we can help you to forestall or negate this type of nasty outcome.
 
Let’s explore the possible and varied reasons why the sports investment was deemed “good” when the CEO agreed to the sponsorship:

There was money available to put into speculative marketing and sales investments.

Those are largely days gone by now thanks to the reality of increasing pressure to produce results for Wall Street. It really wasn’t all that much money in the grand scheme of things (at least as a percentage of the marketing/sales budget).

This struck a chord with the CEO either emotionally, instinctively, or he/she was influenced by some promise (which may even have been financial — but most times unlikely).

If you’re communicating the investment and its performance (in metrics the CEO understands, not in marketing metrics) then there’s no dark room.
Photo by: GETTY IMAGES
Somehow this investment made the CEO feel good, or at least good enough, not to say no to the idea. Our experience is that many CEOs are led by ego. This may result in the ego investment panacea — that a high-profile sports investment will make them appear stronger, bigger, better.

This was a signal of progress, success and prestige to competitors, employees, investors and others.

So what has changed since the initial investment? Like all ecosystems, probably plenty.

Resource largesse may have changed. Plentiful resources dried up as the company’s sales growth matured or competition became pervasive.

Other priorities may have emerged. A previously strong-performing division may now be struggling and resources must be redirected to its rescue.

There may be board pressures or even an entirely new board majority. Boards used to be honorary rubber-stamping clubs. Now, their members can be sued for lack of fiduciary responsibility, meaning looking after the shareholders’ money.

Public scrutiny may have increased. What went under the radar years ago now stands out like a sore thumb.

Something changed emotionally or promises didn’t materialize. CEOs are human and experience the same change in emotions, or react to nonperformance as any other employee. The previous CEO may be gone (perhaps in part for investments like this?), and the new one doesn’t care for sponsorships.

So with all those possible changes, how can you keep the sponsorship investment from going bad?

Communication is often the biggest culprit. How the investment has been performing as part of the marketing plan has not been communicated adequately to the C-suite. Out of sight, out of mind. If you want to stop the jump from wild enthusiasm to total disillusionment, focus on communicating how this investment is doing.

Metrics, the first cousin to communication, may have been lacking or not tracked. The CEO is confronted with a large, highly visible investment that doesn’t have any numbers to support its performance. Or just as bad, the numbers are in the language of marketers that the CEO doesn’t understand. Use metrics the CEO understands and stay in touch via the first cousin, communication.

“Boat owner syndrome” has set in. What was considered sexy and attractive earlier may have turned into a pain to maintain, with the unending and unexpected additional support costs. Anyone who has ever bought a boat remembers the old adage, “the best two days in owning a boat are the day you buy it and the day you sell it.” Many clients become “house poor” by spending too much on the rights for a sponsorship without consideration for all the expenses connected with promoting and using that investment. Avoid this by planning for the necessary budget to maintain the new boat.

Our favorite is fear. The C-Suite fears that it will be perceived as a capricious investment, one without true thought as to integration into the marketing plan. Best to get rid of it before it gets rid of me, they think. This is almost always a direct result of lack of communication and poor metrics. The CEO fears walking into the dark room and finding “Jason” waiting for him/her. If you’re communicating the investment and its performance (in metrics the CEO understands, not in marketing metrics) then there’s no dark room.

The CEO may decide that even with good communication, understandable metrics and proper budget allocation/planning that he or she still wants to exit the investment. That’s OK; you’ve done everything you can to keep it from being a fear-filled dark room.

By following this advice, you might avoid having to address the remaining four progressively more challenging stages of project management.

Raymond Bednar (raymondbednar@hyperion-marketing.com) specializes in advising and implementing optimization strategies for investments in marketing channels at Hyperion Marketing Returns - Rockefeller Consulting.

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