Group Created with Sketch.
Volume 20 No. 41

Marketing and Sponsorship

Over the past few months, we’ve watched with interest as the leaders at the world’s largest ad agency conglomerates offered financial forecasts only slightly less promising than the Cleveland Browns’ Super Bowl prospects.

Three of the ad world’s big four of IPG, Omnicom, Publicis and WPP issued disappointing results, accompanied by warnings about decreasing spending in bellwether categories like autos and consumer packaged goods. While IPG Chairman Michael Roth insisted “we don’t see evidence of a broad-based economic downturn,” when conglomerates as large as Omnicom and WPP adjust North American growth forecasts downward to between 0 and 1 percent, anyone in marketing should be at least a bit anxious.

So, we wanted to investigate and determine if any of that softness at the top of the agency food chain is affecting those with which we are most familiar: the marketing service/sports marketing/consulting agencies that negotiate and service the biggest sponsorships for the world’s largest brands.

“If the global marketing industry catches a cold, we’ll eventually feel it,” said Adam Lippard, head of global sports and entertainment consulting at GMR Marketing, owned by Omnicom. “You’ll see an impact on the broader media and advertising budgets first, but we haven’t felt a negative impact to our sponsorship and experiential space. There’s an elevated concern based on macro geopolitical concerns that’s making marketers more cautious.”

Marketing and media budgets are usually buoyed by upward movement of the stock market and GDP, both of which have been healthy. However, wholesale changes in media consumption, combined with doubts surrounding both the efficacy and transparency of digital advertising have produced a peculiar new dynamic.

“For the first time, media spending is trending in the opposite direction of GDP, so, of course, we’re all trying to figure that out,” said Charlie Horsey, chairman and CEO of MKTG, owned by Dentsu Aegis, the world’s fifth-largest agency holding company.

“We’re starting to see reductions in budgets and clients talking about doing more for less,” said Michelle Palmer, president of sports and experiential at The Marketing Arm, an Omnicom agency. “For next year, we’re hearing flat to down [budgets], and while our agency is diversified enough to handle that, we continue to hear concern from clients about things like NFL ratings as a possible indicator of sports TV overall, and a lot of top-level uncertainty because of Trump.”

The Marketing Arm’s Michelle Palmer is hearing budgets will be flat to down next year.

Nonetheless, many agencies specializing in “below-the-line” marketing, including sponsorship activation and experiential marketing, all report record or near-record revenue, likely because they are insulated from many of the problems faced by traditional agencies.

“In the simplest equation, the more advertising doesn’t work with millennials or the more TV ratings are down, the beneficiaries will be sponsorship and experiential or anything below the line,” said Andy Pierce, Lagardère’s North American president and CEO.

Elizabeth Lindsey, who heads Wasserman’s marketing division, was one of many sports marketing agency leaders reporting record performance, even in the face of disappointing results and forecasts from the ad behemoths.

“Our fates are rarely tied to theirs, because our work is socially and experientially driven, which is all growing,” she said.

Added Rick Dudley, chairman and CEO of IPG-owned Octagon: “People are pointing to things like political uncertainty [for agency holding company financial concerns], but it’s really too early to determine that. We’re not hearing anything from clients about spending levels changing, so while we’re not ignoring the news about cutbacks, it’s not something we’re worrying about now.”

Added MKTG’s Horsey, “From a holding-company perspective, the waters are turbulent and there’s real concern, but our business in the U.S. is as healthy as it ever has been. Even with the proliferation of technology, consumers being able to touch and feel is more important than ever, so experiential marketing is just vital.”

Chris Lencheski, MP & Silva global sponsorship sales head, attributed much of the performance problems at the top of the advertising and marketing industry to changes in media buying.

“A lot of the [holding companies’] decline is related to media buying and how it has been impacted by programmatic [automated] buying,” Lencheski said.

“Money is surely shifting to digital, but there’s all kind of doubts about what you’re buying, which is never a problem in sports. You know who your customer is and you can lock out your competition with exclusive relationships.”

> HERE & THERE: Genesco Sports has hired Ryan Moreland to open its first Washington, D.C., office, part of a two-pronged eastern expansion, which also saw the opening of a Boston office in early September. Moreland, who will start in October and be a senior director at Genesco, worked in Geico’s sports marketing department since 2015. He’s also been at Playbook Inc. and the Washington Wizards. … John Ruzich has been elevated to chief administrative officer and chief legal officer at Legends. He joined as senior vice president and general counsel in 2012. … Former Fotoball and Upper Deck marketer Jon Schneider died Sept. 6 from cancer. He was just 50 years old and leaves behind a wife and three children. We’ll miss greatly his unwavering optimism, his luminescent smile and his resolute devotion to the Yankees and our national pastime.

Terry Lefton can be reached at

Monster Energy has requested more time from NASCAR to decide whether it wants to renew its title sponsorship of the sanctioning body’s premier series, according to industry executives briefed on the matter.

Sources have said that Monster was contractually obligated to let NASCAR know by this December whether it would pick up the option. However, high-level NASCAR executives met at Monster headquarters in late summer, sources said, and the company asked for an extension. It was unclear at press time whether the extension was granted and how much more time was given if so.

Monster signed with NASCAR in December to be title sponsor of the series in 2017 and 2018 in a deal worth around $20 million annually. The term was for two years with a two-year option to renew for the 2019 and 2020 seasons.

Both NASCAR and Monster Energy’s vice president of sports marketing, Mitch Covington, declined to comment.

Monster has its name on the series for 2017 and 2018, with an option for ‘19 and ‘20.
The title sponsorship renewal talks come as Monster also faces decisions on team renewals, with contracts with NASCAR’s Stewart-Haas Racing and the NHRA’s John Force Racing expiring after this year. Between Monster’s NASCAR series naming-rights fee, activation and the two team deals, the company likely will spend in the mid-eight figures this year.

Some industry observers have expressed skepticism that the teams will land renewals. But Stewart-Haas Racing executives have expressed confidence that they will earn a renewal from Monster, while Steven Cole, vice president of sales for John Force Racing, said in late August that he was working on a one-year renewal for 2018.

Steve Phelps, NASCAR’s executive vice president and chief global sales and marketing officer, has expressed confidence in Monster remaining as title sponsor of the series at different times this season. He said in July that data and anecdotal evidence showed that NASCAR fans had quickly developed an affinity with the brand, with spiking brand awareness and TV visibility metrics as evidence. Monster has also struck business-to-business deals with the likes of Kroger by leveraging series naming-rights assets.

“There’s still some things we’re learning about each other that we’ll continue to get better and better at, but overall I think it’s working for them quite well,” Phelps said at the time. “[It’s working] at retail, from a fan perspective and from an awareness and visibility standpoint, it’s working as well.”

A proposal from Tennis Australia for a Team Cup event could come to a vote in November.
China’s CMC Capital Partners has pulled out of bidding for the ATP’s proposed World Team Cup, pulling its 13-year, $500 million offer for the rights to run the event, sources said.

The ATP since last year has been considering setting up an Olympic-style tournament, putting 24 national teams in a competition that would award ranking points and prize money comparable to a Grand Slam.

CMC made its offer more than a year ago, the sources said, but the ATP did not move on the bid because, it is believed, major tournaments were against a team cup. A Team Cup could strain players and dilute the shared revenue of the ATP.

The ATP declined to comment.

The ATP is now left with a nascent proposal from Tennis Australia to rework its January tournament schedule into a Team Cup. That could come to a vote at the ATP’s November board of directors meetings, though it’s unclear whether Tennis Australia will proceed with the CMC bid off the table. Tennis Australia was concerned that CMC’s tournament could compete against those January tournaments and so put together its own idea, first presented to the ATP last month.