In a good neighborhood
As one of the biggest marketing spenders in sports, State Farm was always the prettiest girl at the dance when it came to naming-rights proposals. Offers were frequent, but the insurer remained a wallflower, except for small deals.
“Our answer was always the same: No,” said Ed Gold, State Farm advertising director.
Dale Song, Optimum Sports managing director, has represented State Farm for more than a decade and looked at more than 50 naming-rights proposals for the insurer during that time. “My team was trained to say, ‘We don’t do that,’” he said.
Accordingly, it was a revelation — if not a marketing shock wave — when the insurance giant recently took the lid off two new naming-rights deals, valued in the hundreds of millions. One was the home arena of the Atlanta Hawks, just completing a $192.5 million renovation, now to be known as State Farm Arena for 20 years. The other was for 18 years with the Arizona Cardinals’ stadium in Glendale, now named State Farm Stadium.
To begin with, there was a reorganization that left State Farm with company hubs in Phoenix, Dallas and Atlanta, and a position as a top-10 employer in each of them. Looking to reach those thousands of employees, and to find a better way to connect with a consumer base shying away from traditional media, State Farm CMO Rand Harbert late last year challenged his marketers and agencies to find eight to 10 new ways to reach consumers. Both the Atlanta and Arizona naming-rights opportunities were on that list.
Nothing was available in Dallas, and State Farm already had sponsorship relationships with the Hawks and Cardinals.
“Clearly, traditional media is changing,” Harbert said. “As we started to think about how we’re going to play in the digital world and how our brand is going to look going forward, ownable assets that are strategic became more important, especially where we have a large employee population.”
As a heavyweight in one of the noisiest consumer categories, branding was never a principal concern with these deals, quite the opposite of most naming rights. The intent here was to make naming rights support community initiatives and volunteerism, which are cornerstones of State Farm’s “Neighborhood of Good” marketing platform. Community efforts are part of nearly every corporate sponsorship. Now, they were the lead horse on two top-shelf properties.
“The branding aspects were nice, but what we really wanted was to make State Farm a part of those bigger communities,” Gold said.
Added Song, “Our mission changed to ‘How do we positively impact these communities?’ These had to have measurable community outreach and impact, and they had to deliver something only State Farm could.”
Both deals took around nine months to complete. Andrew Saltzman, Hawks executive vice president and chief revenue officer, said the deal had its roots in a “top-to-top” dinner last November at the Warhorse Investments private club in Buckhead. In attendance were 18 people, including Harbert, Gold, Song and Optimum Sports President Tom McGovern, along with Hawks CEO Steve Koonin and COO Thad Sheely.
“From the beginning, this was about long-term community ties and sustainability,” Saltzman said. “They want to be in the same conversation as brands down here like Coke and Delta. They wanted to be in the same conversation and felt that a partnership with us would get them there.”
Harbert said that originally no one was seeking dual title deals. “It was more like, if we didn’t look at both, individually and together, it wouldn’t have been a complete analysis,” he said. “Once we got on that track, the more we liked it.”
Song recalled that after presenting on the naming rights to State Farm early this year, the deals were on parallel paths. “We were never given the mission to do both until almost the closing moment,” he said.
Steve Ryan, the Cardinals’ senior vice president of business development, said talks with State Farm got serious after a March meeting at the insurer’s Bloomington, Ill., headquarters, attended by team President Michael Bidwill. There was alignment in terms of shared community value from the start, Ryan said. Soon after, he learned State Farm was considering another opportunity but figured it was something else around Phoenix.
“Ultimately, we looked on it as a single opportunity that happened to have two different parts,” Harbert said. “And it was not about spending more, we just reallocated existing resources.”
In July, CEO Michael Tipsord approved the dual deals only after considerable deliberation — and after checking with the heads of those Atlanta and Phoenix hubs. The original plan was to announce both deals simultaneously, but the death of Arizona Senator John McCain changed that. Conceived separately, the deals ultimately were unveiled six days apart.
“This is a way to plant a flag and say, ‘We’re State Farm and here’s what we stand for,’” Harbert said. “We didn’t go in looking for two deals, but these two opportunities just seemed so right for exactly the same reasons.”
On which ROI metrics will these twin naming rights be judged?
“Like any big deal, we’ll look at how the assets are performing versus the way you could have spent [marketing] money otherwise,” Harbert said. “The other half will look at how these are relating to our ‘Neighborhood of Good.’ Are there deeper ties there? If both of those objectives are met, we’ll consider these deals a success.”