Group Created with Sketch.
Volume 21 No. 47

Marketing and Sponsorship

As data and technology supplant experience and instinct as pre-eminent forces in marketing, the biggest names in the industry were posing fundamental questions at America’s largest annual gathering of brand CMOs.

 

 

“In a world of disruption, does marketing still matter?” asked Procter & Gamble Chief Brand Officer Marc Pritchard. “From a CMO, that question might seem surprising, if not insulting. But we spend hundreds of billions on marketing worldwide and industry growth is low — half the client companies have declining sales … traditional media is in steady decline, retail is under tremendous pressure.”

 

As traditional marketing functions are being supplanted by algorithms, analytics and artificial intelligence, and with the media landscape somewhere between unfamiliar and confusing, marketing’s purview has expanded. Consumers, especially millennials, now insist that their brands take stands on social issues. Consequently, the role of the CMO has shifted. One example: FedEx CMO Raj Subramaniam’s responsibilities include customer experience as of six months ago.

 

“Media and creative are just elements of branding,” Subramaniam said. “Our actual service is the other big area. If you do that right, it almost doesn’t matter if they see your media.”

 

An unprecedented amount of consumer control, manifested in things like ad-blocking software, and combined with consumers’ infamously shrinking attention spans, have resulted in the commoditization of big brands — many of which have been the biggest marketing spenders.

 

“Consumers want to feel special now, and big is the opposite of special,” said Katerina Sudit, president of Havas Media, N.Y. “It’s now about giving consumers what they need or want, instead of just pushing messages at them.”

 

Progressive CMO Jeff Charney implored execs to value risk, saying, “The best marketers go right to the edge.”
Photo: ANA

Concurred IBM Chief Content Officer George Hammer, “We all need to move from chasing and buying audiences to connecting. … We need to minimize impressions and maximize relationships.”

 

Big data, AI and “machine learning” promise to unlock personalized marketing on unprecedented levels. Still, as AmEx CMO Elizabeth Rutledge advised: “We really have to put the personal back in personalization.”

 

Just as media audience fragmentation and erosion are affecting sports long after big brands saw it in their entertainment ad buys, brand marketers are well ahead of their sports colleagues in implementation of data.

 

Nonetheless, that’s coming.

 

“It’s about using customer data to attract more fans,” said NBA CMO Pam El. “It will be that mix of mass media and direct-to-consumer marketing that takes us where we need to be.”

 

Energy BBDO President and CEO Tonise Paul said that with more brands shifting from bottom-line to top-line concerns, marketing should be paramount.

 

“Media has been changing, but technology’s connecting brands with consumers in many new ways,” she said. “Fundamentally, our business is about creativity and innovation, regardless of the platform; we need that more than ever.”

 

Progressive CMO Jeff Charney preached the value of risk to a crowd generally inclined toward timidity. “It’s not all or nothing, but the best marketers go right to the edge but do not go over,” he said. Charney cited Nike as the prototypical risk-taker, eliciting applause.

 

COMING ATTRACTIONS: Geoff Ramsey, co-founder of eMarketer, highlighted a number of developing marketing trends. A “duopoly” in the U.S. digital ad sales market has Google (37 percent) and Facebook (21 percent) dominating. However, Amazon will represent 4.1 percent of that market by the end of this year, an astounding year-to-year increase of 144.5 percent, and one that will push Amazon past Microsoft and Verizon’s Oath to third overall.

 

Ramsey projected that by 2020, Amazon will capture 7 percent of the digital ad market, making it a challenger to Google and Facebook. Consider also that “Amazon’s visitors are already in a shopping mode,” Ramsey said, “and [Amazon] has more data than God.”

 

A coming disrupter: speech-based search. Advertisers know if they aren’t on the initial page of a search, they’re invisible. Voice-based web searches shrink that to one result — an impending disaster for brands that aren’t top of mind.

 

While 72 percent of Americans with voice-controlled devices use them to search (finding music is their most popular use), purchasing by voice is still lagging. EMarketer’s estimate is that 28 percent of Americans have used an Alexa, Google Home or other “intelligent assistant” to make a purchase. However, around 40 percent of Americans use those devices to research purchases. Brands were cautioned to start developing voice-search optimization as that technology replaces text-based search.

 

Augmented reality, in which digital imagery is overlaid on reality (think Pokémon Go) also is worth watching. AR use among U.S. consumers will increase from 15.5 percent to 20 percent by the end of 2020. Featured examples included Home Depot, which uses AR on mobile devices to help consumers find goods in its cavernous stores; Hyundai, which offers AR-powered car manuals; and Ikea, which enables consumers to virtually place furniture into pictures of their rooms at home.

 

GENDER INEQUALITY? Following her presentation, outgoing WNBA President Lisa Borders was asked about the disparity between pay for her players and those of the NBA’s G League, which next year will begin offering elite high school players $125,000 contracts.

 

“This is not a gender issue for the NBA, this is an economic issue,” she said. “When we have full arenas across the country, when we have sponsors … that is how the players make more money.” Borders added that while 80 percent of WNBA players also play in offshore pro leagues, “I would love for the players not to have to play in secondary markets or international markets.”

Terry Lefton can be reached at tlefton@sportsbusinessjournal.com.

Hendrick Motorsports’ seasonlong deal with Ally Financial is a major boost for the team and NASCAR, but it also reinforces the sport’s increasing reliance on business-to-business relationships, according to marketers interviewed last week.

 

HMS announced the news in a splashy pre-race appearance on NBCSN before the Monster Energy NASCAR Cup Series race at Martinsville Speedway two weekends ago, revealing that Ally will replace Lowe’s as sponsor of the No. 48 Chevrolet driven by seven-time champion Jimmie Johnson in 2019 and 2020. Ally, which is heavily involved in auto financing, is a longtime business partner of team owner Rick Hendrick’s group of car dealerships. Ally was originally GMAC Financial, which sponsored HMS years ago before that deal ended and the company was rebranded.

 

While financial terms were not revealed, most sports marketers interviewed last week believed that Ally is likely to pay HMS somewhere in the low eight figures annually. Lowe’s was believed to have been spending around $25 million annually, but NASCAR teams have faced a pricing reset in recent years amid drops in key performance indicators.

 

HMS owner Rick Hendrick told media at Martinsville that the deal was similar financially to the Lowe’s deal, but sports marketers interviewed said that given the existing ties between Hendrick and Ally, there is almost certain to be B2B elements of the deal that helped sync the pact. In this case, Ally would be a strong finance option for customers of Hendrick’s dealerships.

 

Industry executives were excited because Ally bought a rare full-season deal. Ally also says it will use the No. 48 car and Johnson in its companywide consumer marketing, something that will promote NASCAR inside and outside the sport.

 

Ally CMO Andrea Brimmer said the company is launching a new brand campaign in January, a month before the start of the 2019 NASCAR season, and Johnson will be a focal point. Brimmer said Ally is focused on being disruptive with its marketing in NASCAR.

 

Ally, which is based in Detroit but has an office in Charlotte, offers online banking services on top of its work in the automotive sector. Brimmer said the company found the deal alluring because of Johnson’s high recognition rate and because of the company’s roots in auto financing.

 

Brimmer said Ally is looking forward to taking advantage of the B2B elements of the sport, including using hospitality assets to entertain customers and prospects. “But we’re also thinking on the consumer side … and putting a whole activation plan together, looking at what makes sense with TV advertising, track activation and other neat opportunities like esports and digital financing.”

 

Ally will be using Hendrick’s internal partnership marketing team to guide it through the NASCAR space, but the company also works with Anomaly, Detroit, for consumer marketing.

This week, writers Bill King and Terry Lefton discuss our front-page story on legalized gambling six months after the Supreme Court ruling, plus a look at the state of sports marketing in the new era of disruption.