You could say it all started in February 2009. That’s when Rep. Barney Frank of Massachusetts, Democratic chairman of the House Financial Services Committee, sent a letter to Northern Trust’s CEO lambasting the Chicago-based bailout recipient for its title sponsorship of a PGA Tour stop in Los Angeles.
On learning of the bank’s on-site hospitality events for top clients and employees at the golf, Frank demanded the bank immediately return to the federal government the funds it “frittered away on these lavish events.” In doing so, Frank painted a picture of sports sponsorships as a vehicle for boondoggles and frivolous spending.
“I think Barney Frank single-handedly changed the face of sponsorship and hospitality with his misinformed statements last year,” says Michael Neuman, president of Amplify Sports and Entertainment, a New York–based sponsorship and marketing agency. “He created a PR concern for companies that were active in sponsorship and hospitality and … the media backlash became a front-page story.”
Bank of America’s Hogan’s Alley
The combined PR and economic pressures have companies rethinking their sponsorships and associated events—on-site hospitality, corporate incentives, and consumer events. One that is leading the charge is Bank of America, which was forced to defend its presence at the 2009 Super Bowl as a sponsor of the NFL after receiving federal bailout money. The company fought back, revealing that for every dollar it spends on sports marketing, it gets back $10 in revenue and $3 in earnings.
In fact, Bank of America had completely revamped its approach to sponsorships more than four years ago—well before the financial crisis—to better understand the value it got from these investments. “We were extremely fortunate,” says Ray Bednar, vice president of global sponsorship marketing for Bank of America, Charlotte, N.C., about the bank’s shift to a measurement model. “We were able to respond very quickly to these inquiries.”
The company’s current strategy involves investing in just a few sports (baseball, football, golf, and motor sports) and dominating those areas both nationally and locally with various activation programs. (Activation programs are the marketing opportunities companies use to leverage value from the sponsorship and typically include hospitality events, corporate incentives, and consumer marketing programs.) One such program is Hogan’s Alley, named after the legendary golfer, Ben Hogan. Hogan’s Alley is a mobile hospitality suite that the bank brings to golf tournaments to entertain key clients and prospects. Since starting the hospitality experience in 2003, the bank has hosted more than 65,000 guests. What sets Hogan’s Alley apart is its one-of-a-kind, high-end atmosphere: Modeled after the interior of a 1950s-era golf clubhouse, the suite includes hardwood panel interior walls, vintage leather couches, a help desk and concierge services, and a museum-like collection of historical PGA Tour tournament and player mementos.
Bank of America measures the value it gets from Hogan’s Alley by tracking the amount of business that comes from clients who are entertained on site and surveying guests about their opinion of the brand. Eighty-five percent of hosted clients and prospects said that the experience “strengthened their relationship with the bank,” and more than 87 percent said they “would recommend the bank to family and friends,” according to Bednar.
That Bank of America still conducts high-end, on-site experiences for clients is not surprising to Mark Nystuen, principal of the Kineo Group, a marketing communications company based in Chicago. Hospitality at sporting events is not dead, he says, “now it’s just done in a more low-key way.” In the future, he predicts that events will be focused less on entertainment and more on getting fans involved in the sport—such as through contests, behind-the-scenes access to the venue, and interaction with athletes. “The idea is for the prospects to see and touch and be part of the experience,” says Nystuen. “It [should be] something that can ignite their passions.”
State Farm’s Game Day
State Farm Insurance also recently realigned is sponsorship portfolio to focus on fewer key properties. “We’re going deeper with the properties we have versus spreading ourselves too thin and not accomplishing our objectives,” says Todd Fischer, manager, national sponsorships, for State Farm Insurance Cos. in Bloomington, Ill.
One of its biggest and most successful programs is sponsorship of the National Collegiate Athletic Association (NCAA) men’s basketball and ESPN College GameDay—a television show that is broadcast every Saturday during college basketball season from a different university campus. On game day, State Farm offers fans a chance to participate in activities such as a poster-making contest, and even selects one individual each week to take a half-court shot on the show for a chance to win $17,000 (on behalf of the company’s 17,000 agents). “It’s a full-day experience for a one-hour show,” says Fischer, “and as part of that opportunity, we get to have really strong engagements with [the fans] throughout that entire time frame.
“From a consumer marketing standpoint, [the event] really bridges the gap between the general market and the ever-valuable young adult market,” adds Fischer. “It allows us to have access to college campuses, which can sometimes be difficult [to get into] and gives us an opportunity to engage with thousands of students and local fans.”
State Farm also conducts sales incentives in each of its 13 geographic zones in the U.S. and Canada that offer top producers a chance to experience the game and take part in some exclusive experiences. In each zone where College GameDay visits, the company’s marketing team creates a sales incentive program based on sales goals and metrics. This year, in addition to bringing its top agents to the game, State Farm took one winner from each area and integrated the agent into the on-air broadcast. “The agent got to hand the student [who took the half-court shot] the ball and be featured on air. No agent could buy their way on air for a nationally broadcast program like that,” says Fischer.
The new incentive is already proving to be successful. The company has begun tracking the sales lift it gets in each region, as well as on an agent-by-agent basis, from holding the incentive program versus the same time period last year when the incentive was not running. “In a time where insurance overall is a pretty slack category from a growth standpoint, we have definitely seen an uptick associated with each one of our incentive programs,” says Fischer.
Kia Motors’ NBA Nation
For Kia Motors America, integrating truly experiential aspects into its sports sponsorships—like its status as the official automotive partner of the NBA and 13 NBA teams—is a top priority for Tim Chaney, director of marketing communications, Irvine, Calif., who heads up the sponsorship division for the company.
While Kia hasn’t pulled out of any sponsorship investments, it has recently shifted its approach. “The current economy and the fact that we have to operate within budgets forces us to be selective,” he says. That means executing sponsorship-related marketing events “that have scale for the company” and deliver measurable value.
One such event is the company’s sponsorship of the “NBA Nation” event tour, a grassroots experiential marketing initiative that last year went to eight major cities in the off season for a weekend of basketball-related activities. The tour includes an opportunity for fans to interact with NBA players, a skills challenge on a Kia-branded court, vehicle displays, photo ops, even a trivia challenge. The tour allows Kia to reach young urban males—an important target audience for the brand, and “one of the reasons we were attracted to the NBA sponsorships,” says Chaney.
To judge the success of the programs around its NBA sponsorship, Kia looks at metrics such as interactions on site, number of visitors who opt to receive additional information and special offers, and redeemed test-drive offers. Kia also conducts fan surveys and research programs to track how sponsorship efforts are affecting brand opinion and purchase consideration.
“I can tell you unequivocally that we have seen extremely strong increases [in these key performance indicators] over the period of time that we have been associated with the league and the teams,” says Chaney. “For those people who are aware of our partnerships with the NBA, their opinion of the brand and their purchase consideration has significantly increased. We wouldn’t be investing in this [if it didn’t].”
The company’s NBA activities are also a big motivator for sales staff at Kia’s local dealerships. The company conducts various dealer incentives that include everything from private tours of the arenas for winners, “chalk talks” with the team’s coach, and even the ability to play an actual game on the court and interact with the players. Winners then get to attend a game at night in a private suite to complete the full-day experience.
Using its partnerships with two different NBA teams, Kia has even developed some higher-end incentives that offer top sales managers a chance to travel on the team jet to an away game for some truly exclusive VIP access. The “fly-away trip” opportunity was offered to Kia’s regional offices in select markets, which developed the short-term internal contests for sales managers from local dealerships in that market.
The programs have resonated with dealer sales teams—who are predominantly male and generally big sports fans, says Chaney. The company offers a variety of dealer incentives around its sports sponsorships, but it has found its regional programs around various NBA teams to be particularly successful. “We have done this with a variety of different teams and it has turned out to be highly motivating to the dealership sales managers and sales staff. We feel we have a lot of buy-in from the local dealers in these markets because of these sponsorships.”