Travelling through Europe recently I couldn’t help but notice how commercial Europe had become in the sense that you are totally inundated by advertising and sponsorship messages. With its strong Euro and economic prosperity, the Europeans are in many respects ahead of us in many areas of marketing. I saw many more electronic advertising messages than I see in this country. From the moment you step off the plane, there are ads all along the hallway. The luggage carts (which are free) have ads on them. Huge banners hang in many of the terminals, again promoting a brand. In some supermarkets, the shopping carts have rotating ads.
In this country, stadiums are being named after airlines and banks. Companies sponsor sporting events, culinary competitions, and almost anything else that will give them the exposure that will help in their branding. So what has changed?
There was a time when corporate sponsorship was reserved for not-for-profit causes. A charity looking for funding for a project would offer a sponsorship to a company in what appeared to be a win-win situation for all. The not-for-profit organization received the money to fund projects that they might otherwise have trouble funding. The company received exposure to large numbers of people in a targeted marketing effort to increase visibility.
Today, in an age of soaring fueling costs and a declining dollar many businesses behave like not-for-profits. One international airline that is still offering pillows and blankets to its passengers features the logo of a major communications company. We are after all living in an era when airlines charge for snacks, baggage, headsets and in one case even for pillows. A European airline provides its Business Class passengers with a bag of amenities that features the logo of a newspaper.
Daniel, a marketing director for a large travel related business, still has some marketing dollars to dispense despite the down economy. Prior to 2008, Daniel’s advertising budget was well over $1 million for print media and some electronic media. With a slowdown in business, Daniel still has a budget of $400,000 but now he spends the money on sponsorships, ranging from a community concert in Connecticut to a bike race on Long Island. He is convinced that despite the retrenchment in advertising, he is still getting bang for the buck through his sponsorship programs.
Marketing professionals might not disagree with Daniel, but are likely to counsel using some dollars for advertising as well. The marketers say that targeted sponsorships often restrict the number of people that will be exposed to the brand, necessitating somewhat of an effort to go beyond the sponsorship.
Daniel is not alone. Many marketers are looking to team up with other companies that are also hard pressed for the extra marketing dollars. On the West Coast, a minor league sports franchise was building a new stadium but fell short on funds to construct a state-of-the-art electronic scoreboard. They were about to give up on the scoreboard in favor of a much cheaper conventional scoreboard when they learned that a local utility company was looking for a sponsorship opportunity.
The utility company, it turned out, had made a strategic decision to cut back on its conventional advertising. When they learned about the scoreboard opportunity, they immediately seized on the chance. They estimated that some 75,000 people from the County would see the scoreboard during a season. These were not just 75,000 people at random but 75,000 people who live in the County and use the service. They were given the opportunity to advertise various products and after a year were convinced that their investment had paid off.
The trend is to increase these sponsorship opportunities in what marketers say will continue to cut into conventional advertising. The simple formula of past years no longer works for anyone. You cannot simply pass on increased costs and hope that it will cover the budget. There is a fear that at some point you will price yourself out of the market. Sure, airlines can pass on the higher fuel costs, but what is the limit. The answer is that while some increases will still keep the consumer’s interest, declining budgets will have to be made up elsewhere.
For marketers evaluating sponsorship and promotion opportunities the key question is the bang for the buck. One marketer told me that in making a decision for sponsorship he was considering bus shelters, the marquis on yellow cabs, public school athletic fields and even sanitation trucks. The Bloomberg administration was said at some point to be considering selling individual trains stations for sponsorship opportunities. The 34th Street stop, for example, might be changed to “Macy’s 34th Street” station.
What some of these government opportunities offer is volume. Their services are simply used by large numbers of people. For example, you can buy a sponsorship at the Cleveland Metropark Zoo or a children’s wing at a major Metropolitan area hospital. The extent of the exposure is what gives the sponsorship its ultimate value.
There is no question that marketers will increasingly look to sponsorship to disseminate their message to large numbers of people. The media itself is expected to jump on the bandwagon, offering the corporate world many sponsorship opportunities of special sections or special events. Sponsorships have always been a basic tool of the marketing mix but in today’s tough economic times, they will become even more important.
Out of the Box is a collection of strategic marketing articles that Lubicom has published on various topics, trends and ideas in the marketing world. The articles have been published in the Hamodia weekly newspaper circulated on three continents to a readership of well over 100,000.
The name, "Out of the Box" is a term used frequently in business nowadays to describe creative thinking that is not the norm. It is meant to help a business pull away from the pack or separate oneself from the competition. It is to some extent fraught with risk, simply because it is not the run of the mill thinking, but it is at the same time the key to reaching the next opportunity.