Wednesday, April 15, 2009

Are Stadium Naming Rights an Effective Marketing Practice?

Photo found on: Ad Pulp

After the Final Four wrapped up here in Detroit, The Detroit Free Press published an article stating that as a result of the event being held at Ford Field, Ford Motor Company had won $22.5M in free advertising from media coverage. The "Freep" noted that despite the fact there were no courtside signs present, "Ford received more than a minute of clear, focused exposure time during the two nights of coverage. Ford Field was also mentioned by the CBS announcers 23 times." (For background, when Ford purchased the naming rights to the stadium (completed in 2002), it agreed to pay $40 million over 20 years).

This article inspired me to bring up the use of stadium-naming rights as a marketing tool. It's a topic on the heat of many tongues over the past few months, primarily due to public criticism of Federal-bailout-money-funded banks continuing on with naming-right plans. Although the practice isn't anything new, over the past few years as stadiums have become larger and more luxurious, naming-rights prices have skyrocketed. For example, in July of last year
Ad Age reported the naming-rights for the new Giants/Jets stadium, was estimated at $800M. And on February 4 of this year, MSNBC reported (via the AP) that “Citigroup's contract with the Mets is the biggest stadium naming rights deal ever...paying the team $400 million over 20 years...” At rates this high and the economy this low, is it even worth it?
In the MSNBC report, William Madway, marketing instructor at Villanova had said in regards to purchasing naming-rights as a marketing tool, “This is not a silly thing…this is not a corporate jet.” (Although I don't think this is a very good comparison, because an asset like a corporate jet isn’t intended for marketing purposes and in many cases the jet isn’t silly because the plane is already a sunk cost and the company is only paying for operation costs to fly (instead of paying for fluxuating, booked-at-the-last-minute, high-priced commercial airline tickets). It makes business sense because the plane flys large numbers of employees (not just executives) to highly frequented company destinations multiple times a week. But I digress.). Don Sexton, a professor of marketing at Columbia, on the other hand said "You have to have the right tone. People in these times have very sensitive ears...Perceptions rule." In other words, if people are highly critical of how you're spending taxpayer money, it probably isn't a good time to continue with a high-priced, high-exposure sponsorship. He also said, "from a branding perspective, there's no hard data to prove how effective stadium naming rights are for financial services firms."

This brings us back to the Freep article. So what if the company name was mentioned on the air? Did the name make people think of cars or football (the Detroit Lions) or college basketball? What was the actual ROI for Ford Motor Company - the car company? Did more people go out there and buy or lease new cars/trucks or get a warm fuzzy feeling when they thought of the Blue Oval? Can it be compared to $22.5M of strategized, paid-for advertising when it may not have been reaching or connecting with the appropriate target audience? What has been the actual naming-rights ROI over the past few years for Ford?
In 2005, Brand Channel posted a Brand Debate asking readers whether or not corporate sponsorship (specifically stadium naming-rights) scored with consumers. There was a range of differing opinions, from those who didn't believe it made people more inclined to purchase products/use services, to those who said it may help increase or strengthen top of mind awareness if the stadium/sport has something to do with the product and brand experience. In other words, before throwing money at naming-rights a company needs to remind themselves of their brand basics. What does your brand stand for? What do you want the customer to think or experience when they're exposed to your brand? So what if a customer knows your name...do they know what the brand is about and like what it stands for? Does tying the brand name to a stadium or sports team compliment your overall brand goal? What if the sports team is a losing one or tends to get a lot of bad PR?

In my opinion, not only is it difficult to measure the ROI to justify buying naming-rights as a marketing plan, but there are an unlimited number of ways to more effectively reach your customer for far less spend. You can do a lot of marketing for $400M and do it smartly - i.e. in ways that won't anger consumers and tarnish your brand image. But, if you do decide your brand might fit with a sports team (maybe you are a maker of athletic shoes or something), just remember to go back to the brand basics before pulling the trigger.

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