Wednesday, December 15, 2010

Gross Sponsorships for Mad Men

Advertising agencies are king of the advertising world. Most of the dollars spent in advertising and marketing pass through an advertising or media-buying agency. Over the years, I’ve had my share, both good and bad, of discussions with agencies. And like many colleagues, I hang up the phone with an account manager and say “they just don’t get sponsorship.”

Actually they do.

But a distinct issue for agencies is – how are we going to make money off of a sponsorship? Agencies aren’t built to necessarily buy sponsorship and activate the program. Unlike creating a TV ad and buying time, sponsorship falls completely out of their model for making money.

Many agencies aren’t geared to execute street marketing programs, design a fleet of experiential tour trucks, or build out trade show booths. Perhaps because they cannot make money on sponsorships, they steer clear of involving their client in sponsorships.

Ad buying agencies make their money by receive a percentage of what they purchase for their client at a gross rate – meaning – the agency takes anywhere between an 8% -15% cut off the price of the media and that’s how they’re paid. Realize that the media “lifts” the rate they offer to agencies in order to make up for some of the difference of selling ad space directly to the brand versus through the agency. This is called a “gross rate” versus a “net rate.”

I’m not suggesting a major conspiracy here. But it’s possible that because the way North America’s sponsorship discipline developed (no measured media, no gross and net rates to agencies), it’s growth has been stymied because decision makers aren’t able to find a way to make a profit off of it. Look at the growth of the digital media space. Digital media can be measured in a myriad of ways and agencies make money off design (Websites/Facebook Cause pages/digital ads) and placement.

So, would it make sense for the sponsorship industry to offer a gross rate to agencies? How would it effect sponsorship broker fees? Would there be an overall reduction in sponsorship rates from it? I realize there’s a lot of questions to be asked before heading down this road. But, as an industry, shouldn’t we be thinking of ways to make it easier to say “yes,” especially to a discipline that we know works so well!

I respect the fact that agencies need to make good decisions for their clients and also make profitable business decisions for themselves. Maybe it’s time our industry makes it easier for agencies to do both.

Thursday, April 29, 2010

KFC and Komen – Supporting or adding to the cause?

On the outset it’s cute. Supporting breast cancer research by purchasing a chicken breast – I get it. It’s even in a cute pink tub and branded buckets for the cure. But, are you scratching your head on this one too?


YUM Brands KFC, has launched a campaign to provide a donation of up to $8.5 million – a potential record-breaking donation – to Susan G. Komen for the Cure. Just go to your nearest KFC and purchase a pink bucket of sodium and fat rich fried chicken or the less sodium and fat packed grilled chicken - and help the cause. However, the verdict is still out on all the causes associated with breast cancer – including the risk from sodium and fat rich foods.


Barbara Brenner, exec at Breast Cancer Action, a watchdog group, denigrated Komen Foundation with this quote: "This will keep them (Komen) in business for years. They talk about a cure, but this partnership will create more breast cancer.”


Ouch!


So, has Komen missed their mark on developing support for their cause? Research says a definite “yes.”


Studies have shown (Gareth Smith, Journal Marketing Management 4/04, Vol. 20) that the connection with a cause needs to make a valuable connection in the consumers mind to be effective. Synergy provides credibility to both the cause and the supporting company. I'm not a cancer researcher, but I'm thinking this may be a bit of a conflict - and hence - would be perceived by consumers as missing the relationship purpose. I'm not sure who looses on this one - KFC or Komen.


Cone’s recent Trend Tracker report stated that 56% of consumers feel better about a nonprofit when they partner with a company. I wonder how this makes everyone feel about Komen?

Saturday, March 13, 2010

America's New Beer Market

Don't look now, but that beer your drinking isn't American. Yes, I know it says "American Lager" or "home of the Rockies" or whatever on it - but it's owned by a multi-national conglomerate that resides somewhere overseas.

And, as I sit in this bar, I notice most people are drinking the local craft coming out of the tap. I don't even see a bottle of Bud Light Miller Draft Coors Lime ANYWHERE here. So, it makes me wonder why these local breweries haven't "tapped" into the fact that building relationships through a sponsorship with the local "cool" community event isn't on the TOP of their list. Look, spending all those marketing dollars on the bottom shelf at the local grocery store is ok, or on those neat little draft tap tops shaped as your logo. But isn't time you come out to meet and rub elbows with the American beer drinker? Isn't time you stepped up your marketing game?

Are you really that afraid of the BIG multinational brewer that you won't even TRY to compete for a meaningful sponsorship? You wanna know a secret? Small properties aren't always excited to work with the BIG multinational brewer - and big brewers seem to have their sites on global events rather than the local food fair.

So, maybe now is the time for the local brews to belly up to that local sponsorship scene and reshape the way your audience experiences an I.P.A. Believe me, activated properly, local events will do wonders in gaining customers because in reality, Americans are ready for you.

Friday, March 12, 2010

The sign of too many logos...

Is what we call “sponsorship” becoming too pervasive?

While I think sponsorship marketing is still a fledgling discipline, the way in which it’s currently being used is becoming pervasive….even to me.

But, when I tell people what I do – and I still get this quizzical look. I mean, sponsor logo's are EVERYWHERE.

That’s when I’m reminded that sponsorship has become so omnipresent, the general population has become immune to its existence. And, study after study points to the fact that as sponsorship becomes a permanent feature with properties, the use of benign activities like placing logos as the only property activation point is ruining our profession.

The property rights holders providing proposals to potential sponsors around on field signage, and pricing the different sizes of signage around the arena as options – please STOP. If you want to sell billboards – get into the away from home advertising industry – but stop calling yourself sponsorship marketing professionals.

As a discipline, it’s imperative that we start providing opportunities that fully integrate partners into our properties and the experiences our properties provide for our audiences. We need to insist that sponsors leverage their relationship with us in order for everyone, especially our audience, to gain the most from it. As a property, you’re the vehicle that companies use to promote and sell their brands. But, the rights fees also need to include creating an integrated relationship that the sponsor uses to enhance our audience experiences.

A logo on a sign in the stadium, or in a TV ad, and calling that “sponsorship” does not enhance the experience for our audience. In fact, it doesn’t do anything except line your pocket. And if it doesn’t do anything for anybody except put money in your property – then it really doesn’t do any of us any good.

Wednesday, January 27, 2010

Revolution or evolution: State of the Media

I attended a state of the media Webinar hosted by Vocus today. The state of the media industry is anything but rosy for sure. The 3rd largest broadcast company files for Chapter 11 last month, major newspapers - and some 1070+ others - folded in 2009, and major magazines with a million readers - decide to publish no more! At the end of the Webinar - I felt like playing taps.

But, is this the demise of the traditional media industry or an evolution occurring in the media industry? Are newspapers and magazines being weeded out or is this the complete demise of an industry the way we knew it? And the big question, did traditional media fail to utilize new media in time to survive?

The Wall Street Journal and the NY Times are two good examples of print media that have overcome the new media blitz - and in fact - have become major players. You may say - yes but they've always been. But, so were pubs like the Chicago Tribune and Gourmet magazine? They were major players too - and look what happened to them.

My take - whether it's local media or national media - you can no longer rest on your laurels as having a built-in audience. Your media product has to become relevant to your audience and always - always available; on-line, on my phone app, podcast whenever the audience WANTS to consume. Rebecca Bredholt called it the Green Eggs and Ham syndrome. I want the content in on my phone or in my home, in my car or at the bar. I want my content Sam I am..

But just as important, the product needs to be relevant - and that means the brand - yes the brand of even the local radio station has to be relevant to the audience. So, you can put more wattage in my cottage - but if your brand means nothing to me...you lose me and your advertisers.

Some advise? Look at how you promote yourself OUTSIDE of your medium. Showing up at the local chamber meeting is nice, doing a radio remote at the local car dealer's ok. But go out and provide unique experiences that only you can provide that taps into your potential audiences interests.

Products like the Wall St. Journal are still valid because those organization's invested in the brand years ago, and continued to do so as the media "weeding" began. So, ask yourself Mr. Editor, Mr. GM - what experiences can you create for your audiences that will make you more valuable to your audiences?

Experiential marketing programs, sponsorships in locally meaningful activities? Just a thought.