Monday, January 28, 2013

Marketing through Sports: Is It Worth It?

A useful approach for beginning study of sports marketing (or any other subject) is to answer the "what is" question. In this case, what is sports marketing? A breakdown of sports marketing  yields two dimensions: 1) marketing of sports (leagues, events, teams, venues, athletes) and 2) marketing through sports (use of sports by a company or brand as a marketing vehicle to reach a target audience). While marketing of sports is self-explanatory even to students new to the subject, marketing through sports may be less familiar territory.

To illustrate the concept of marketing through sports, I used the example of Pepsico and its sponsorship of the NFL. Pepsico renewed its NFL sponsorship through 2022 for an estimated $100 million per year to associate Pepsi, Frito-Lay, Gatorade, and Tropicana with the NFL. On top of the $100 million annual rights fees, Pepsico is expected to spend an additional $130 million per year to activate, or market its NFL relationship. These figures prompted a student to ask a very important question: "Is sponsoring the NFL worth $230 million a year?"

What a great question! It is one that every sponsor should ask of a potential or actual spend. Is the investment worth it in terms of helping achieve marketing objectives? But, before considering the return on investment of marketing through sports, it is important to understand the attraction of sports as a marketing platform. Two strengths of sports as a marketing channel are:
  1. The Affinity Advantage - Many people have strong, emotion-based relationships with their favorite sport, team, or athlete. Fans who identify with a team and have favorable attitudes (i.e., liking) are likely to have favorable attitudes toward another object associated with the sport brand that they like such as Pepsi or Gatorade. Liking of the sport transfers to liking of the brand... at least in theory.
  2. Targeted Reach - Sports are a valued marketing channel because of their ability to deliver what is known as targeted reach. Audience characteristics for a sport or event tend to be well-defined with similarities observed among a fan base (e.g., age groups, income level, and interests). Sponsors can use an association with a sports property to reach a specific audience group. For example, the U.S. Navy is an official partner of the X Games, enabling it to communicate the Navy as a career and lifestyle choice to the X Games audience that has a large proportion of young people (i.e., potential recruits).
Is any sport property worth a $230 million a year investment? The answer is complex with many variables to consider. But, the affinity advantage and targeted reach of sports are strengths that make sponsorship an attractive opportunity to break through highly competitive and cluttered marketing environments.