Wednesday, April 23, 2014

Activation: The Fuel of Sponsorship Marketing

Sponsorship of sports leagues, teams, events, and athletes can be an effective strategy for building brand awareness, creating a desired brand image, or even attracting new customers. The power of sponsorship as a marketing strategy is not the mere association of a brand with a sports property. One of the most powerful differentiation points between a successful sponsorship and a mediocre one is how effectively a sponsor markets its relationship. Unfortunately, too many sponsors do not fully grasp the importance of integrating a sponsorship into the brand's marketing communications strategy and thus do not realize the potential impact.

Sponsorship = Horsepower

My favorite business author is the late Zig Ziglar. One of my favorite stories Zig told was about an old Indian man who found himself suddenly wealthy when oil was found on his property. The gentleman wanted to enjoy some of his newly found wealth, so he purchased a big Cadillac. He rode into town in his shiny, new car and was conspicuous not because of his luxury automobile but because it was being pulled by horses. You see, the man did not know how to harness the tremendous horsepower under the hood, so he made do with the only horsepower that he understood.

Activation = Fuel

What the old Indian man was missing (and thus not enjoying full benefit of his new car) was fuel to make the Cadillac's engine go. The fuel of sponsorship is the activation or marketing of the association a brand is entitled to promote as part of its sponsorship rights. Sponsors receive certain assets or privileges from properties, but it is up to them to create marketing programs around those assets to connect target markets to a sponsorship.For example, Coca-Cola is a long-time sponsor of NASCAR. An activation program that Coca-Cola has built around its NASCAR sponsorship is the Coca-Cola Racing Family, a collection of nine NASCAR Sprint Cup Series drivers including Greg Biffle, Danica Patrick, and Tony Stewart. Coca-Cola has activated using the CCRF since 1998, featuring drivers in promotions, packaging, special events, and advertising. The CCRF activation is a way for Coca-Cola to go beyond "official sponsor" designation and connect its brand with the NASCAR brand and driver personalities.

Budget for "Gas Money"

You would not attempt to go on a trip without putting fuel in the tank. Similarly, companies should not undertake investments in sponsorship without making sure they have adequate "gas money" to spend on activation. One measure of activation spending is a leverage ratio, a comparison of dollars spent on marketing a sponsorship to the rights fees paid. There are varying opinions about the optimal leverage ratio, with current industry average being about $1.70 spent on activation for every $1 spent on rights fees. Regardless of what you believe to be the right leverage ratio to strive to achieve, one thing is certain: A sponsorship will not "go" in the long run without activation fuel. Activation is the creative leeway that marketing managers can use to articulate meaning for their association with sports properties that they sponsor.

Note: This post first appeared on the Sports Biz U blog April 15, 2013