Big Scoring Opportunities with the World Cup

The 2014 World Cup is poised to be a record-breaking sport marketing event offering massive payoffs for advertisers who play their cards right.  Advertisers can capitalize on this worldwide quadrennial event to build a global brand and amass a global following.  Similarly, marketers can realize both short-term benefits such as incremental sales and brand awareness and long-term benefits, including increased equity and brand loyalty.  The numbers to be generated by the games are expected to be huge in every category.

While preparation for the games started long ago, the June 12 kickoff marks the official start of the month-long event which stages matches in 12 cities across Brazil.  An estimated 4 Billion fans will watch on television or other social media, up from the 3.2 Billion that viewed the 2010 World Cup.  An additional 500,000 fans are expected to head to Brazil to attend the games, bringing in considerable revenues for hotels, restaurants, retailers and others in the travel and hospitality industries.

The Federation Internationale de Football Association (FIFA) will likely take in over $4 Billion in sponsorship and television rights from the World Cup, including $1.4 Billion from sponsorship revenue and $2.6 Million from television rights.

FIFA has a new, three-tiered sponsorship structure for the World Cup, with twenty-two corporations participating as either FIFA Partners, World Cup Sponsors or National Supporters.  The six FIFA partners are afforded the highest level of involvement with FIFA and associated with all major FIFA events and the development of soccer around the world.  The FIFA Partners are Addidas, Coca Cola, Hyundai, Emirates, Sony and Visa who collectively have paid $730 Million for their partnership with FIFA.  The eight middle tier World Cup Sponsors have sponsorship rights for the World Cup and the Confederation Cup and together ponied up about $500 Million for participation.  The eight National Supporters, which represent the third tier, paid $170 Million and have the right to promote their association in domestic markets.

The traditional television broadcast outlets will be streaming the games continuously for roughly 30 days, offering a lot of advertising punch.  Globo, Brazil’s TV network, will receive  $600 Million from 8 companies (including AmBev, Banco Itau, Coca-Cola, Johnson & Johnson, Hyundai, Nestle, Oi and Magazine Luiza), which represents roughly $75 Million per sponsor for advertising rights.  For their commitment, each television sponsor will get 1,120 video insertions, including 451 30-second television commercials, plus 359 mini 5-second ads and several mentions by the game announcers with visuals.   Also, digital billboards, posters and banners in each host city and stadium provide additional advertising outlets.

Traditional broadcast marketing will no longer be the sole primary focus for advertisers.  Social media now plays a starring role too.   Because the games are typically played in continuous action without timeouts, television broadcast advertising is somewhat limited.   Also, the newer, broader social media landscape offers a new dynamic to the games and will likely be the main reason for record setting exposure.  While Facebook, Twitter, YouTube and other social media platforms and mobile marketing were up and running four years ago, they were nothing like they are today.   These outlets offer real-time, emotive and interactive platforms and integrated brand content able to reach audiences across the globe 24/7.  Moreover, these audiences are not only watching and following the games, they are watching and following the teams and the players individually, which gives advertisers any number of ways to link to the event.  To understand the reach one need to look no further than Christian Ronaldo who has 25.1 Million Twitter followers and 76.4 Million Facebook friends and Neymar who has 10.1 Million Twitter followers and 18.7 Million Facebook friends.  And the fan base will continue to grow from the games.   With thirty-two teams and stars on each team, many different advertisers have the chance to jump into the marketing game.

The potential rewards of connecting with the 2014 World Cup do not come without risks, however.  No matter how hard they plan, sponsors, advertisers and the media cannot control the upcoming narrative of the Cup.  Brazil faces numerous social problems, including poverty, substandard living conditions, income disparity and other economic and humanitarian issues.   Many Brazilians and others around the world have been unhappy about the Brazil hosting the Cup with their primary concern that FIFA is benefiting more from the Cup than the people of Brazil.  The amount of spending on the Cup, the stadiums and the infrastructure bothers many who argue the money and efforts should be directed towards public and social services not spectator sports.   Last year demonstrators rioted against hosting the Cup, and marketers must be prepared or face the possibility of backlash.   Those marketing in connection with the World Cup must be sensitive to these issues and be smart, prepared and flexible to adapt their message and communications depending on what unfolds just before and during the games.   They need to manage risks and have alternative plans and responses.

The upcoming World Cup will undoubtedly be the most popular worldwide sporting event ever and likely set records for viewership, social media exposure and advertising expenditures.   The payoffs are potentially enormous for those lucky enough to get in on the action.  However, advertisers must be socially aware and sensitive to the citizens of the host country.   If they do, they can be among the lucky who score big at this record event.

March Madness’s Runaway Success Fuels The Pay-to-play Controversy

March Madness is a financial winner for just about everyone except the athletes playing the games. The NCAA, the media, sponsors and advertisers, the participating schools, the host cities and businesses all profit from the tournament, while the players enjoy media exposure but do not share in the financial windfall. In our changing marketplace, it seems like the time to pay college athletes may be here at last.

The March Madness Tournament generates billions of dollars of revenue every year amid skyrocketing popularity, trailing only the Super Bowl as the highest ranked sports advertising event. The NCAA will take in an estimated $777 million this year, most of which will come from broadcast rights for the tournament. A $10.8 billion, 14-year broadcasting deal gives the NCAA plenty to smile about in the future.

Broadcasters themselves do very well during the three-week tournament — ad revenue for the 2013 tournament was approximately $1.15 billion, according to Kantar Media. The level of unpredictability requires live tune-in, which is great news for advertisers, who shell out from $100,000 for a single spot in the opening round to almost $1.5 million for the championship game, according to TRA, Inc.

In addition to the money the colleges receive from the NCAA’s tournament revenues, they also take in huge sums from merchandise sales and alumni giving (not to mention the recruiting benefit and profile exposure).  Many athletic directors and coaches receive bonuses for participation in the tournament as well. The cities that host the games earn a profit, and so do the restaurants and bars that draw fans for the telecasts.

That’s a long list while omitting the players themselves. Many feel the time has come to change to economic structure of college sports, and while the debate about compensating student athletes is not new, the stakes have risen as the success and the profitability of the tournament grow.

Those opposed to paying student athletes argue that these players are amateurs who are amply compensated through scholarships and the current system is needed to keep in place the amateur nature of college sports and the educational goals of the NCAA.

Moreover, they argue that paying athletes will wreck the competitive balance in college sports, eroding the integrity and leading to exploitation of the athletes.

The counterargument is that the old system fails to reflect the realities of today’s market and the motivations of the NCAA and the universities. Many find that one of the biggest hypocrisies is the NCAA’s argument that academics take precedence. On average, college athletes spend over 30 hours a week practicing their sport and regularly miss significant class time due to athletic obligations.

Those absences intensify during tournament season, when the athletes and their schools get major lifts in visibility. For example, heading into this year’s Elite 8, Creighton’s Doug McDermott connected to the largest audience of any participating athlete, according to SponsorHub’s internal measures. It’s safe to say many hadn’t heard of McDermott or thought about Creighton prior to the tournament.

Schools leverage this visibility by selling school and player affiliated paraphernalia — witness how quickly teams don NCAA approved t-shirts after winning big games. Players, who face career-ending injuries each time they play, do not see a dime of this tournament income, even though they are the real revenue source. The players should be able to receive some sort of cut of the pie, not matter how small the slice is.

Of all those who stand to gain from the players’ performance, it is the players who need it the most.  For those athletes who have few professional sports prospects, visibility and earning potential is highest during their college years. More than 80 percent of college athletes on scholarship live below the poverty line, and therefore compellingly need the money.

March Madness and its built-in unpredictable outcomes will continue to grow as a TV rights and sponsorship behemoth. But that success will naturally fuel the debate on whether to pay the student participants. It may not be long before the players are shown the money.

LeBron and Samsung: How to Deal with Endorsement Crisis in Real Time

If you are a fan of the NBA (and LeBron James’ 12 million Twitter followers), you have undoubtedly noticed the recent brouhaha over LeBron’s Samsung Galaxy phone. As you probably know by now, LeBron is one of the athletes who is sponsored by Samsung. With a sponsorship of this sort comes an implicit (and often contractual) obligation to be a vocal supporter of the brand that is endorsing you.

However, in the middle of the afternoon, with many idle eyes on his Twitter account, LeBron tweeted this:

“My phone just erased everything it had in it and rebooted. One of the sickest feelings I’ve ever had in my life!!!”

Needless to say that within 5 minutes the collective wisdom of the Internet has figured out that the phone in question was a Samsung Galaxy (or technically speaking, the Note phablet) and sarcastic tweets started flowing.

This posed a challenging moment for Samsung, who spends a considerable amount of money and time to nurture their endorsement of LeBron – and probably had Nike, McDonald’s and Coke nervous, too, who also spend lots of money endorsing LeBron (is he going to say his Big Mac sucked? Or his Diet Coke tasted stale?)

Samsung’s team sprung into action and within an hour got LeBron’s backup data on the way and LeBron was kind enough to quickly delete his tweet and replace it with:

“Close Call. Wheew! Got all my info back. Gamer!”

So why do we think this particular event is so important and what can other brands learn from Samsung?

One word: “Real-time”

Everything about this situation was real-time:

 

  • The use of an endorsed product
  • The PR problem
  • The solution

 

What can other brands learn from it?

First of all, sponsorships of athletes needed to be monitored and managed in real-time. You should expect accidents, but you should also be ready to minimize their likelihood and their impact.

Real-time monitoring and response are key.  Even if you are a much smaller brand than Samsung and don’t have a dedicated person watching social media 24/7, the sentiment tracking technology has advanced tremendously and is now widely affordable.

Also, take ownership of a back-up plan.  Make sure that if your product breaks (or is just used ineffectively), the life of the athlete/celebrity is minimally impacted so the last thing you have to worry about is them reaching for a competitor’s product.

Because, after all, in two years we could easily be talking about how LeBron’s Samsung auto-whispered about his Big Mac-induced heartburn since he forgot to change his health privacy settings.

The dynamics and impact of sponsorships are very much real-time. But with that also come the real-time risks.

The New Age of #Olympics2014

Sponsorship has always been a key part of the Olympics experience. First of all, it helps athletes afford the expenses of non-stop travel. And, for big brands, it has always been a great way to gain brand recognition with consumers at home, glued to their TV’s for hours at a time.

And for the International Olympic Committee, it’s a great business. With a limit of 35 official exclusive sponsors in 2012, the top corporate sponsors paid over $100 million each to participate. The next tier paid $40 million each. But, while the sponsorship spend has been rocketing to record heights, technological progress has enabled even faster changes in both viewer habits and our ability to measure the results. So what are these trends and what do they portend for Olympic sponsorship in 2014 and beyond?

Viewership Changes

Over the past few years, the TV and cable industries have seen a rapid shift towards “anytime, anywhere” viewing, especially among the highly desired digitally savvy consumers.  A lot of viewers now consume programs (even sports) in a time-shifted manner, on mobile devices, with at least two active screens – and frequently, all of the above!    This year, NBC has decided to aggressively get ahead of the trends and dominate the shift to digital.  NBC Olympics, a division of the NBC Sports Group, made a digital bet that is paying off.  They are offering:

  • Exclusive live streaming: Coverage in the US offering over 1000+ hours of streaming. Not only has this given them total control of US digital streaming rights of the Olympics, but also the ability to control of what ads appears as you are watching the Olympic coverage online.
  • Two mobile apps: These are featured apps on the iPhone for over 2 weeks with over 1 million downloads in the iOS app store.

Measurable Engagement

Other huge benefits of the “anytime, anywhere” viewing are the increase and measurability of mobile social engagement.  According to Hashtracking, there are record social engagement numbers for key hashtags: #sochi2014 (3.3M tweets), #teamusa (472k tweets), #sochiproblems (371k tweets).  A large share of these are coming from mobile devices. And, brands are not merely measuring impressions. They are also measuring the experience and fan bases.

Sponsors are also asking athletes to use their social media accounts to promote their brand. The agents for US figure skaters Ashley Wagner and Gracie Gold both say sponsors draft some of their tweets, plugging their brands.

The trend of consumer engagement with content in a social and mobile environment is rapidly changing how brands conduct and measure their sponsorship.

Social Media in Sponsorships:
What’s Old is New Again

The first time I heard the word “sponsorship,” the very first thing that came to mind was sports events that I had attended where banners hung with logos of local companies, a.k.a. “sponsors.” If you’re anything like me, that’s pretty much where my knowledge of sponsorship started and ended.

Nowadays, those of us who work in the general sphere of sales, marketing and marketing research, and touch our customers in one way or another, are familiar with how major companies use sponsorships of events to move customer relationships from the beginning of the sales pipeline straight through to closing a new relationship.

Recently, there’s been a lot of talk about how this old, tried-and-true method of marketing can leverage the much newer world of social media to create even deeper relationships with customers and prospects. There’s also mounting pressure from marketers to justify their huge sponsorship budgets to their CEOs and Boards. For example, Pepsi spends nearly $340 million dollars per year on “activating” sponsorships such as the NFL and endorsing athletes and stars such as Beyonce.

Who at Pepsi is on the hook to prove that the $340 million dollars was actually worth it, year in and year out and how do they prove it? This is big business with high stakes.

The challenge is that sponsorships are rarely the most efficient way to purchase eyeballs but are often the best way to generate sales.  So, given this dilemma, what’s a marketer to do? How do you bridge the gap between the power of sponsorship to generate sales and measure the power of social media within a sponsorship activation to generate awareness and consideration for your brand?

Other forms of marketing (TV, Digital, etc.) have industry standard metrics and dashboards galore, to prove that the spending was worth it. Here are 3 suggestions that can be deployed:

  1. De-prioritize raw tallying of media values such as TV and digital that surround a sponsorship
  2. De-prioritize measuring awareness and consideration of your brand via expensive, time-consuming surveys alone
  3. Treat your sponsorship like a political campaign with a finite beginning, middle and end (pre-, during and post-sponsorship) and increase prioritization of measuring all of this in real-time