IEG SPONSORSHIP REPORT. IN DEPTH Deep Pockets: The Biggest Sponsorship Spenders of 2010
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1 May 16, / IN DEPTH Deep Pockets: The Biggest Sponsorship Spenders of 2010 PepsiCo retains top spot; Anheuser-Busch up to number 3, as 14 companies join the 2010 roster. As with other indicators of the state of the sponsorship industry, IEG s ranking of the largest U.S. based sponsors reflects a healthy condition. After a year 2009 in which the list of sponsors spending more than $15 million shrank in number, 2010 witnessed significant growth, as 14 corporations joined or returned to the big-budget roster. Those gains were offset by the loss of only three companies, meaning the list grew from 66 sponsors in 2009 to 77 in Also in contrast to the previous year, many companies on the list increased their annual spending in line with the overall rebound ( Sponsorship Spending: 2010 Proves Better Than Expected; Bigger Gains Set For 2011, 12/22/10) the sponsorship industry experienced. In 2009, only 14 percent of the previous year s big spenders increased their sponsorship outlays, while in 2010, 47 percent spent more. When the 14 new companies are included, 55 percent of companies 42 out of 77 in the new rankings grew their sponsorship budgets from 2009 to Another 27 percent (18 sponsors) spent about the same in both years, while 26 percent (17 sponsors) saw spending shrink typically because of the absence of a major deal that was not renewed or otherwise ended. The top 20 sponsors remained the same, although there was some shuffling within the upper echelon. PepsiCo, Inc. home to Pepsi, Gatorade, Mountain Dew, Aquafina and SoBe beverages, along with Frito-Lay snacks held on to its position as the largest U.S.-based sponsor, ahead of archrival The Coca-Cola Co. Notable activity among the biggest spenders included: Anheuser-Busch Cos. spending increase pushed it past Nike, Inc. and back into third place on the list even before 2011 spending on its new NFL partnership is accounted for. Verizon Communications, Inc. nearly cracked the top 10 on the strength of its blockbuster NFL deal, coincidentally taking the number 11 spot previously occupied by Sprint Nextel Corp., which Verizon replaced as the NFL s telecommunications partner. Sprint maintained its top 20 ranking thanks primarily to its ongoing status as NASCAR s largest partner. J.P. Morgan Chase & Co. almost broke into the top 20 it jumped 10 spots to number 22 due to its mega-deal with Madison Square Garden. 1
2 The 14 companies to the 2010 list are: Aflac Inc.; Capital One Financial Corp.; 3M Co.; Under Armour, Inc.; Papa John s Int l, Inc.; Delta Air Lines, Inc.; Kia Motors America, Inc.; Kraft Foods Inc.; The Goodyear Tire & Rubber Co.; Subway Restaurants; The Hershey Co.; Discover Financial Services, Inc.; Cisco Systems, Inc.; and The Sherwin-Williams Co. The three companies who fell out of the rankings all did so because they dropped primary sponsorships of NASCAR Sprint Cup Series teams: Black & Decker Corp., Brown-Forman Corp. and Kellogg Co. The spending estimates for the companies on the list reflect amounts spent on sponsorship fees of U.S. properties and the portion of spending on international properties that is directed to the U.S. market. Top U.S. Sponsors: Companies Spending More Than $15 Million Amount Company 2010 Rank 2009 Rank $335M-$340M PepsiCo, Inc. 1 1 $245M-$250M The Coca-Cola Co. 2 2 $220M-$225M Anheuser-Busch Cos. 3 4 $210M-$215M Nike, Inc. 4 3 $185M-$190M General Motors Co. 5 5 $175M-$180M AT&T, Inc. 6 6 $155M-$160M MillerCoors LLC 7 7 $150M-$155M Toyota Motor Sales U.S.A., Inc. 8 8 $135M-$140M Ford Motor Co. 9 9 $130M-$135M Adidas North America, Inc $105M-$110M Verizon Communications, Inc $85M-$90M Bank of America Corp $80M-$85M The Procter & Gamble Co Sprint Nextel Corp $60M-$65M FedEx Corp $55M-$60M Motorola, Inc $50M-$55M The Home Depot, Inc $45M-$50M State Farm Cos Chrysler Group LLC Mars, Inc Citigroup Inc J. P. Morgan Chase & Co United Parcel Service $40M-$45M Berkshire Hathaway, Inc Bridgestone Americas, Inc Shell Oil Co Wells Fargo & Co Target Corp Mercedes-Benz USA, LLC Lowe s Cos $35M-$40M Visa Diageo North America, Inc Dr Pepper Snapple Group, Inc McDonald s Corp
3 Top U.S. Sponsors: Companies Spending More Than $15 Million (continued) Amount Company 2010 Rank 2009 Rank $35M-$40M (continued) American Express Co Sirius XM Radio Inc $30M-$35M Canon U.S.A., Inc Aflac Inc. 38 General Mills, Inc Time Warner Inc Nationwide Financial Services, Inc MasterCard Int l, Inc Yum! Brands, Inc American Honda Motor Co $25M-$30M Capital One Financial Corp. 45 American Airlines Eastman Kodak Co Exxon Mobil Corp DuPont Co Nestlé USA, Inc Office Depot, Inc Hewlett-Packard Co The Allstate Corp M Co. 54 Under Armour, Inc. 55 Chevron Corp Microsoft Corp Sunoco, Inc Papa John s Int l, Inc. 59 Red Bull North America, Inc BMW of North America, LLC IBM Corp Best Buy Co Sony Corp. of America Sears Holdings Corp Delta Air Lines, Inc. 66 Kia Motors America, Inc. 67 Kraft Foods Inc. 68 Unilever United States, Inc BP America, Inc The Goodyear Tire & Rubber Co. 71 Subway Restaurants 72 Samsung Electronics America, Inc The Hershey Co. 74 Discover Financial Services, Inc. 75 Cisco Systems, Inc. 76 The Sherwin-Williams Co. 77 3
4 Top U.S. Sponsors: Companies Spending More Than $15 Million, Sorted by Category Category Company 2010 Spending Automotive General Motors Co. $185M-$190M Toyota Motor Sales U.S.A., Inc. $150M-$155M Ford Motor Co. $135M-$140M Chrysler Group LLC $45M-$50M Mercedes-Benz USA, LLC $40M-$45M American Honda Motor Co. $30M-$35M BMW of North America, LLC Kia Motors America, Inc. Bank Bank of America Corp. $85M-$90M Citigroup Inc. $45M-$50M J. P. Morgan Chase & Co. $45M-$50M Wells Fargo & Co. $40M-$45M Capital One Financial Corp. $25M-$30M Beverage PepsiCo, Inc. $335M-$340M The Coca-Cola Co. $245M-$250M Anheuser-Busch Cos. $220M-$225M MillerCoors LLC $155M-$160M Diageo North America, Inc. $35M-$40M Dr Pepper Snapple Group, Inc. $35M-$40M Red Bull North America, Inc. Computer & Information Systems Hewlett-Packard Co. $25M-$30M Microsoft Corp. IBM Corp. Cisco Systems, Inc. Consumer Electonics Canon U.S.A., Inc. $30M-$35M Sony Corp. of America Samsung Electronics America, Inc. Credit Card Visa $35M-$40M American Express Co. $35M-$40M MasterCard Int l, Inc. $30M-$35M Discover Financial Services, Inc. Food Mars, Inc. $45M-$50M General Mills, Inc. $30M-$35M Nestlé USA, Inc. $25M-$30M Kraft Foods Inc. The Hershey Co. Fuel Shell Oil Co. $40M-$45M Exxon Mobil Corp. $25M-$30M Chevron Corp. Sunoco, Inc. BP America, Inc. 4
5 Top U.S. Sponsors: Companies Spending More Than $15 Million, Sorted by Category (continued) Category Company 2010 Spending Insurance State Farm Cos. $45M-$50M Berkshire Hathaway, Inc. $40M-$45M Aflac Inc. $30M-$35M Nationwide Financial Services, Inc. $30M-$35M The Allstate Corp. $25M-$30M Mailing and Shipping FedEx Corp. $60M-$65M United Parcel Service $45M-$50M Personal Care The Procter & Gamble Co. $80M-$85M Unilever United States, Inc. QSR McDonald s Corp. $35M-$40M Yum! Brands, Inc. $30M-$35M Papa John s Int l, Inc. Subway Restaurants Retail The Home Depot, Inc. $50M-$55M Target Corp. $40M-$45M Lowe s Cos. $40M-$45M Office Depot, Inc. $25M-$30M Best Buy Co. Sears Holdings Corp. Sport Apparel & Equipment Nike, Inc. $210M-$215M Adidas North America, Inc. $130M-$135M Under Armour, Inc. Telecommunications AT&T, Inc. $175M-$180M Verizon Communications, Inc. $105M-$110M Sprint Nextel Corp. $80M-$85M Motorola, Inc. $55M-$60M 5
6 May 16, / RESULTS NASCAR Sponsorship Helps Caterpillar Sprout Wings Company analyzes 18 metrics to determine ROI from its multimillion-dollar primary sponsorship of Richard Childress Racing s No. 31 car. Similar to the movement of its namesake insect and the company s products, a slow-and-steady approach to sponsorship has paid off for Caterpillar Inc. The manufacturer of construction, mining and other heavy equipment credits its 18-year-old NASCAR program to generating return on investment. Specifically, Caterpillar attributes incremental business from existing customers and prospects entertained at races as well as business from motorsports tracks and other NASCAR stakeholders to its primary sponsorship of a Richard Childress Racing Sprint Cup Series entry. We have had positive ROI every year since we began measuring the program, said Greg Towles, Caterpillar s NASCAR program manager, who has spearheaded the program since its inception. Caterpillar, which recently extended its primary sponsorship of the No. 31 car driven by Jeff Burton, began to prioritize ROI measurement roughly six years ago, Towles said. We sat down with other major NASCAR sponsors and asked them how they measure their programs. We discovered that most companies didn t have a good way to measure success. We re a Six Sigma-driven company, and we like to deal with the facts. As a result, Caterpillar assembled an internal team to develop a process to track results. The team evaluates roughly 18 metrics, including the profit margin from products sold or rented as a result of the sponsorship, royalties from licensed merchandise and media exposure. Knowing that multiple factors influence any buying decision, Caterpillar assigns a small portion of each sale to the sponsorship. We are part of the process, but a tiny part, said Towles. Caterpillar uses an outside service to track the value of media exposure, a metric it discounts by roughly 90 to 95 percent. (Editor s note: Such discounting is a long-practiced industry standard established by IEG.) We take a very small percentage as true value, although some could argue that media exposure has more value to a company like Caterpillar because we are not a typical TV advertiser. 6
7 Relationship-building, Direct Sales Opportunities Drive Program Caterpillar entered NASCAR in 1993 primarily seeking a client entertainment platform for its dealers in the U.S. and Canada. We conducted some lifestyle studies on what our customers enjoy, and NASCAR came up big next to hunting and fishing, Towles said. Caterpillar began as an associate sponsor of the No. 42 Mello Yello car driven by Kyle Petty in the Nationwide Series. It then served as primary sponsor of a Nationwide entry in 1995 and 1996 before moving up to Sprint Cup, where it had sponsorships with two other teams prior to its partnership with RCR. The NASCAR program created a lot of interest among our dealers, customers and employees, Towles said. Caterpillar offsets some of its costs by selling tickets and other hospitality-related inventory to dealers, who then share the assets with customers and prospects. The company uses promotions to encourage dealers to participate. For example, Caterpillar is conducting a promotion that offers branding on the trunk on the No. 31 car for dealers that host 50 or more guests. While dealers primary focus for NASCAR hospitality has been customers from the U.S. and Canada, they are increasingly finding interest from those outside North America. Customers from Sweden, Norway and the Netherlands attended this year s Daytona 500, while dealers frequently host customers from Latin America at Homestead-Miami Speedway, Towles said. Cat dealers also leverage the program to gain business from tracks and members of the NASCAR community. SIDEBAR Caterpillar Activates NASCAR Team Across Multiple Business Units Looking to gain the biggest bang for its buck and spread its rights fee among different budgets Caterpillar Inc. activates its NASCAR program across multiple business units. Twenty-three units have leveraged the program, said Greg Towles, Caterpillar s NASCAR program manager, citing an analysis conducted for the company s senior executives. Below, five examples of how Caterpillar s business units are activating the company s primary sponsorship of a Richard Childress Racing Sprint Cup Series car: Caterpillar Financial used on-car exposure at the April 17 race at Talladega Superspeedway to tout its 30th anniversary Caterpillar Paving Products hosted a paving school at Fontana, Calif. s Auto Club Speedway, around which it paved a section of the track s hospitality area. The following month, the unit displayed products and hosted attendees at the track s Sprint Cup race CatUsed.com activated the October 2010 Sprint Cup race at Charlotte Motor Speedway by displaying 32 pieces of equipment for sale at the track for three days prior to the race. On Dec. 11, 2009, Caterpillar displayed its car and hauler outside the New York Stock Exchange to commemorate its 80th anniversary as a publicly traded company. Caterpillar activated a Sprint Cup race at Atlanta Motor Speedway by building a 15th-scale version of the track using tractors equipped with its Accugrade Grand Control System. Source Caterpillar Inc., Tel: 309/ For example, Cat Entertainment Services a provider of temporary power generation owned by Ring Power Corp., a St. Augustine, Fla.-based Caterpillar dealer has a contract with NASCAR to provide on-site power for race TV broadcasts. NASCAR also works with other Cat dealers to provide power generation needs for on-site displays and hospitality villages at various tracks. Every time you watch a broadcast, Caterpillar is providing power. That s a big deal for us, Towles said. Dealers frequently provide equipment to tracks in exchange for suites and other hospitality assets, Towles added. More Focus On Sponsor Cross-promotions Caterpillar has become involved in joint activations with other sponsors of the team, a development spurred by its property partner. 7
8 I give a lot of credit to RCR, Towles said. The whole cross-branding thing is relatively new for us, and the team is constantly thinking of ways to bring sponsors together and help leverage each other s investment. For example, RCR last year coordinated a General Mills, Inc.-led ( Cereal Marketers Scoop Up Sponsorships, 4/25/11) promotion that featured toy replicas of the team s four cars in Cheerios boxes. Cheerios is the primary sponsor of the No. 33 Sprint Cup entry driven by Clint Boyer. We were in more than three million cereal boxes, Towles said. That is great brand exposure in front of audiences that we would not typically reach. Caterpillar also has received visibility in Coca-Cola North America s ( Coca-Cola s Motorsports Guru On New Plans, Goals And Measurement, 2/7/11) TV ads and point-of-purchase materials touting Burton and other driver members of the Coca-Cola Racing Family program, Towles added. Caterpillar several years ago titled a David Powers Motorsports ( Cat Takes To The Track To Find Qualified Job Applicants, 9/17/07) NHRA PowerAde Drag Racing Series Top Fuel dragster, a sponsorship it dropped following the fallout in the economy. We were using the program to recruit service technicians, Towles said. Unfortunately, once the program got going the economy crashed and dealers were laying people off. Outside of sponsorship, Caterpillar has an endorsement deal with Mike Roe, star of Discovery Channel s Dirty Jobs. Individual Cat dealers sponsor a number of regional and local properties ranging from pro sports teams to community festivals. Ties include Dick s Sporting Goods Pittsburgh Marathon; Houston Livestock Show and Rodeo and the MLS Houston Dynamo. Source Caterpillar Inc., Tel: 309/
9 May 16, / CATEGORY UPDATE Changes In Airline Industry Create Tailwind For Sponsorship Deals Airline objectives include establishing brands and promoting loyalty and other marketing programs. Although the one-two punch of industry consolidation and the escalating price of oil have created some turbulent times for airlines and passengers alike, sponsorship activity ( Airline Industry Remains On Board With Sponsorship, 3/29/10) has continued to increase and stands to benefit from the first of those factors. With business and leisure travelers returning to the skies as the economy recovers, nearly all of the major carriers in the U.S. have expanded their sponsorship portfolios over the past year. Those deals include pro sports teams, community events and nearly everything in between. What s more, the recent round of mergers in the category is expected to drive more activity as companies look to promote new brands and operations. At United Continental Holdings, Inc. where United will become the single airline brand those connected to sponsorship decision-making at the former United Airlines and Continental Airlines, Inc. expect the consolidation of those functions to be finalized in the next few months. For their part, Southwest Airlines Co. and AirTran Holdings, Inc. just closed their merger on May 2, with the elimination of the AirTran brand not beginning until next year (see Sidebar). The flurry of recent activity in the category includes Frontier Airlines new partnership with the LPGA, its first national sponsorship. The airline was purchased in 2008 by Republic Airways Holdings, Inc. In addition, JetBlue Airways Corp. ( What s New At JetBlue, 11/5/10) this year came on board as a first-time sponsor of New York City s Tribeca Film Festival, while Delta Air Lines, Inc. just took two-year title of MLB s Civil Rights Game in SIDEBAR Q&A With Southwest Airlines Andy Allmann In light of the recent activity in the category, IEG SR checked in with Andy Allmann, director of national strategic partnerships for Southwest Airlines Co., a company that has long used sponsorship to connect with consumers and support the passion points of the communities it serves. Below are edited excerpts from the conversation. IEG SR: Southwest recently closed on its acquisition of AirTran Holdings, Inc. How might that impact your sponsorship activity? Allmann: We closed the deal May 2, so we are only in our second week. We had one of their marketing folks here today to provide an update on the types of things they are doing. They have done a fantastic job. Their marketing staff is only about 30 folks and they have built a really great brand. We are excited to have them as part of the family. The AirTran brand will continue until 2012 at the earliest and I don t think anything will change in the foreseeable future. IEG SR: Southwest operates in 37 U.S. markets. Which do you focus on when it comes to sponsorship activity? 9
10 Atlanta and expanded its partnership with U.S. Ski and Snowboard Assn. with a tie to the NGB s new U.S. Freeskiing unit. On top of that, United has signed new multiyear deals with the MLB Los Angeles Dodgers and San Francisco Giants and renewed an existing partnership with the Chicago Cubs. As in years past, airlines are sponsoring primarily to accomplish four primary marketing objectives: boost visibility in new markets, demonstrate community support, build relations with frequent business fliers and gain business from sponsored properties. As an example of the last two objectives, United s new MLB partnerships include entitlement of club suites and other exclusive members-only areas, as well as team charter service. In addition to domestic carriers, U.S. properties also are seeing more interest from sponsors based outside the U.S., such as Emirates Airlines, which last year inked a tie with USA Rugby. More and more international brands are looking to extend their presence in the U.S., which could lead to unique opportunities for those properties that appeal to a global audience, said David Wright, vice president of global sponsorship with Soccer United Marketing, Major League Soccer s marketing arm. American Airlines has sponsored MLS since Source Soccer United Marketing, Tel: 212/ Allmann: Some of our key markets include Denver, Boston, Chicago, Philadelphia and the Baltimore/Washington, D.C. area. IEG SR: Southwest sponsors the NBA Boston Celtics, Phoenix Suns and other pro sports teams. How do you typically activate those partnerships beyond signage and ticket giveaways? Allmann: Last year we focused on customer acquisition, so we ran promotions to encourage consumers to sign up for our Click n Save special offers and Rapid Rewards frequent flier program. We also use hospitality for our corporate sales group and have an online presence on each team s Web site. People can click on the team s schedule page to access the Southwest home page. IEG SR: Does Southwest have any new initiatives this year? Allmann: We launched an enhanced Rapid Rewards program on March 1, so we continue to focus on acquiring new members. We also have something else up our sleeve that I can t announce yet. It s not necessarily sponsorship related, but we may leverage our current sponsorships to gain some promotional opportunities. IEG SR: Has Southwest recently entered any new markets? Are there new sponsorships in those markets? Allmann: Greenville-Spartanburg, South Carolina is one of our newer markets. We signed a new partnership this year with minor league baseball s Greenville Drive. Last year we signed a two-year partnership with Clemson University. We partnered with Clemson prior to entering the market. We had some signage at football games, but we couldn t activate with ticket giveaways and that sort of thing; we didn t enter the market until March of this year. IEG SR: Has Southwest signed any other new ties in the recent past? Allmann: On the national level we have a great partnership with Microsoft. We worked with them on a holiday promotion last December. We had Santa Claus at 26 airports and customers had the opportunity to have their photo taken for free. Microsoft had on-site kiosks to demonstrate their Photo Fuse software. Our customers loved it. IEG SR: How did such a non-traditional partnership come about? Allmann: We have worked with 206, Inc., Microsoft s Seattle-based agency. We have worked with Levi Strauss & 10
11 Co. s ( Levi s Tries On Another Sponsorship Style, 9/20/10) Dockers brand, which is another one of 206, Inc. s clients. We ran a Father s Day promotion where we gave Dockers to fathers on our flights. 206, Inc. brought us the opportunity with Microsoft. IEG SR: Has the increase in oil prices impacted your marketing activity? Allmann: Yes, we have felt it. We have to make sure what we are doing is the right thing for the right reason. It s not that we weren t doing that before, but you have to take extra precautions. Do we need to spend this money, and if so, what kind of impact will it have? It s not that we ve slashed our budget, but we need to double check everything to make sure we are doing the right things for the business. Source Southwest Airlines Co., Tel: 214/
12 May 16, / SPONSOR PROFILE Do-over: Crocs Returns To Sponsorship Arena With Event Deals After focusing on traditional media, footwear marketer returns to event marketing as a platform to gain on-site display and sales rights. Just as quickly as it left, Crocs, Inc. has gotten back into the sponsorship game. The marketer of brightly-colored clogs and other footwear products will have a presence at roughly 35 local and regional events in 2011, including state fairs, food fests and other events that attract young families. Crocs kicked off the initiative at last weekend s Zazzle Bay to Breakers 12K race in San Francisco. Other properties on its roster include the Indiana State Fair, Taste of Dallas, Milwaukee s Summerfest, Oregon s Portland Rose Festival and Michigan s Grand Haven Coast Guard Festival. The company amassed a substantial sponsorship portfolio ( Crocs Tries Entertainment Deals On For Size, 3/17/08) between 2006 and 2008, including title of the now-defunct AVP Tour and cosponsorship of music festivals, motorsports events, endurance sports and other types of properties. Although Crocs dropped those ties in 2009 at the height of the recession, the move was made to focus on more traditional forms of media, not because of the bad economy or financial problems, said Tim Gray, the company s senior sponsorship manager. It was a shift in marketing direction, he said. We moved away from the experiential space in favor of more mainstream spending. Crocs did not significantly reduce its marketing budget during the downturn, he added. Similar to its strategy three years ago, Crocs is largely using event marketing to gain one-on-one touch points and on-site sales rights. The company will use sponsored events to tout its expanding product line, including slip-on shoes for men, translucent shoes for women and a new line of Chameleon children s shoes that change color in the sun. We want to show how we are diversifying our brand from a product standpoint and let people know about some of our new summer and fall products, Gray said. Crocs will offer free massages to incent traffic to its on-site display areas, Gray said, noting that massage reinforces Crocs comfort positioning. 12
13 Where possible, the company prefers to access on-site display benefits without purchasing official sponsor status. For us it is all about being on site, Gray said. We are not looking for full-blown sponsorship opportunities. The company has bought official sponsorship packages when properties do not offer display rights a la carte, he noted. Crocs spearheaded and manages its new sponsorship push in house. The company worked with Chicago-based agency Engage Marketing on sponsorship strategy and implementation through Source Crocs, Inc., Tel: 303/
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