Home improvement chains continue to use sponsorship as a key element of their marketing mix; NASCAR remains the primary battleground.

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1 October 3, / WHO DOES WHAT Who Does What: Home Improvement Retailers Home improvement chains continue to use sponsorship as a key element of their marketing mix; NASCAR remains the primary battleground. Like many other categories, home improvement retailers have had their ups and downs over the past few years. But while The Home Depot, Inc. and Lowe s Cos have dropped a handful of high-profile ties in the recent past, they and other DIY chains continue to use sponsorship as a key element in their marketing mix. As in years past, motorsports and soccer remain high on their priority list. Among new deals, Lowe s in March kicked off a multiyear title of the NASCAR Sprint Cup Series race at the Las Vegas Motor Speedway on behalf of its Kobalt tool line. The company also is negotiating a separate tie with track owner Int l Speedway Corp. that would replace Home Depot beginning with the 2012 season, sources said. Home Improvement Retailer Sponsorships By Number Of Deals Government 2% Associations 2% Entertainment 8% Festivals 9% In the soccer space, Home Depot this year came on board as the official home improvement sponsor of the CONCACAF Gold Cup tournament. Sports 61% Causes 18% Home improvement retailers largely use sponsorship to accomplish three primary marketing objectives: Gain platforms for retail promotions; reach niche audiences and demonstrate corporate citizenship. Like other types of retailers, home improvement chains frequently try to offset rights fees by bringing in vendors that sell through their stores. 2011, IEG, LLC. Source: IEG Research 1

2 Ace Hardware Ace Hardware Corp Kensington Ct. Oak Brook, IL John Surane, vice president, merchandising, advertising & marketing 630/ Sponsorship/Activation Strategy: The country s largest hardware cooperative focuses on its long-running partnership with Children s Miracle Network, around which stores raise money for local CMN hospitals. Ace and its stores have raised more than $46 million for the nonprofit over the 20-year-old partnership. Ace dealer-owners operate more than 4,400 Ace Hardware stores in all 50 states. The company previously sponsored Little League Baseball; Ace activated the tie by refurbishing Little League ballparks and acknowledging local heroes. Current Deals: Children s Miracle Network; MLB Detroit Tigers; Mount Prospect Park District; Tennessee Aquarium. Additional Comments: Sponsors CMN out of Ace Foundation. Ranks highest in customer satisfaction among home improvement retailers for the fifth consecutive year, according to J.D. Power And Associates. Accepts proposals through www. AceHardware.com. The Home Depot The Home Depot, Inc Paces Ferry Rd., NW Atlanta, GA Trish Mueller, chief marketing officer 770/ Sponsorship/Activation Strategy: The country s largest home improvement retailer uses its title of Joey Logano s Joe Gibbs Racing NASCAR Sprint Cup Series team to maintain top-of-mind awareness and gain promotional platforms to drive retail traffic. The company is reportedly revaluating its NASCAR program as a result of the success of Jimmie Johnson, a Lowe s endorser and the only driver in NASCAR history to win five consecutive championships. Home Depot is reportedly mulling a possible replacement for Logano and may opt out of its Int l Speedway Corp. partnership after the 2011 season, sources said. Like other home improvement chains, Home Depot is increasingly using sponsorship to reach Hispanics. Case in point: The company this year signed a new partnership with the CONCACAF Gold Cup. Typically sponsors local and regional events out of regional marketing budgets. For example, Home Depot sponsors the San Antonio Stock Show & Rodeo at the behest of a regional marketing manager. The company operates more than 2,200 stores in North America, Puerto Rico and China. Current Deals: Title: Home Depot Center, Carson, Calif.; Joe Gibbs Racing NASCAR Sprint Cup Series team. Cosponsor: Atlanta Journal Constitution Peachtree Road Race; Aquarium of Niagara; Autism Speaks; Auto Club Speedway; Bank of America Atlanta Football Classic; Chicagoland Speedway; Chik-Fil-A Bowl; CONCACAF Gold Cup; Darlington Raceway; Daytona Int l Raceway; ESPN College Gameday Built by Home Depot; Georgia Aquarium; Greater Gulf State Fair; Kansas Speedway; MCAS Miramar AirShow; Michigan Int l Speedway; MLB Atlanta Braves; MLS; MLS Red Bull New York, Chivas USA, Los Angeles Galaxy and Seattle Sounders; National Cherry Blossom Festival, Washington, D.C.; NBA Atlanta Hawks; NFL Atlanta Falcons; NHL Atlanta Thrashers; San Antonio Stock Show & Rodeo; Richmond Int l Raceway; Stagecoach: California s Country Music Festival powered by Toyota; State Fair of Texas; Talladega Superspeedway, Ala.; Watkins Glen Int l.; Working Women s Survival Show, St. Louis. 2

3 Additional Comments: Suzy Deering, the former executive director of media, engagements & integration at Verizon Wireless, joined Home Depot this summer in a senior marketing position. Activates MLS with Community MVP contest that identifies MLS fans who are passionate about making a difference in their community. Dropped USOC, NASCAR, NFL and NHL In Canada in 2008 and Estimated 2010 sponsorship spend: $50 million to $55 million. Lowe s Lowe s Cos Lowe s Blvd. Mooresville, NC Tom Lamb, senior vice president of marketing and advertising 704/ Sponsorship/Activation Strategy: While the country s second-largest home improvement retailer has trimmed its portfolio over the past several years, Lowe s remains an active sponsor with a portfolio spanning NASCAR to the NCAA and college athletics. The company credits its long-running partnership with NASCAR Sprint Cup Series champion Jimmie Johnson to building a consumer database and generating incremental credit card transactions. Lowe s is placing more focus on activating NASCAR on behalf of its Kobalt private-label tool line. Kobalt will serve as primary sponsor of Johnson s NASCAR Sprint Cup Series team for more than 10 races in 2011, while the tool brand this year kicked off a multiyear title of a NASCAR Sprint Cup Series race at Las Vegas Motor Speedway. Lowe s this year inked two-year title of The Manchester Cup, a college soccer showcase in Rock Hill, S.C. The company operates more than 1,700 stores in 50 states. Current Deals: Kobalt Tools: Title: NASCAR Sprint Cup Series races, Las Vegas Motor Speedway and Phoenix Int l Raceway. Lowe s: Title: Hendrick Motorsports NASCAR Sprint Cup Series team; Lowe s Manchester Cup soccer tournament, Rock Hill, S.C. Presenting: Merlefest, Wilkesboro, N.C. Cosponsor: American Cancer Society making Strides Against Breast Cancer; Boys & Girls Clubs of America; Fiesta LatinoAmerica!, Dallas; Las Vegas Motor Speedway; MLS Chicago Fire; Muscular Dystrophy Assn.; NASCAR Hall of Fame; National Trust For Historic Preservation; Nature Conservancy; NCAA; NFL Carolina Panthers; Phoenix Int l Raceway; The Principal Charity Classic presented by Wells Fargo tour stop, West Des Moines, Iowa; Susan G. Komen for the Cure; University of Maryland Athletics; University of North Carolina at Chapel Hill Athletics; University of Southern California Athletics; University of Texas Athletics. Additional Comments: Sponsors National Park Foundation, SkillsUSA and other nonprofits out of the Lowe s Charitable and Educational Foundation. Dropped title of Lowe s Motor Speedway at the end of Estimated 2010 sponsorship spend: $40 million to $45 million. Menards Menard, Inc Menard Dr. Eau Claire, WI John Leonauskas, marketing manager 715/ Sponsorship/Activation Strategy: Third-largest home improvement chain largely focuses its sponsorship activity on NASCAR driver Paul Menard, son of company founder John Menard, Jr. The privately-held company titles Menard s Richard Childress Racing NASCAR Sprint Cup Series team as well as a Kevin Harvick Inc. NASCAR Nationwide Series team. Typically 3

4 offsets deals by bringing in retail partners. For example, the company has cosponsored its RCR NASCAR Sprint Cup Series team with Midwest Manufacturing s Mastercraft Doors. Menards operates more than 250 stores in the Midwest and Western U.S. Current Deals: Title: Kevin Harvick Racing NASCAR Nationwide Series team, Menards 200 ARCA race, Toledo, Ohio; Richard Childress Racing NASCAR Sprint Cup Series team. Presenting: ARCA Racing Series. Cosponsor: Road America, Elkhart Lake, Wisc.; Robby Gordon Motorsports NASCAR Sprint Cup Series team. Additional Comments: Menards this year renewed title of the Mendards 200 ARCA race in Toledo Speedway; the company activated the tie by selling advance discount tickets at local stores. Frequently touts weekly flier on property Web sites. Co- Pilott Motorsports Marketing & Management helps execute ties. 4

5 October 3, / CATEGORY UPDATE A Hot Category Gets Hotter: Group Dental Practices Group dental practices place more emphasis on sponsorship as a platform to build visibility and credibility. As predicted by IEG SR ( Dental Practices Also Brush Up On Sponsorship, 2/14/11), sponsorship activity on behalf of group dental practices shows no sign of slowing down. The latest entrant: Pacific Dental Services, Inc. The company this year has signed a handful of deals including the NHL Colorado Avalanche and the MLB Arizona Diamondbacks, Los Angeles Angels of Anaheim, Los Angeles Dodgers, San Diego Padres and Texas Rangers. PDS also inked a new tie with Triple-A baseball s Sacramento River Cats and is finalizing a deal with at least one other major league sports team. PDS joins other dental services that have expanded the use of sponsorship over the past year. Those include Aspen Dental Management, Inc., whose portfolio includes title of Rusty Wallace Racing s NASCAR Nationwide Series team and cosponsorship of the MLB Pittsburgh Pirates and other pro and college sports teams; and Comfort Dental, Inc., which titles the former Fiddler s Green Amphitheater in Greenwood, Colo. and cosponsors a handful of events. Further demonstrating the growing popularity of sponsorship among group dental providers, a handful of rightsholders contacted by IEG SR said they have received more interest from the category in the recent past. It s an emerging category. Pacific Dental isn t the first dental service that has reached out to us, said Lorenzo Sciarrino, account director, corporate partnerships with the Los Angeles Dodgers. Like its competitors, PDS uses sponsorship to gain top-of-mind-awareness, build credibility and acquire new customers. The company provides staff and support services to independent dentists who market their practices under the Pacific Dental brand. The company represents more than 250 dental offices in six states: Arizona, California, Colorado, New Mexico, Nevada and Texas. To demonstrate its offerings, PDS activates by playing up smiles. For example, the company this year sponsored the SmileCam at Dodgers Stadium. PDS also uses sponsorship to reach families. Case in point: The company sponsored a children s lunchbox giveaway during the Dodgers Aug. 28 home game, while it sponsored the team s SmileCam during weekend games, a period of time when the team draws a large number of families. 5

6 In addition to reaching families, the company also uses sponsorship to build relations with dentists and promote its corporate citizenship. For example, a PDS dentist threw out the first pitch earlier this year at a Arizona Diamondbacks game, while the company supported the Dodgers by making a $100 donation to the Dodgers Dream Foundation for every home victory. Laura Rod, PDS offline marketing manager, helps spearhead ties. Sources Pacific Dental Services, Inc., Tel: 714/ Los Angeles Dodgers, Tel: 323/

7 Category Update October 3, / EMERGING CATEGORY Affresh To Freshen Up Endurance Sports Endurance sports properties should put Affresh and other washing machine cleaners on their prospect list. Looking to reach consumers who produce a large amount of sweaty, smelly clothes, Whirlpool Corp. ( Dogleg Right: The Strategy Behind KitchenAid s New Golf Ties, 7/19/10) is partnering with marathons and triathlons on behalf of its four-year-old Affresh washing machine cleaner. The company thus far has inked two new deals, both of which are located within several hundred miles of its Benton Harbor, Mich. headquarters: Title of the July 7 Ironman 70.3 in Muncie, Ind. and a multiyear partnership with the Oct. 9 Bank of America Chicago Marathon. The appliance giant is using the ties to reach runners, a demographic that understands the importance of committing to a long-term schedule, whether training or cleaning. Affresh helps reduce or remove odor-causing residue that can accumulate in washing machines, especially those that are not cleaned or maintained on a regular basis, according to the company. I understand the time commitment any type of training takes. Whether the end goal is a marathon or a run around the neighborhood, sticking to a schedule can be tough, said Michael Colston, Affresh brand manager, in a statement. The sponsorships also provide access to an affluent audience with a discretionary budget for non-essential cleaning products. Whirlpool activates with on-site brand ambassadors who talk up the product and the importance of washing machine cleaning. It also uses the ties to sample product. At A Glance: Whirlpool Corp. Key sponsorship decision-maker Deborah O Connor, senior manager of brand experience, KitchenAid Current sponsorships KitchenAid Fine Cooking Epicurean Classic (presenting) Food Network New York City Wine & Food Festival presented by Food & Wine and Travel + Leisure Food Network South Beach Wine & Food Festival presented by Food & Wine Food & Wine Classic in Aspen PGA of America Senior PGA Championship (presenting) Susan G. Komen for the Cure Whirlpool Habitat For Humanity United Way of America Whirlpool Steelhead 70.3 Triathlon presented by Pizza Hut 7

8 Whirlpool will leverage the Chicago Marathon with a sweeps dangling a Maytag Bravo washing machine and dryer to draw traffic to its booth. It also will award prizes to consumers who check in at the booth via Foursquare. Other companies that market washing machine cleaners include The Clorox Co. and The Procter & Gamble Co. Clorox markets its cleaner under its eponymous brand, while P&G markets its product as a Tide line extension. Source Whirlpool Corp., Tel: 269/

9 Category Update October 3, / OPINION Is Social Media The Greatest Ambush Marketing Technique Ever? Editorial Director Jim Andrews latest observations, insights and advice. My recent blog post ( IEG/Sponsorship-Blogs/Jim-Andrews/September-2011/ How-Do-You-Value-Social-Media-Benefits-in-a-Sponso.aspx) on valuing social media as a sponsorship benefit prompted a thought-provoking response from my old pal Dan Schorr of Start2Finish Marketing. In addition to the intangible value of social media discussed in the blog, Dan raised the idea of social media as an ambush marketing tool, which is really intriguing. Here s the outline of just one way that social media could be used to imply a company has an official relationship with a property and divert attention from another company s sponsorship. Social media makes it much easier to create and maintain a long-term relationship with fans or other audiences an affinity that could be stretched beyond the length of an official sponsorship. Consider an automaker that has established itself as a sponsor in tennis through high-level partnerships with key tournaments and popular activation programs that have allowed it to build a targeted database of tennis-loving prospects from its key customer demographic. In the pre-digital age, if the company dropped its sponsorships it kept the contacts it had collected, but it was difficult to maintain a relevant dialogue without the assets and activation programs that came with its deals. But in the Internet era, we re no longer talking about names sitting in a database waiting for a direct mail piece. Today, the auto company can use its involvement with tennis to provide relevant content and build an online community of fans that it can continue to develop even if it doesn t renew its tournament deals. (It will be more difficult without the benefits of sponsorship, but nowhere near impossible.) This scenario crosses into ambush territory when another automaker comes along and takes over the event sponsorships. The original sponsor, with its history of involvement and its ongoing conversation with fans is still hanging around the space, making it harder for the newcomer to gain its own foothold. From the property s perspective, there is really nothing a rightsholder can do to prevent a savvy company from maintaining an ongoing relationship with the people it met through its sponsorship. Providing access to a targeted audience is a key benefit of sponsorship, but unlike the rights to use a property s name or have a display space at a venue, it is not one that automatically ends when the contract does. This has always been the case, but social and digital media allow the sponsor to exploit it like never before. 9