No, Sponsorships Are Sponsorships

To answer my last post: I see no obvious difference in “level of waste” between the naming rights for the new Mets stadium and the sponsorship of the New York City Thanksgiving Day Parade.

Both a stadium and a parade provide public benefit. The costs of providing each can be partially defrayed by allowing one or more companies to add their name(s) to it. And either can be wasteful or efficient, provide more or less equal compensation to those employed by them, and so on.

The heart of understanding this NALM misjudgment is to realize that, since a stadium alone does not entertain, it’s easy to underestimate its communications impact. But sentimentality makes this particular comparison more uneven: Macy’s has been sponsoring the Thanksgiving Day Parade for so long that most people never consider the possibility of another company doing it, or of the parade not being sponsored at all. (I remember being pretty annoyed when Met Life took over the naming rights for what till then was the Pan Am building.)

I doubt that Citicorp will hold the naming rights to the Mets stadium 85 years from now, but if it does, it will seem very strange if another company takes it over. We can compare the marketing effect or degree of public benefit of sponsoring a parade vs. naming a stadium some other time, but it’s clear that they’re of a piece and not particularly different in principle.

There Are Sponsorships and There Are Sponsorships?

Happy Thanksgiving to all! Be safe, relaxed, and joyful.

My marketing note for the day is just this: If Citicorp’s naming rights for the Mets stadium are wasteful, what about Macy’s sponsorship of the New York Thankgiving Day parade? Where, exactly, is the difference? If you’re thinking that, in your bones, you know the Macy’s Thankgiving Day Parade is different, I advise caution.

Hint: Is a parade more or less of a public service than a sports stadium?

Marketing ≠ Victim

Marketers often complain that marketing gets unfairly punished in tough business or economic times. “Now more than ever is the time to invest in marketing, and keep sales up!” is the usual refrain. Whether or not this makes any sense, though, depends on whether you see marketing as a support function or as a generating function.

Actually, let me back up a sec and let you know what I mean by the term marketing, at least for the purposes of this blog. This word has a surprisingly broad application around the world and even around the block. What I mean by “marketing,” in this blog at least, is those aspects of selling that do not involve account work, i.e., the development of sales relationships. (More on this some other time.)

Anyway, the Internet particularly has severely altered how this function plays itself out. Prior to the rise of the Internet, the only non-account sales work was essentially mass communication—messages being distributed unchanged to hundreds, thousands, millions of potential buyers. Marketing was and is still generally seen as supplemental to the rest of sales (the account work) because without marketing, you could still imagine account work going on.

Let’s say you were a packaged-goods company in 1990, the beginning of the Bush I recession. Marketing creates your public ads (outdoor, TV, wherever), gets your products placed in movies and on shows, creates in-store displays, puts on publicity events—and also supports your salespeople by providing them with information sheets, brochures, presentations, etc. they can show distributors in order to develop sales. Well, everyone loves all the ads, placements, and so forth, but they only contribute to revenue in a kind of amorphous, tough-to-measure way; if you suddenly are looking at a drop of 30% in sales because of the rough economy, it’s easy to say to imagine doing without them. As long as you have in-store displays and your salespeople are armed with materials, you can get your product on the shelves and sold.

Thus for you, packaged-goods company circa 1988, marketing is pretty much a support function. It was difficult (if not impossible) to quantify the return on your, say, $10 million investment in advertising. Did this create $20 or $200 million in additional sales? Who knows? There were metrics to collect and research you could do—Dell Computer mastered this in the 1990’s to reach its dominant position of today—but in the end there was always a little horse-sense and faith that went into understanding the return on a marketing investment.

This is still true to a greater degree than anyone will admit. But the Internet has created so many ways for marketing actually to generate revenue directly, that it can actually become a bedrock company investment that can’t be cut. Or more accurately, parts of marketing can become so.

This was foreshadowed by the catalog companies before the Internet came along. In a recession they still mailed catalogs, because if they didn’t they gave no one any reason to buy. What are you going to do if you need new shirts, check your bookshelf for last year’s Land’s End catalog? No, you expect one in the mail or find a recent one in your catalog pile.

Today there are hundreds of electronic avenues supplementing the SCRW ways that marketing leads directly to revenue. E-mail, SEM, Web promotions, banner ads, and so forth all can put people on the path to buying, and using these programs the marketer can say, “In the fourth quarter we spent $2.00 per member acquisition, and made an average of $10.00 revenue from all members and $4.00 from new members.” In this scenario, in a downturn, marketing may say that reducing the marketing budget is equivalent to reducing gross profits.

This isn’t a perfect argument because if there are less sales to be had out there, you can’t keep your marketing investment level the same unless you’re taking advantage of the weakness of rivals to gain market share (which has nothing to do with a recession). But can you see how, once marketing can be cast as a “generating” instead of a “support” function, its essential role even in a downturn becomes obvious?

Why I’m Here

I’ve created this blog because marketing is likely to take a real hit over the next few years as an endeavor and as an industry—as marketing always seems to when times are tough. So I want to sing marketing’s praises, to counteract its cutbacks as much as possible, and give anyone who cares to listen arguments and ammunition to keep marketing going.

Naming Rights ≠ Waste

There was a lovely posting at Talking Points Memo yesterday with the NALM subtext that naming stadiums after companies is bad; wasteful.

The post’s topic was that Citicorp just got a ton more money from the government in order to stay afloat, and yet it’s still spending $400 million on naming rights at the new New York Mets stadium (which will be called Citi Field). Rachel Maddow also had a segment on this on last night’s show.

The disdain journalists can have for the sources of their daily bread can sometimes amaze a marketer who’s worked in media. I understand the need for distance from sponsors and advertisers, certainly; this distance enables integrity. And I rather admire those who bite the hand that feeds in the name of integrity—since sponsors and advertisers, including multi-billion-dollar banks on the dole from the Feds, support the marketing and media industries that pay most journalist’s salaries (even Blogads-supported journalists).

But these guys shouldn’t show such disrespect for an entire industry, in this case sports marketing, as to assume ipso facto that naming rights are so wasteful that no company receiving taxpayer money should be allowed to spend money on them.

Look, Citicorp is spending $400 million for these rights, which they will have for 20 years. $20 million a year. Let’s forget for the moment that some of this $20 million a year will go to employ people—that’s a complicated and I think ultimately specious argument.

No, the point of marketing is to make extra money by investing in it. Having the stadium of one of the best-known teams in the U.S. named after your company means that that name will be repeated over and over again, on TV, on the radio, in sports articles, on the train, in peoples homes, and a thousand other places. Will frequently hearing, reading, and thinking the word “Citi” cause consumers and businesspeople to go to Citicorp more often, enough so that the bank will gain more than $20 million a year in additional revenue? I don’t know, but it doesn’t sound outlandish to me; far from it.

Junkets for losers, on the other hand—now those are wasteful. Just a lot less expensive (usually).

→ Update: My buddy SK points out to me that it’s actually Citicorp, not Citibank, naming the stadium. So I’ve corrected the above.