With the NBA regular season about to tip off, it’s time to see how the return of LeBron to Cleeland will have an impact on the city of Cleveland. I’ll spare you the parallels between the Browns leaving and crushing fans, only to return, and, well, yeah.
When LeBron left Cleveland, passionate fans burned jersey’s in the street, penned nastygrams, and vowed eternal damnation on him. Now, I anticipatea flood of outpouring and support akin to the “he loves me again” attitude of teenage girls (yes, I’ve seen about 1,000 such references on Twitter already). Miraculously though, initial indications are that he will be even more popular than when he left.
I guess the question in my mind is, what does this mean for LeBron the brand (as an aside, I think the idea of athletes/actors/etc. becoming brands is fascinating)? When he announced he was coming back fans raced to create shirts with his new number 6, which he then changed back to 23. More shirts, more sales, more dollars. But that’s probably just a drop in the bucket. The below link from CNBC looks at some widely varying estimates of what LeBron will mean to the economy of Cleveland.
LeBron is one of the most interesting athletes from a sponsorship perspective, and will hopefully be the subject of a few upcoming blog posts as I attempt to look at the sponsored-athlete approach for companies.
After a long absence, the Friday Link of the Day is back. I would say that it’s the most popular feature on the blog, but that would ignore the fact that it is arguably the only feature, and, if my Google Analytics are correct, I’m basically talking to myself.
Anyway…in June Nike announced the Vapor Trout baseball cleat, named after superstar Mike Trout. The signature shoe represents a new level for Mike Trout; a level reserved for only the most elite of athletes. Nike is an expert at collaborating with the top players in each sport to work together on the development of equipment and co-promote it with the player. Think of the Air Jordan, the Tiger Woods line of golf equipment, etc. The link looks at the entire collection, but also goes into the work that Nike does with the athlete to get feedback and buy-in, both of which make the shoes even more sought after by the general public. One can only imagine how many high school and legion players will be asking for the $140 Vapor Trouts before baseball next season.
As I was writing my earlier post on naming rights, I littered it with caveats and assertions that the thoughts were simply my opinion, and that I hadn’t read or looked at any literature regarding naming rights. But, while I may think they are a bad idea, that doesn’t mean they are actually a bad idea. Oftentimes hypothesis can be proved wrong.
According to an article published for USA Today Sports, those companies that own naming rights have outperformed the S&P 500 by a significant margin. In fact, according to the article, “since the beginning of 1996, when the naming rights started to take off and there were 15 naming rights companies (NRCs), through the August 19, 2014 (when there are currently 68 NRCs) that index is up 580%, versus the 222% increase in the S&P 500. The NRC index beat the market in 13 of the 19 calendar years (including 2013)…”.
That seems like pretty solid evidence right there. Stocks are up, so consumers can’t be that disinterested or disenfranchised. Obviously it’s not hurting the brands, right? Not necessarily. This only compares the companies to a broad-based index, and not against their peer-groups. For example, AT&T could be up 50%, but Verizon is up 100% (though both have naming rights).
Beyond that, I see two holes in the analysis. First, due to the small size of the sample, it is susceptible to outliers. Two examples stand out. In 1999, Qualcomm (San Diego Chargers), gained 2600% which the article notes, and shows that if that is moved, the compound growth would move to 4.3% for NRCs and 2.1% for the broader market. Then, in 2001, McAfee grew 517% in one year, again skewing the metrics. In addition, the article claims that we remember the companies that had naming rights that went bankrupt at a greater magnitude than their impact. While this is true from a numbers perspective (4 companies going bankrupt can be balanced by one company that grows 500%), it’s worth noting that there have been 12 different companies that have gone bankrupt in the past 18 years that had naming rights at the time of bankruptcy.
The second hole in this basic analysis is that it does not actually look at the impact of naming rights, but rather general business performance. Again, it could be argued that if there was a negative response to the naming rights, then performance wouldn’t be as strong. This does have some validity. But, I wanted to see if there was any study that looked directly at the impact of consumer perceptions on the brand as this is what naming rights are supposed to build. And I found a study by Woisetschläger, et al due to be published in the European Journal of Marketing that looks at fan resistance to naming rights.
According to the article, companies purchase naming rights for a variety of reasons. These include “the pursuit of community citizenship and goodwill as local residents approve of the corporation’s financial effort to provide a state-of-the-art facility in their region; as well as pursuit of increases in sales or market share (McCarthy and Irwin 2000). In addition, firms try to raise their brand awareness and enhance their brand image by associating themselves with well-known sports teams(DeSchriver and Jensen 2003).” There are studies that indicate that “naming right sponsorships contribute positively to brand awareness (Quester 1997), and stock prices of the sponsor (Clark, Cornwell,and Pruitt 2002).”
However, there are also studies that indicate that naming rights can cause negative reactions in fans. In this paper, the authors looked at the impact on fans of the sale of naming rights to a large soccer stadium in Germany. The sale of the naming rights helped the club survive bankruptcy, but caused a stadium that had used a non-corporate name since the ’70s to change to a corporate sponsored one. The authors found that “brand attitude and word-of-mouth intention are significantly lower when fans are able to recall the sponsor correctly but refuse to use the new name (i.e., the sponsor’s name) for the stadium.” Additionally, the recognize that from the perspectives of the sponsor, these negative effects an be significant (though they do not indicate what that impact might be.
So, it seems that there is a bit of a conflict. We see good financial performance in one report, and indications that there are in fact positive brand attitudes, those this most recent paper seems to indicate otherwise. Reading into this, I see two reasons for this conflict.
First, the stadium in question in the study had long had a regionally specific name. Think Dodger Stadium in Los Angeles or Fenway Park in Boston. These names are rooted in the tradition of the team and the fan base. Changing the name can have a significant impact on the people that respect that tradition. Imagine the blowback if suddenly the Red Sox said they were changing the name of the stadium to Amgen Stadium. There may be riots in the street. And while, in the case of the stadium in the study (Westfalenstadion, home of the Borussia Dortmund for those interested), the sale of the naming rights allowed the club to avoid bankruptcy, fans saw it as selling a piece of tradition, and as such, rebelled. It is anticipated that for new stadiums, this impact is minimized.
Second, is a key word throughout the paper: “fan”. This gets into some social identity areas, but in essence the “fan” is going to be more passionate than the casual observer. Fans identify with the team, enthusiastically support the team, and therefore feel violated when it becomes to “corporate”. Perhaps the companies that purchase naming rights are willing to overlook what they see as a vocal minority in the hopes of broad exposure to the casual observer. According to Yahoo! Sports, the regular season game between the Seahawks and Cowboys drew over 30 million viewers. Every time there was an aerial shot, the audience was exposed to the CenturyLink logo. The commentators repeatedly mentioned being at CenturyLink Field. The impressions were enormous for the company, and probably far outweighed those fans that resistance against corporate sponsorship.
Of course, the irony of naming rights going for the broader audience is that the point of sponsorship is to try and become part of the in-crowd of “fans”. These people that socially identify with the team should be more open to appropriate sponsors, and therefore more likely to react favorably toward sponsor brands and sponsor products. The question is, would any negative repercussions felt by the “fans” of a team (say Borussia Dortmund) be outweighed by the positive brand associations from a wider, more general population?
At this point, I would say that the jury is still out, but there is an interesting case to be made in both directions.
As someone that is very interested in sponsorships, a marketing approach that is done largely to increase brand awareness, why then would I be opposed to stadium naming rights as I claim in this past post? Because other than stroking the egos of shareholders and senior management, I don’t think they really achieve the desired effect. I will caveat this by saying that as I write this, I have not read any literature/research/etc. on the topic, though it is on my to do list, and could prove everything I’m about to say wrong…
My assumption, again without having done a deep dive into the topic, is that the reason for naming rights is to promote the brand, and tie it to something positive. Then, as a game is broadcast or people talk about it, the name works itself into the subconscious and allows consumers to develop positive brand associations. These positive brand associations then manifest themselves when the consumer goes to make a purchase.
It all seems to make sense. However, my argument against naming rights is that the consumers don’t realize what the company is or does, or that there isn’t a fit with corporate sponsor. Or that, in the case of legacy names, the consumer doesn’t accept the name. Let’s take a few of the stadiums I know best as examples.
In Seattle the name of the baseball stadium is Safeco Field. If I interviewed 100 people in Seattle, I feel like 50% might know that Safeco is an insurance company (or how it ties in to the Mariners). The football stadium, formerly known as Seahawks Stadium, is now CenturyLink field (quickly shortened to just the Clink). How many people know this is an internet service provider? Again, without looking at the actual numbers, I’m going off a gut feeling, but based on my time in Seattle, none of these seem to have built the positive brand image for the company…rather it is focused on the venue and the team.
These ones have a chance though as the names pretty much came with the stadiums, and so they have had that brand building for awhile. The ones that are a challenge are the ones tied to stadiums that had legacy names. In Denver, many people know of Mile High Stadium. It’s always been Mile High, and will always be Mile High, despite the fact that it was once Invesco Field, and is now Sports Authority Field. In Cleveland, the baseball stadium is lovingly referred to as The Jake, despite the fact that it is actually Progressive Field. People still call Quicken Loans Arena the Gund. When you have a stadium that has such an entrenched name, getting people to change what they are calling it in favor of corporate name can be difficult, and could backfire.
Now, I do understand that another reason that companies may do it is the opportunity for other exposure. Ad space tied to the naming rights for in-stadium, on television, and other sponsorships could add exposure that was otherwise not possible. And for some, with a strong fit, it works (think Coors Field in Denver or Busch Stadium in St. Louis). But from where I sit, which is usually in the 300 level, stadium naming rights hardly seem worth the millions of dollars in investment, unless the goal is simply to have a company’s name in lights.
Hello blog. It’s been awhile. How’ve you been? Oh, and my readers (assuming that’s still plural). How are you doing?
Since June 20, I really haven’t written much. A couple links of the day. An outsider’s view of Cleveland. And, well, that’s about it. Not much in 3 months. It’s not like anything big has happened since then. Nothing like a World Cup, NBA Finals and NFL controversy that would probably make for good blog material for someone that likes to write about sponsorships. No interesting ads or interesting papers have been published, I’m sure. I mean it’s the summer!
Sigh…nothing like life getting in the way a little bit. But, rest assured for those of you that have noticed the lapse, I’m back in the saddle. And you know this because I’m writing a very typical, hey I’ve been gone for awhile, but I’m back post that I always write before I do anything of substance. It’s kind of my way to get myself back into the flow and get myself to start writing again.
So, the plan is to ease back in this week with a link tomorrow, and then start working through some of the draft posts I’ve started and writing a couple times a week. Excited aren’t you? I can see the giddiness. Wait, maybe that’s my reflection…
Grab a cup of coffee, kick back, and give yourself a little while. This will probably be the longest post seen here on Deck on Marketing, but with any luck, it will also be the best. Given the latest events in Cleveland, the fact that my time here is quickly coming to an end, and the request of one friend (and 5 others that agreed to read this), now seemed like a great time to offer a view of what it’s like to be in Cleveland from someone that doesn’t have the bias of growing up here.
More than two and a half years ago, I found myself headed to Cleveland. It was never on the map, never one of those places I would pick to live. By my estimation, it was a smaller, depressed, midwest city that lacked all of the things that I liked. It didn’t have the pull that took me to Seattle, nor the appeal of any number of cities that I visited that would elicit a “you know, I could live here for awhile” thought. But, by some strange combination of job opportunity, and needing to get out of Dodge for a little while, I found all of my possessions packed up and shipped out to the city that many loving refer to as “The Mistake on the Lake”.
In the two and a half years that I have been here, I have had the opportunity to learn more about the city and the people and the culture. And to sum it up succinctly, Cleveland doesn’t rock; but it’s not as bad as you might think. Not unexpectedly, Cleveland is that type of place that does a terrible job of talking about what it does right, but let’s all the bad out unabated. When people think about Cleveland, often the first thought is that this is the place where the Cuyahoga River caught on fire…a place that is such a mess that a RIVER caught on FIRE! (And for the record, it, along with most rivers in the Great Lakes region, caught fire multiple times before the infamous 1969 fire that provided the iconic photos that finally changed the environmental approaches.) There is the Cleveland tourism video that made the rounds on YouTube, and was sent to me a half dozen times before I left. There was the story about the women held hostage for more than 10 years, but instead of being a happy story that they were rescued, it was a sad, of course this happens in Cleveland moment. And for those that follow sports, you have the Browns ripping the hearts out of the fans, only to come back and not only not perform, but have the owner indicted on corruption charges. There was the Decision. And then there are the Indians who haven’t won anything since 1947.
Needless to say, my expectations were set incredibly low. But over the course of two and a half years, there are some things I have been pleasantly surprised by. Cleveland boasts the second largest theater complex outside of New York City (seriously!). There is a small, but burgeoning food culture, driven largely by celebrity chef Michael Symon, but that also features multiple James Beard nominated chefs. There are wonderful craft brewers around, like Great Lakes Brewing, that could give some other regions a run for their money. Cultural events and festivals fill up the summer calendar, highlighted by the Ingenuity Fest every September. Two world-class medical institutions call Cleveland home, and attract some of the best physicians in the country. And the cost of living is incredibly low. Nestled on the shores of Lake Erie, with the Cuyahoga River dividing east from west, Cleveland definitely has some positive things going for it.
But, these are a few shining beacons in an otherwise sad and depressed city. That Midwest Hospitality you’ve heard of? Not in Cleveland. Granted, I didn’t walk into the city with arms wide open, but I have never truly felt welcome. It’s the type of place where it’s everyone for themselves, and “if you aren’t from here, you don’t get it”. It’s also the type of place that has this unexplained feeling of entitlement, despite what LeBron said in his letter. Here people happily write down “Medicaid” as their insurance provider, but act offended if you ask for a $3 co-pay. People seem ok with the fact that they are on food stamps and in Section 8 housing. They think they need a higher minimum wage because it’s hard taking care of 3 kids. It’s almost like they think that they stuck around and so they deserve to be taken care of, whether or not they are contributing. At the top levels, the city is rife with corruption, everybody trying to get theirs. It got so bad that the FBI recently concluded a five-year investigation that lead to 26 arrests of city and county officials.
The city itself seems to yearn for the old days, stubbornly thinking that the manufacturing that once made Cleveland a boom-town, will once again reappear despite the fact that the city is slowly dying. Cleveland was once home to more than 1 million residents; now there are fewer than 300,000. People have left for the suburbs or for jobs in other places, leaving behind abandoned and decrepit buildings that don’t just dot the landscape, they make up the landscape. Blighted housing that is beyond repair takes up large swaths of most neighborhoods, driving property values down and crime up. The urban core is represented by a population where only 19% of people have a college degree (actually up from 6% 20 years ago). The city roads are in desperate need of repair. The school system is in shambles as the city asks for levies to buoy the declining property taxes, only to close multiple schools a year. There are times when I felt safer walking the streets of New York at night than I do in my car in Cleveland. For every urban oasis like the small neighborhood of Tremont, there are vast stretches of sketchy, abandoned and decrepit streets.
Of course, this isn’t meant to be a bash on Cleveland. This is supposed to be an essay about an outsider’s view on what it’s like to be in Cleveland right now (and only 1,000 words to get to that point!) Up until a few weeks ago, the attitude in Cleveland was the attitude that I’ve seen since I’ve been here. Down-trodden. Stand-offish. There are a few that of course take the sunny view, saying it’s not that bad. But overall it has felt like a town with a chip on its shoulder just for the sake of having a chip. In fact, the city’s regional marketing slogan is described as “unapologetically Cleveland”. Now, following the drafting of Johnny Manziel, winning (not sure that’s the right word) the Republican National Convention, and having LeBron come home, the attitude has shifted. From a dark pessimism to an almost unbridled optimism. The feeling of “Cleveland’s time is now” seems to be radiating from the urban center. An attempt to revitalize the core has now received an extra boost of excitement. It’s a stark shift from the “we’ll somehow screw this up” attitude that seems to permeate everything in the city.
Since I have been in Cleveland, this week represents the high point of enthusiasm, optimism, and every other positive emotion that has been lacking from the area. But (there’s that word again), in my outsider’s perspective, it seems like the pendulum might have swung a little too far. Instead of being cautiously optimistic, it feels like it is wide open optimism, the type of optimism that sets people up for failure. It’s like the high school girl that gets dumped by a guy for the prettier girl, only to welcome him back with arms wide open because she always knew he’d come back. And most of the optimism is based on two pieces of sports-related good news. While there is civic pride and the opportunity to generate money from the sports franchises, theses pieces of good news are not going to fix Cleveland. Sure, they are going to bring some attention, just like when LeBron was here the first time. Just like when the Browns came back (and fleeced the city with a ridiculous stadium deal and a terrible franchise). But that attention isn’t fixing roads and schools and corruption. That type of attention isn’t getting parks and bike trails and infrastructure built. That type of attention isn’t making Cleveland a place people want to live. It’s making Cleveland a place people want to stop by, visit, and get the heck out.
Now, the Republican National Convention offers a real opportunity for change, if it is handled right. It’s an opportunity to showcase the challenges that people face every day, and to possibly turn the ship. It will definitely be interesting as the GOP has dropped their presidential convention smack in the middle of the bluest part of Ohio; in an area where the population represents everything Republicans think is wrong with the system, while population embraces the system to its fullest. It’s actually something I am going to miss seeing live, just for the potential drama that it may entail.
I definitely don’t wish anything ill on the city. This is the place where I met my future wife, figured out what I want to do when I grow up, and got myself in the best shape of my life. It’s a place where I would never consider living long term, but a place that hasn’t been as bad as I had originally though. And I will miss some things from here like Mitchell’s Ice Cream, the Taste of Tremont, the vendors at the Shaker Square Market, and the fact that I can buy a house with a big back yard for less than $100k.
And I do truly want to see Cleveland pick itself up. I’m happy to see the city get a little bit of good news, even if it is predominantly sports related (though I am dreading the 24/7 coverage of Manziel and LeBron). But I just can’t help but feel like the first time Manziel blows a game (or gets arrested) or LeBron can’t get the Cavs out of the second round or something happens with the convention, that there will be this collective “here we go again” feeling that brings the city to its knees once again. The optimism isn’t built on anything strong and solid. Maybe that’s my pessimism shining through; pessimism that has been built over the last two and a half years. Until Cleveland can start attracting employers, counteracting the brain drain in the city, develop world-class educational institutions to go with the world-class hospitals, and keep those young professional in the city and out of the suburbs, the city will continue to languish and pine for the heyday and resurrection of the industrial revolution.
But, hey, what do I know? I’m just an outsider in Cleveland. Someone that hasn’t been through the trials and tribulations. Someone that thinks that world expands beyond the borders of the state. Who am I to rain on the parade? And that’s a good point. This is a time of happiness for Cleveland, and a chance for people to smile and feel like the world isn’t punching them in the gut. Heaven knows that they need this feeling, if even for a moment.
With the World Cup now fully underway, and two powerhouses already eliminated, it seemed like a good time to talk about sponsorship and advertising at the World Cup. The thing is even though I started a post, I’ve only watched about 60 minutes of actual game time this year. This owes to the challenges of being at work for many of the games (where my internet connection is painfully slow) and being a cord cutter where the only access I have is through .GIFs, Vine videos, and Univision. And while I know these are fairly lame challenges for someone that aspires to be a student, neigh, an expert when it comes to sponsorships (especially around sports), they have been my limiting factor. But I do promise, that when World Cup 2018 rolls around, I will be glued to the TV, analyzing some aspect or another of sponsorships, and writing something significantly better.
Until then, you are just going to have to take a look at what Marketplace has to say about sponsorships and advertising. No Budweiser puppies, or Beats by Dre commercials to be had. Just some good, old fashion, sponsorship with the hopes that lengthy on-screen time translates to favorable impressions and ultimately sales.
With the NBA Finals (rapidly) winding down, I figured I had better get this link up now before it is rendered irrelevant. While I am not a big believer in stadium naming rights (I personally don’t think they are worth anything more than stoking of a company’s ego when it comes to a business’s bottom line), I do think that the post is an interesting look at sponsorships, and the hoped for values by the marketers that purchase them.
Last Friday I had the opportunity to attend my first baseball game of the year; an interleague tilt between the Rockies and the Indians. It was probably my fifth trip to Progressive Field, still loving known as the Jake to baseball purists (which is a naming rights/sponsorship issue, but beyond this post). As anyone that has been to a baseball game before knows, there are a myriad of advertisements, logos, etc. around the ballpark, each vying for some sort of attention and retention. The theory is that through association with the Indians, consumers will look on the brand more favorably which will have an effect on purchase behavior. The question is, how many of these impressions are retained?
Now, as someone interested in sponsorships, I tried to make a conscious effort to note and remember as many as I possibly could. Here’s my list:
- Cleveland Clinic
- University Hospitals
- Progressive Insurance
- Mitchell’s Ice Cream
- Sugardale Hotdogs
- Pinzone’s Sausages
- Great Lakes Brewery
- Fat Tire Brewery
- Samuel Adams
That’s honestly it. I think you see a trend. Most of it was driven by the fact that there is only one place to get good beer. I do remember that there was a dental group sponsoring the “Smile Cam”, and there was a wine brand that I think was called Zipz, but I don’t remember exactly.
So, what happened? If I was trying to remember brands, and that’s all I could come up with, doesn’t it mean there are dozens of companies wasting money? Not necessarily. While it’s true that I, like many people, go to the games to watch the teams or to socialize, it doesn’t mean that the efforts don’t count. There is something to be said for subtle cues that we recognize subconsciously. Perhaps with aided recall I would be able to name a lot more. Or if I go to buy something, that subconscious recognition will help me make a decision. There is also the impact of repetition. This was my first game of the season and fifth all time. As a season ticket holder, I would be exposed to the sponsors much more frequently. And lastly, the sponsorships aren’t necessarily just for the fans in the stands. In fact some of them are invisible to the majority of seats. These are sponsorships that are for the much larger TV audiences.
Ultimately the real impact of sponsorship will be seen by purchase behavior and the relationship that is developed and fostered between the brand and the consumer. In many cases, it isn’t about the ability to have unaided recall of a list of brands. This doesn’t make me any more likely to buy anything. It just means I can memorize a lot of things. It’s about building a positive, maybe even subconscious, association. Did it work? Well, it’s going to take a lot more than a one game, self-introspective post to figure that out. Maybe someone should study that…
As more and more purchasing moves out of the stores and onto the internet, decisions marketers are making have to evolve as well. While on the cover, it might make sense to showcase all of the available options, colors, configurations of products (trying to recreate the store experience online), research shows this might not be the best approach. This great article from the Stanford Graduate School of Business shows that more (images in this case) isn’t always better.