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Why We Said NO to Sochi

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As many of you may know, Performance Research founders Jed Pearsall and Bill Doyle have been consistently attending & analyzing the on-site activities at Olympic Games for over 30 years.  In fact, Jed’s first Olympic event was “Miracle on Ice”- the legendary USA vs. USSR hockey game held during the 1980 Lake Placid Olympic Winter Games, where Jed’s Mom bought the tickets from a sidewalk scalper for just $25 each. 

Since Lake Placid, Jed has attended 13 out of the last 15 Olympic Games (Winter & Summer), with Doyle attending eight of his own.  This bi-annual pilgrimage has been a mix of business and inspiration, allowing us to provide observations and insights to sponsors worldwide, while also being reminded of how lucky we are to work in such a fascinating industry.

However, starting with the controversial and antagonistic laws against gay rights propaganda passed by the Russian government, we both felt we could not, in clear conscience, attend these Sochi Games.

Now, following weeks of reports of possible terrorism, U.S. Department of State warnings, reports of the near certainty of computer hacking against any and all devices brought into the country, and most recently the U.S. Department of Homeland Security bulletins to airlines warning of the potential threat of explosive materials being contained in toothpaste tubes, we are convinced more than ever that we made the right choice.   

Apparently we are not alone–  just yesterday TMZ reported that AB-InBev is not hosting its traditional “Club Bud” party at the Olympics, suggesting that the threat of terrorism is just too large even for corporate America.

While we are disappointed to not attend the Games, we are proud of our integrity that drove the decision.  And, we will always question the rationale of the IOC (especially when we could have been headed to competing bid city Salzburg, Austria right now instead of staying away from Sochi).  So for this Olympic Winter Games, for the first time in nearly three decades, you will be reading Performance Research updates (now tweets) written from the viewpoint of our couch instead of from the bleachers.

See you in Brazil!

More Links:

http://www.cnn.com/2014/02/06/world/europe/russia-sochi-winter-olympics/

http://abcnews.go.com/blogs/headlines/2014/02/sochi-visitors-report-hotel-horrors-dangerous-conditions/

http://www.globalpost.com/dispatch/news/regions/europe/russia/140203/6-openly-gay-athletes-sochi-olympics-russia

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NASCAR seeks new partner for its B-level series

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Ricky Stenhouse Jr. will be sporting this new paint scheme powered by Nationwide for his 2014 Sprint Cup debut.

With Nationwide Insurance announcing that it will no longer continue its entitlement partnership with NASCAR’s B-level series, the nation’s top motorsports organization will have to find a new company that is willing to be the one of the major faces of a sport who’s interest has been steadily declining in recent years.

The decision by Nationwide to abandon its sponsorship wasn’t necessarily driven by poor performance. They have actually chosen to increase its overall investment in NASCAR sponsorships by increasing exposure on Sundays, where the fan base is about twice the size of its current Saturday series. Nationwide will be sponsoring up and coming Sprint Cup driver and two-time Nationwide champion Ricky Stenhouse Jr., continuing its TV ad campaigns featuring select Sprint Cup drivers, all while increasing its online media and good will efforts.

For Nationwide, this decision seems like a no-brainer. Several studies developed by Performance Research indicate that there are solid returns to be made from an increased commitment to NASCAR’s top series. Nationwide’s longstanding relationship with NASCAR and its fans acts as a testament to these findings. With that being said, who will be willing to step into Nationwide’s shoes when the sport has been surrounded by so much controversy lately?

One can’t deny the sheer amount of people that consider themselves NASCAR die hards. On average, the Nationwide Series has pulled in about 1.7 million viewers throughout the 2013 season. While these numbers are down from last season, 1.7 million viewers is still a great number to have on a weekly basis over a 10 month season. However, one has to be wary when you see the fact that NASCAR’s ratings have been on a steady decline since 2005, sinking to their lowest level in 10 years

Some consider this downturn in recent interest as a direct result of a 2011 rules change which restricts drivers to only earn points towards one series per season. This means the big time Sprint Cup names that typically draw in fans to the Nationwide Series are no longer a key part of the action each week. Given the one-two punch of a decline in ratings and fewer big name drivers, who knows how long it will take the series to gain traction with its fans again.

And what about the issue of integrity?  The recent allegation of race manipulation against the Michael Waltrip Racing team has seriously damaged the competitive spirit of the sport and may spell the end of MWR. NAPA Autoparts has already pulled their sponsorship, with more sponsors waiting until the dust settles at the end of the season to decide if they are willing to continue their efforts. This wasn’t the first time MWR has been caught cheating either… Anyone remember the fuel tampering scandal of 2007?

From the outside looking in, one has to wonder how much of this continues to go unnoticed. While the organizing authority has enforced strict penalties on the team involved in the latest scandal, nothing may be able to make up for the damage done to the public’s perception of the sport.

This news comes in light of NASCAR signing a multi-billion dollar TV contract with FOX and NBC. While these two recently established networks are more than happy to open its doors to so many racing fans, it begs the question, why have ESPN and TNT been so willing to give up one of the only sport that consistently competes with the NFL for viewers each week? Perhaps NASCAR’s fan base isn’t as stable as this new deal would suggest. With NASCAR’s ratings in decline, who could blame the two incumbents for not wanting to pay any additional rights fees in order to renew their contract?

Sports Business Daily released the terms and conditions for NASCAR’s new entitlement sponsorship, expecting the new sponsor to shell out around $30 million a year in rights fees, activation and media expenditures. At this price, NASCAR is guaranteeing unmatched fan loyalty. Our very own Jed Pearsall will attest to the influence a NASCAR title sponsorship will have on consumer behavior. In a previous study on NASCAR fans, he said, “NASCAR fans provide one of the highest levels of brand loyalty and sponsorship support of any one of the hundred or so sports and special events we’ve tested.” In any case, it would be safe to say that any prospective sponsors should carefully consider paying a premium to replace Nationwide as title sponsor of NASCAR’s B-level racing series.

Image Source GFR Racing

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International Soccer Sponsorship Provides GM with a Global Reach

Big things have been happening across the pond as October marked the signing of the largest jersey manufacturing deal in history. Manchester United has reportedly signed with Nike for £300 million over the next five years, giving Nike the right to manufacture Manchester United game kits (kits are apparel worn by football players during games) until 2019. This historic deal shatters the previous record held by Spanish football club Real Madrid and sponsor adidas, worth £248 million over eight years.

Not only does Manchester United receive a significant cash infusion, which is likely to be used for signing more star players to their roster, but also included in the contract is the right to sell the jerseys. Sales could generate another £15 million a year, pushing the potential worth of this contract close to £375 million.

The latest partnership with Nike isn’t the only record-breaking deal England’s most commercially successful football club struck this year. This past May, Manchester United worked a deal with Chevrolet for the American car company to become the principal sponsor of the team starting in the 2014/2015 season, replacing insurance company AON. The deal is supposed to run until 2021 and will be worth $559 million.

This deal doesn’t mean the end of AON’s involvement with the club. AON has partnered with Manchester United as the official sponsor of the team’s training facility and practice kits in a $240 million, 8-year deal. They will also assist the club with player analysis and risk management practices. While they were unable to secure the principal sponsorship again, AON’s reinvestment in the Manchester United brand speaks volumes about the marketing power of the world’s largest football club.

The partnership with Manchester United sponsorship solidifies GM’s position in the English Premier League. Chevy has also worked a deal as the official automotive sponsor of Liverpool. The deal with Manchester United did not come without controversy for the American auto brand. GM’s Global Chief Marketing Officer, Joel Ewanick, resigned the day before the Manchester United deal was announced. It has been said that the deal with Manchester United was the breaking point for GM, which asked Ewanick to resign on his own terms.

While there is much doubt in the GM camp regarding the value this sponsorship will bring, they cannot question the global reach their new partnership will extend to them. With over 650 million fans in nearly every country on the planet, Manchester United’s brand is recognized by millions of people all over the world. Receiving that kind of exposure will certainly bring Chevrolet a new level of awareness globally, especially among the 325 million Manchester United fans in Asia alone. Pair those numbers with the current trends in the auto industry outlined by the current KPMG report, and the Manchester United / Chevy partnership seems like a match made in heaven.

It should come as no surprise that Asia is slated to become the world’s next big market for autos. As rapidly developing countries such as China and India begin to witness an increase in the purchasing power for their ever growing middle class, the demand for quality, name-brand automobiles should provide the auto industry with plenty incentive to shift the focus of their global supply chain to Asia. GM has already positioned itself to take advantage of this growth by establishing an Asia-Pacific headquarters in Shanghai, as well as developing several manufacturing plants throughout China, Russia, and India. Three countries that, when grouped together, are expected to surpass the US in automotive sales in the next 5 years.

These moves mark a significant shift in the corporate philosophy of GM, showing that in order to maintain their expansive share in the automotive market, a serious effort needs to be made to get the attention of the people living in developing areas. Although the team at GM recognizes that there is foreseeable future in the Asia-Pacific region, bringing awareness to these people will come at a cost for the American auto giant.

In order to fund their global football initiative, GM has been forced to cut spending on domestic advertising and sponsorships. Last year it was forced to eliminate advertising on Facebook and even cut their ad in the Super Bowl. While their new sponsorship with Man U and the One World Futbol Project paints Chevy in a positive light to footballers everywhere, GM could appear to be neglecting the needs of its own city.

As we mentioned in a previous post, Detroit is desperately seeking a corporate sponsor for its new hockey stadium. However, with a price tag of $650 million, a new stadium for only the US’ 3rd most popular sport pales in comparison with the Manchester United deal. Although soccer fans around the globe will begin to recognize Chevy, this iconic symbol of American ingenuity may risk losing the support of the city that fondly refers to itself as Hockeytown, and built the company up to where it is today.

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From RB to IPO: Fantex Offers Fans Chance to Own Shares of NFL’s Arian Foster

Arian Foster is set to become the first professional athlete to be publicly traded on a Fantex platform that valuates the its high-profile clients as a ‘brand.’

Fantasy sports have long provided a platform for fans to become more connected to their favorite professional athletes.  Monday Morning Quarterbacks obsess over player statistics and weekly matchups all in an effort to win fantasy games against their friends.  However, thanks to Fantex Brokerage Sevices, fans will soon be able to get even closer to their favorite athletes.

Arian Foster is set to become the first professional athlete to be publicly traded on a Fantex platform that valuates the its high-profile clients as a ‘brand.’ The bay area company is finalizing its Initial Public Offering (IPO) to raise $10 million for a 20% return on the running back’s future earnings.  Fantex is offering 1.06 million shares at $10 a share to the bidding public.

Investors will be able to buy and sell shares of “Fantax Series Arian Foster Convertible Tracking Stock,” exclusively online through the Fantex platform.  The company has also reached an agreement with San Francisco 49ers tight end Vernon Davis to receive 10% of his future earnings in exchange for $4 million up–front.  If these ventures are successful, Fantex plans to secure athletes in other sports, as well as celebrity entertainers and musicians.

More: Fantex Arian Foster Brand Launch Video 

This move leaves many wondering: Why would Arian Foster sell an interest of his future earnings during the prime of his career?  Essentially, Foster is securing an insurance policy on his football prowess.  Currently in his fifth year in the league, he has already outlived the average 3.5-year shelf life of an NFL player.  Foster is hedging his bets as he approaches his 30’s, and presumably, a decline in production.

In the case of Arian Foster, this offering gives all fans, rich and poor, an opportunity to own a piece of their favorite player.  The idea seems more of a novelty than an economic opportunity.  However, if other players express interest in similar insurance policies, corporations could step forward offering a lump sum in exchange for an interest of their earning potential.  And unlike Fantex, they could proceed without selling shares to the general public.

Endorsement deals have served as the mutually beneficial vehicle connecting brands and players in the past.  Return on investment is certainly tied closely to on-field performance.  Under Armour, for example, is set to increase its revenue-generating abilities with success of its athletes such as Cam Newton and Foster.  The results, however, are not as concrete.  Under the parameters of the Fantex platform, athletes experience the security of cash up front, while investors enter a high-risk, high-reward scenario with the potential for massive dividends.

A successful Arian Foster stock market could leave traditional sponsorships and endorsement deals in the rear view mirror.  Instead, companies could begin to seek investments in athletes, rather than sponsorship of them.

Popular targets would include athletes with high earning potential during the dawn of their careers.  Imagine if Company X agreed to invest $3 million in Tom Brady after he was selected in the 6th round of the 2000 NFL Draft in exchange for, say 15% of his future earnings.  13 years and three Super Bowl Championships later, that company would be experiencing stratospheric profits.

However, would it be ethical for that company to capitalize on Mr. Brady’s hard work and good fortune?  Should he be penalized for insuring his football career before it took off?

By offering shares of the Arian Foster brand, Fantex raises some unique moral and ethical questions.  The success or failure of this Arian Foster stock will have a profound impact on the sponsorship industry.  With its groundbreaking Arian Foster IPO, Fantex may have opened the floodgates for forthcoming changes in sponsorship deals.

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Oracle stages remarkable comeback, but it’s still New Zealand’s Cup

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While Oracle Team USA may have defended the America’s Cup, they hardly represented the United States as they chose to field only one American sailor. Meanwhile, it was truly a national effort for the Kiwis as even the government gave its support to the America’s Cup challengers, providing $36 million dollars in funding for the program to bring the cup back to Auckland. The people of New Zealand were equally responsible for making this storied competition happen. Not only did their tax dollars fund a large portion of the team that was made up of 80% Kiwis, but the marine industry in New Zealand developed and manufactured most of the innovative technology that was showcased in the cup.

Many New Zealanders have to be wondering about the future of Emirates Team New Zealand. With this latest effort turning out to be unsuccessful, the country will not receive the NZ$600 million dollar boost to the economy it has received in its previous two defenses of the cup. The program’s shortcoming poses a tough question to policymakers in New Zealand: do they continue to spend public money at a potentially unsuccessful program, in a time where the country is considering austerity measures in other areas of government?

The effects of an America’s Cup victory, and defense, are clear to tourism in New Zealand. Contributing about NZ$15 billion to the nation’s GDP annually, tourism in New Zealand has typically seen a 12.5% increase in international visitors when they have the cup. However, this industry has been known to struggle in the absence of the Auld Mug.Image

As you can see, tourism rates in New Zealand were booming after Team New Zealand successfully defended the cup in 2000. When they were unable to defend the cup in 2003, growth in the tourism sector became stagnant and was further decimated by the global recession.

Even though the Kiwis were unsuccessful in this past run, they received a great deal of press from competing for the America’s Cup. Domestically, nearly a quarter of the New Zealand population watched the first weekend of racing. The cup was also broadcast in over 170 countries, bringing exposure to an untold number of international viewers. The United States had over a million people watching each of the first two races. However, these numbers were short lived when viewers dropped from one million to about a quarter million viewers per race for the rest of the series. While Team New Zealand sponsors such as Emirates, Nespresso, Toyota, Omega and Camper expected a greater return in the US considering how much it cost to invest in an America’s Cup campaign, they may have gained the respect and admiration from the famously loyal New Zealand sailing community for making one of the most prestigious and thrilling events in America’s Cup history possible.

With global economic conditions seeming to improve as of late, press from the America’s Cup may have provided the push that will cause New Zealand’s tourism figures start to grow again. While they may not realize the same growth rates as the early 2000s, we’re hoping the New Zealand government will realize a great enough return to justify sponsoring another challenge.

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PR On-Site at X Games LA 2012!

The Performance Research team was busy conducting research at the X Games in LA this summer. The event continues to grow, and sponsorship activations on-site are growing right along with it.

Check out some of our pictures, below, and let us know: did you watch X Games this summer? If you did… did you see the Hot Wheels Double Loop Dare? It’s been getting lots of attention on social media. It was our favorite sponsorship activation by far. The stunt drew huge crowds and follow-up traffic at their X Fest booth. It was a unique and daring way to engage with X Games fans who have a penchant for the unique and daring.

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Nike, Famous Ambusher, Is Redefining the Art of Ambush Marketing

As the world is ramping up for London 2012, savvy marketers everywhere are attempting to find ways to align their brand with the Olympic Games — even though they’re not official sponsors. Ambush marketing is nearly synonymous with the Games, and if any brand is famous for its Olympic ambush schemes, it’s Nike: they’ve perfected the art, from wrapping the 1996 Athens stadium in their “swoosh” to handing out branded merchandise to fans entering Olympic arenas.

But the sportswear brand is doing something completely different for the 2012 Games: instead of attempting to “trick” consumers into thinking Nike is an official sponsor, they’re taking ownership of their non-sponsor status. It’s a first in Olympic ambush marketing… and it’s compelling.

The ad campaign they revealed yesterday pushes a message no ambusher has ever attempted to sell: official doesn’t mean great. You don’t need official equipment to play a great game, you don’t need to be an official Olympic Gold medalist to be a great athlete, and you don’t need to be an official sponsor of the Olympics to be a great brand.

The 60 second ad spot opens with shots of un-famous athletes competing and training in lesser known “Londons” around the world, from Ohio to Nigeria. They’re wincing through sit-ups, throwing perfect pitches, and wrestling their hearts out. During the montage, a (British!) man voices over this message:

“Somehow we’ve come to believe that greatness is only for the chosen few, for the superstars. The truth is, greatness is for us all… Greatness is not in one special place, and it’s not in one special person. Greatness is wherever somebody is trying to find it.”

In the end, they promote #FindGreatness, encouraging athletes everywhere to join in on their conversation.

            

Only time will tell if it manages to drown out adiadas’ campaign (they paid a cool $60 million for their official sponsor status of London 2012). In any case, it’s a powerful ad, a powerful message — and a very interesting 180 for Olympic ambush marketing.

Check out the ad for yourself here.

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Francis Tiafoe, 14 Year Old Tennis Phenom… And Potential Marketer’s Dream

Francis Tiafoe is a 14 year old tennis phenom who, if he isn’t already, should be on corporate sponsors’ radars.

The obvious reason: he’s got skills. As the nation’s top-ranked boys player in his age group, Tiafoe has the potential to become the next star in men’s tennis at a time when the game is going through a greatness drought (it’s been almost a decade since a U.S. male won a major).

But Tiafoe didn’t become a rising star in a conventional way. It’s his underdog story that will really attract sponsors and fans.

Tennis is an expensive sport. Those who play at a professional level usually come from privileged backgrounds, allowing them access to top-notch coaches, exclusive tennis clubs, and the best equipment. But Tiafoe wasn’t born with a silver spoon in his mouth. There is no Jr., III attached to his name. If it weren’t for the fact that Tiafoe’s father was employed by the Tennis Center at College Park, a private tennis club in Maryland, Francis may never have had the means or the resources to hone his talent.

Francis’ father was the Tennis Center’s janitor for more than a decade. During that time, he lived on the grounds with Francis and his twin brother, Franklin; the family slept on massage tables in a 120 sq. foot space that became their makeshift home. Mr. Tiafoe earned less than the club’s $27,000 annual membership fee, but because Francis lived on the grounds it was as if he was a member. He had access to the courts, the coaches, and the equipment.

Francis spent much of his early life watching his more privileged peers learn the game. Eventually, he would begin to practice with his brother, early in the morning, before lessons started. He quickly fell in love with tennis. After years of practice, the Tennis Center coaches noticed his talent and took him under their wings. And now he’s winning prestigious international tournaments — Les Petits As 2012, for one.

While Tiafoe’s tennis chops are impressive, it’s his inspiring rags to riches tale that has the potential to grab all Americans, who have always had a soft spot for talented athletes with Cinderella stories.

Wilson and adidas already have endorsement deals in the works. And we’re betting it doesn’t stop there.

Image source.

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Is Touting Past Relationships at Opportune Times Ambush Marketing?

The Performance Research team always has sponsorship on the brain — even when we’re shopping for cereal! We recently snapped photos of two cereal brands shelved side by side at our local grocer. The sight immediately caught our “sponsor eye.”

Quick, which of the cereal brands below officially sponsors the Olympic Games?

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If you said Wheaties, you’re forgiven — but mistaken.

With a quick glance, it seems as if both of the cereal giants could be sponsors of the Olympic Games. But look closer. The Kellogg’s box has the iconic Olympic rings logo emblazoned on it, along with language (“official sponsor”) that ties them directly to the Games. The Wheaties box? Not so much.

That’s because Kellogg’s is the official cereal brand of the United States Olympic Committee (USOC), and their Corn Flakes box is part of a marketing campaign driving home that official sponsorship to consumers. Wheaties, on the other hand, has no current official relationship with the USOC or the Olympic Games.

The re-release of past Wheaties boxes featuring Olympic champions at such an opportune time — leading right up to the 2012 Summer Games — could be considered ambush marketing, a tactic that can be cause for concern for those official sponsors (like Kellogg’s) who spend millions of dollars on officially associating their brand with the Olympics.

It’s a recurring issue. Olympic season after Olympic season, unofficial “supporters” of the Olympics elbow their way into the top of consumers’ minds as bon-a-fide Olympic sponsors by using ambush marketing tactics.

We conducted research during the 1994 and 1996 Games that lent insight into consumers’ perceptions of official Olympic sponsor brands. Often, ambush sponsors outpaced official sponsors (e.g., ambusher Nike vs. official sponsor Reebok) in terms of sponsor recall and belief that these non-Olympic companies were doing more than many official sponsors to support the Olympics.

More recently, we collected data after the 2010 Vancouver Games and found that ambush sponsorship marketing was still alive and well. In particular, Subway, who used Michael Phelps in a campaign leading up to the 2010 Games, was strongly associated with the Olympics that year even though they weren’t officially sponsoring the Games. So was Verizon, who used the U.S. Speed Skating team in ads surrounding Vancouver but had no official partnership in 2010. Full details of that report can be found here.

The topic raises a lot of questions: is spending big bucks on official Olympic sponsorship worth it? Is it ethical to lead consumers to believe your brand is associated with the Games when there is no official sponsor relationship there? We welcome your comments on this one.

Also, a challenge: keep your eyes out for all of the official and not-so-official Olympic campaigns going on this month.  Send us your pics, we’d love to see what you uncover.

Just as we’ve done since the 1992 games, we’re planning to conduct similar research for the 2014 Olympic Games.  As always, don’t hesitate to send us a message or ask us questions if you want to learn more about what we’re up to.

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July 5, 2012 · 10:54 am

NCAA Men’s Lacrosse Finals at Gillette Stadium

The Performance Research team was conducting research at the NCAA Men’s Lacrosse Finals’ Fan Fest area at Gillette Stadium recently. 

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Lacrosse fans seemed to be having a blast at all of the different fan areas and activations. It was one of the more diverse fan zones we’ve seen, with live music, a DJ, activations (AT&T, Allstate, Capital One, Buick, Powerade, and Reese’s, among others, all had exhibits), licensed merchandise vendors, and segregated Fan Fest areas, where fans of each participating team could meet and mingle. 

Check out some pictures we snapped throughout the weekend below, and head over to our Flickr page to see more of our photos from past events: http://www.flickr.com/photos/sponsoreye/. And if you hadn’t heard, Loyola came out on top!

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