With a competitive environment similar to a high-profile sporting event, an increasing number of wireless carriers have recently thrown their marketing and sponsorship efforts behind sporting events and venues.
“Sporting events are a marketer’s dream,” said Tracy Rummel, founder of The Brand Soup Agency, which labels itself a brand development company. “Even though there is usually a high cost associated with sporting events, at the end of the day, the ability to reach both a national and international audience often makes it worth the investment.”
Siemens AG, which sponsors a number of worldwide sporting events, including soccer and Formula One racing, reported its sports sponsorships helped to nearly double its brand awareness in Spain to 62 percent, increased its brand awareness throughout Europe from 81 percent to 84 percent, and increased its market share from 17 percent to 21 percent over the previous 12 months.
In the United States, one of the largest sponsorship deals was inked last month when Nextel Communications Inc. signed a 10-year agreement to become the title sponsor of the National Association for Stock Car Auto Racing premier national series replacing long-time series sponsor R.J. Reynolds’ Winston brand, which had sponsored the Winston Cup Series since 1971. While financial terms of the deal were not released, a number of sources claim Nextel will spend more than $700 million during the next decade on the partnership.
Beyond the monetary concerns, NASCAR officials seemed happy to be teaming with a high-tech firm following increasing pressure to break its links with the tobacco industry.
“Nextel is a perfect fit for NASCAR because technology is an untapped growth area for our sport,” said Bill France, vice chairman and executive vice president of NASCAR. “It is an area of significant interest among all consumers everywhere.”
While some long-time NASCAR observers questioned the link between a high-tech firm like Nextel and an old-school racing series like NASCAR, wireless industry analysts noted the partnership should play out well for both parties.
“The former Winston Cup series is well known and commands a large audience-its core demographic fitting nicely with Nextel’s primarily blue-collar customer base,” said Scott Miller, principal analyst at ARS Inc. “NASCAR has historically commanded a loyal following, and this sponsorship should open consumer opportunities for Nextel, as well as reinforce relationships with some existing small business customers.”
Miller also noted Nextel’s financial investment in the racing series should not limit the carrier’s future network plans.
“It’s hard to find a downside here, and even the $700 million commitment should not overly impair Nextel’s ability to fund an eventual network upgrade or purchase additional spectrum,” Miller added.
While Nextel’s NASCAR deal is one of the largest wireless industry sponsorships in the sporting world, it’s far from the only such arrangement. Fellow wireless operators Alltel Corp. and Cingular Wireless L.L.C. currently sponsor NASCAR teams and next year will begin competing in the Nextel Cup series.
Geographically, Alltel’s and Cingular’s links with NASCAR make sense because both carriers are based in the Southeast, which is known as NASCAR country, Alltel explained
“There are six tracks in our service area that see a direct benefit,” said Randy Wilbourn, senior vice president of corporate communications at Alltel, who added that Alltel also provides service to a number of teams headquartered in its service area.
But beyond the obvious market link, Alltel said its NASCAR sponsorship is about selling products, and the company has to be able to justify the money spent on sponsorship with increased sales.
“We expect to sell our goods and services through such sponsorships,” Wilbourn said. “[The sponsorship] supports the brand but clearly it must be looked at as a selling tool.”
In addition to its NASCAR sponsorship, Alltel also has its name on Alltel Stadium where the Jacksonville Jaguars National Football League team plays and where the 2005 Super Bowl is scheduled to take place, and Alltel Arena in North Little Rock, Ark., which hosted this year’s SEC Women’s college basketball conference tournament. The company also is a corporate and exclusive telecommunications provider for the Southeast and Atlantic Coast collegiate conferences.
Wireless carriers have also been aggressive in getting their names associated with other sporting events and venues.
U.S. Cellular Corp. signed a 20-year, $68 million naming rights agreement earlier this year with the Chicago White Sox Major League Baseball team to rename the former Comiskey Park, which is scheduled to host this year’s All-Star Game, to U.S. Cellular Field.
The carrier explained that while the deal includes a large financial commitment, it expects to see an acceptable return on its marketing investment. “For every $1 we spend in naming rights, we see a 25-percent premium return on the investment,” said Jay Ellison, executive vice president of operations for U.S. Cellular.
In addition to its positive marketing return, U.S. Cellular said the deal would allow the carrier to further expand name recognition in one of the country’s most competitive wireless markets following its acquisition of PrimeCo Wireless Communications L.L.C.’s Chicago market last year, as well as collateral name recognition nationwide.
“After our PrimeCo acquisition in Chicago, we decided we had to have a fully sustaining and multiple pronged approach to marketing in the Chicago market,” explained U.S. Cellular’s Ellison. “There is an incremental value from other markets as well.”
As part of the naming rights deal, Ellison said the stadium would receive renovations geared toward improving the fan experience at the ballpark, including a new video board in center field and a “fan deck.”
Along with the benefits of having a name attached to a widely watched sporting event comes the potential drawback if an event draws negative publicity.
Shortly after U.S. Cellular took over the naming rights for the White Sox this year, a fan ran out of the stands and attacked an umpire during a game with the Kansas City Royals. The attack mimicked a similar attack last September by a father and son who ran onto the same field and attacked a Royals base coach.
Last month a college student was electrocuted after walking barefoot on a wet metal staircase at a concert being performed at Verizon Wireless Amphitheater in Charlotte, N.C.
“You always have to examine the liability aspect,” said Alltel’s Wilbourn.
Marketing experts note that while events are hard to predict, most companies that get involved with sponsoring sporting events should be prepared to handle such situations to minimize any ill effects on the corporate name.
“Most companies that get involved with sports sponsorships should have a proper crisis communications team in place to handle such incidents,” Rummel said. “But from what I have seen, those types of incidents don’t usually damage the corporate name in the long run.”
