Red Thread

Alfred Kelly’s big decision

McDonald’s exit from the top echelon of Olympic sponsorship created a media opening for anti-IOC narrative.

But the sponsorship issue that McDonald’s exit raises is not about the travails of the IOC, it’s about whether or not the sponsorship of both the FIFA World Cup and the Olympic Games can be justified – at a combined annual cost of somewhere between $50 million and $100 million.

McDonald’s, Coca-Cola and Visa were in a highly exclusive subset of sponsors of both. And then there were two.

Steve Easterbrook, McDonald’s chief executive, clearly decided that the company’s energy and investment needed to be focused on its core product. But for Coca-Cola, with its heavy dependence on its main iconic brand and drink (increased by its recent move to a one-brand strategy), departure is simply unthinkable.

Nearly 90 years of Olympic heritage and over 40 with FIFA mean that both properties are completely institutionalised within the ecosystem of bottlers, distributors, major retail partners and brand teams.

Exit is often hard to countenance for any business, because it leaves such a huge gap. Like Brexit. For Coca-Cola it’s particularly unthinkable because of the huge impact it would have on every part of that system, and the immense challenges it would impose – in terms of global and national market budget management, brand and financial governance and operations across all parts of that system – to replace them.

But Visa’s business model and structure is entirely different. In 2016, it had over 54 per cent of global card transactions. The value of 2016 Visa transactions totalled US$8.2 trillion. It has approximately 3.1 billion Visa cards in use and accepted by 44 million merchants. Unlike Coca-Cola, it is not a luxury, a treat or a comfort, it’s integrated within the daily fabric of our lives.

Now the IOC and FIFA are both great for global brand-building, the World Cup in particular, with the global TV exposure it offers. But Visa’s challenge in most markets isn’t awareness, but relevance. And a major quadrennial appearance on the global stage doesn’t deliver.

So the question for Visa has to be: do we need both and what is the opportunity cost?

Beyond the World Cup’s TV exposure, both properties offer promotional and incentive opportunities to drive card spend and recruit merchants and member banks. They both generate revenue from official merchandise and refreshment sales. The World Cup offers an exclusive ticket pre-sales window to Visa card holders, while the IOC contract notoriously allows Visa to impose its exclusive use on all ticket sales. For the London 2012 Olympics, this will have generated between £5 million and £7 million in interchange fees.

More significantly, the structure of the IOC’s bid city criteria offers Visa a direct opportunity to influence the payment infrastructure around the games, and an opportunity to showcase innovation which the FIFA World Cup doesn’t. London 2012 was used to accelerate the uptake of contactless payment technology. Visa used Rio 2016 as a platform for wearables, in the form of ‘the Ring’, a ring worn on the finger that allowed Team Visa athletes to make purchases by tapping their rings at enabled payment terminal.

There are no comparable examples from Visa’s World Cup sponsorship – and its ambassador for both the Olympics and the World Cup since 2012 has been now-retired Olympian Usain Bolt. Of the two, FIFA sponsorship looks by far the most vulnerable.

Interestingly, Visa’s sponsorship portfolio has grown in recent years, in pursuit of diverse objectives. In May 2015 it signed a partnership with motor racing’s Formula E series and in January this year, it launched into eSports with sponsorship of Germany’s SKGaming, before expanding into surfing in May with The Boardmasters Festival, described on Visa’s site as ‘part of Visa’s evolving sponsorship strategy aimed at engaging the millennial audience’.

Despite the millennial characterisation, Visa’s evolving sponsorship strategy looks driven by closer targeting and more regular relevance – where $100 million of rights fees from the IOC or FIFA could usefully be deployed.

When FIFA dumped MasterCard for Visa in 2006, it was hard to imagine what MasterCard could do next – because there was no substitute. Despite the $90-million compensation FIFA was obliged to pay to MasterCard, it looked as though Visa had dealt a major body blow to its rival by occupying the category with both the IOC and FIFA. And indeed, MasterCard has not been able to reassert its global stature on the sponsorship stage.

MasterCard’s post-FIFA strategy has predictably been to use sponsorship assets to deliver loyalty benefits and drive usage. And, although this delivers far less reach – it offers enviably more frequent relevance.

Visa’s memory, on the other hand of replacing Amex as an IOC partner in the late ‘80s, will underscore the value that FIFA could hold for its challengers. Amex’s decision not to renew its IOC partnership unquestionably created a different trajectory for both Amex and Visa.

Fast forward to 2017: AliPay and PayPal are both growing aggressively. China’s UnionPay – larger than Visa already in cards issued and as of 2016 the largest provider by global transaction volume – still has a far smaller global network, which a FIFA partnership could build.

McDonalds decision to exit TOP was so momentous that only the CEO could ultimately confront it. Visa CEO Alfred F Kelly Jr will inevitably be faced with a similar challenge. Ironically, Alfred spent 23 years of his career at American Express, joining in 1987. As such, he will have personal memory of the notorious 1988 Calgary dogfight between both businesses that is now part of sponsorship ambush legend.

Despite the huge cost of FIFA sponsorship, and its relative inability to fulfil a useful marketing function for three years out of four, Mr Kelly will be a brave man indeed if he follows the sign marked exit.

Red Thread

how does big business satisfy consumer appetite for integrity?

Brand psychotherapy: In an age when people are hungry for integrity and meaning, how does big business satisfy that appetite?

We published a blog on purpose in 2014, which we revisited last week on reading Trinity Mirror’s new study on consumer trust The study reports the unsurprising figure of 43% of consumers claiming to mistrust brands and 69% claiming to distrust advertising. Nothing particularly noteworthy there. More interestingly, the research also identified found that nearly 40% of consumers view major businesses as part of the ‘Establishment’ and a majority are actively sceptical about brand purpose: 58% of adults don’t believe brand purpose until they have seen ‘real world proof’ with their own eyes.

Our 2014 post did its best to look at the glass half-full and cheers to that. Here’s more of a glass half-empty look…

Watching the concept of Brand Purpose spread has been very reminiscent of the 80s when Tom Peters relentlessly and almost single-handedly pushed Excellence and Big Hairy Audacious Goals up every Boardroom agenda. We should have all suspected at the time that Tom’s ambition for corporate excellence was the product of his personal psychology rather than the intrinsic power of any one idea.

And businesses are like people. They have their own personalities, their own psychologies and their own pathologies. Manfred Kets de Vries has explored business culture for over 30 years through the lens of business leaders and his output includes titles such as ‘The Neurotic Organisation’, ‘Organizations on the Couch’, ‘Essays on Irrational Organizations and their Leaders’ and more. Much of de Vries’s work is based on taking a psychoanalytical approach to organisational behaviour.

At the heart of both, people and business, are relatively immovable psychological structures. For people, belief systems based on early years parental influence: for businesses, the enduring mark of the founder. Individuals and businesses both share core beliefs, such as life is a competition or hard or, more positively, life is an opportunity. For both, the financial model, and its relationship to our identity, and security. Just like people, businesses can be extremely resilient and, just like people, once their personality structure has crystallised, they resist change fiercely.

Fritz Perls, the originator of Gestalt psychotherapy, described two routes to change.

The first was an implosion, the mini-death which precipitates personal change, and growth. It’s the conclusion of realising that our routine behaviours, including the relationships we create, are no longer delivering for us. In business, it’s called the burning platform. As far as I’ve read and experienced, a burning platform is the only sure-fire lever for real change.

The second was acceptance (simply expressed here by The Bristol Therapist). The foundation of Gestalt is that self-acceptance dissolves the internal tensions and external facades which bind us to these patterns of behaviour. But for most of us, there’s a mini-death along that path….

Where’s all this heading?

To the simple point that a cognitive concept like Purpose remains a concept unless it’s felt and lived by the CEO. Unless it’s personal, in the way it became for Ray Anderson of Interface, Paul Polman from Unilever or, to a lesser extent, Ian Powell of PWC. Once again, we’re at the juncture between emotion and cognition.

Purpose – in this sense of an emotive force within a business – is not something you can operationalise. You can place it in your values, you can print it on your documents, you can use it to reframe your CSR, you can repeat it to your customers, but that’s not Purpose.

You can hyper-rationalise what you do and audit every single positive externality to demonstrate clearly, beyond doubt, that your presence within the business community is a cornerstone of society. But that sort of purpose doesn’t get you out of bed in the morning. It doesn’t galvanise employees. It’s not enough to rest a credible case on or build a robust communications platform. And, as Trinity Mirror findings suggest, it has precisely the opposite effect on consumers, who just see another attempt by businesses to feign a commitment and values which in many many cases aren’t really there. And then you’ve just erased another connection with … people.

As we wrote in 2014, people need a sense of purpose. Viktor Frankl’s short but powerful account of life in a concentration camp, Man’s Search for Meaning, relates how only meaning and purpose made survival possible. A sense of purpose, aka meaning, is a ‘human given‘ – a sine qua non of existence, every bit as much as a sense of attachment or sense of self,  or a need for responsiveness.

Coincidentally, last week also saw the launch announcement by EY Global President and CEO Mark Weinberger of The Embankment Project, in partnership with Inclusive Capitalism. The ambition of The Embankment Project is to create a framework to measure Long Term Value – based on organisational purpose.

LTV, as defined in the White Paper, is: ‘the value created for and perceived by stakeholders through the effective development, preservation and deployment of strategic capabilities in line with the organisation’s stated purpose’. Purpose is the organisation’s ‘aspirational reason for being, grounded in humanity and inspiring a call to action’.

It’s a great exercise in reimagining financial reporting to make it more relevant, more timely, more realistic, and – its third ambition – to restore the public’s trust in (big) business. In the words of Lady Lynn Forester de Rothschild, Founder of the Coalition for Inclusive Capitalism: ‘We have reached a critical point in history when popular opinion of capitalism is very low… This will worsen unless trust between business and the public improves.’ Global businesses such as Allianz, Du Pont, J&J, Pepsico and Unilever will be piloting the reporting framework developed by EY.

Like most thought leadership exercises, of course, its main value is to stimulate debate and engagement – and in that, I’m sure it will succeed.

But a final plea for emotion. Trust is not built on reporting systems: it’s based on a far more complex web of (personal) judgments based on an organisation’s largest (governance and ethics) and its smallest (daily) actions; and it’s based on perceived motives.

Professor Glenn Reeder, whose work focuses on how we perceive others, knows that we use multiple inputs and cues to assess motives; and that we attribute three fundamental flavours of motive to behaviours: free choice, no choice (obligation), and calculative choice (ulterior motive). Interpretation of motive is a key determinant of the traits we ascribe to others. In other words: suspicion of ulterior motives = distrust.

Although this research is conducted in the field of personal psychology, the parallel again between individual and organisation is obvious. So the question here is how big businesses can convince people that their motives are positive.

Tom Peters understood the connection between business passion and inspiring purpose. He preferred to talk about the power of being unreasonable, for example: customer service beyond what’s reasonable. Psychotherapy refers to authenticity.  Now the power of sponsorship is its ability to give a real-world display of brand values. Big, bold, purposeful sponsorship and partnership has the power to inspire belief better than any framework. But I’m not championing sponsorship as the way to rebuild trust in big business – far from it. I’m making the simple point that trust is built on emotions, not numbers. And… for many categories and business leaders, sponsorship can be… a very useful tool to work with emotion.

 

 

Red Thread

McDonalds and the IOC: fake news from the FT?

McDonald’s departure from the IOC TOP programme has provoked much commentary. Of course, big sponsorship news always attracts its fair share of clichéd reflection and the departure of McDonald’s from TOP is very big news in the sponsorship industry. But it’s been particularly interesting to observe, especially in the context of fake news.

The worst culprit, surprisingly, is the Financial Times, in their 16 June article ‘McDonald’s ends Olympic Games sponsorship 3 years early’.

According to Leisure Correspondent Murad Ahmed, ‘McDonald’s has ended its decades-long sponsorship of the Olympic Games, becoming the latest US company to pull support and marking the latest financial blow to the body that runs the world’s biggest sporting event’.

He refers to Budweiser, Citi, Hilton and AT&T, all of whom indeed terminated relationships in recent years – with the United States Olympic Committee, of course, not the IOC. In fact, the last USA TOPs to withdraw were actually KodakJohn Hancock (after fairly respectable terms of 22 and 16 years, respectively) and Johnson & Johnson (after four years) in 2008. P&G has since more than occupied the temporary space created by J&J of course. The IOC’s TOP programme is in rude good health.

The article continues: ‘In response, the IOC has looked elsewhere for major sponsorship deals, particularly Asia’, citing the case of Alibaba – but ignores the advent of GE, P&G and Dow to the TOP programme since 2000. And today, 21 June 2017, Santa Clara based Intel is being announced as TOP number 13.

The article’s real destination, however, appears in paragraph six: ‘the departure of another big-name sponsor comes at a difficult time for the IOC, which is struggling to convince cities to take on the multibillion-dollar costs of staging.’

The FT’s article looks as though it was largely subbed down from Reuters. In which case, we’re potentially in classic fake news territory here. Were the facts deliberately misrepresented in order to feed the popular media narrative about the challenge the IOC faces in attracting bid cities?

Reuters, who looks to have led the story, provided far more insightful commentary. They looked beyond the cliché into McDonald’s current business position, citing McDonald’s CMO Silvia Lagnado and their investment in improving food quality, restaurant service and online ordering to refresh and revive McDonald’s. Their very publicly stated change of focus, in other words.

(Bizarrely, the FT article – and not Reuters’ feed – was picked up and replayed virtually verbatim by Sports Business Daily, who, of all people, should know better.)

To our certain knowledge, McDonald’s IOC relationship has been under repeated review since 2010 – definitely since before London 2012, and possibly longer. The reasons are fairly obvious, but worth exploring, because of the light it shines on sponsorship – and McDonald’s as a sponsor.

The issue of obesity is certainly high on the list of reasons. Media and public concern about obesity have shone a bright spotlight on McDonald’s, making corporate comms and public affairs a higher order need in many markets than pro-active sales promotion.

And sales promotion is one area where the Olympics historically do not perform for McDonald’s. The simple question is: what Olympic sales promotion is more cost-effective than a tie-up with Universal & Dreamworks, for example? Without an answer to that question, Olympic Partnership struggles to address the very real needs of the 80% of restaurants globally which are franchised.

Images of Olympians queueing for burgers in Rio must have been very gratifying for McDonald’s. In many ways, it offered an ideal positioning for McDonald’s – as a dietary treat, not a staple. But as a public affairs ‘defender’, it’s a blip and doesn’t work nearly as well as, for example, McDonald’s collaboration with the Association of French Regions to create 2,000 new jobs for young people in France. Or McDonald’s grassroots sport investments.

For some categories and brands, the IOC offers the most powerful sponsorship opportunity in the world. Like any sponsorship property, of course, it has its limitations. The Tokyo 2020 line-up appears to be dealing with its ageing audience profile and the IOC clearly recognises that its bidding process has become a victim of its own success. Harder to deal with is the intrinsic challenge facing all IOC Partners of maintaining relevance during the three fallow years between Summer Games. Yes, the Winter Games exist but they’re far from global in terms of reach or relevance. It works better for some categories than others.

But, according to various sources, including Kantar Media and Statista, McDonald’s has been spending between US$600 million and US$1 billion annually on advertising in the USA alone. Which puts the IOC’s rights fees into perspective, even if the IOC are seeking to double the rights fee for TOP to US$200 million. The most likely explanation is in fact not cost-saving, but simply that the IOC Partnership was no longer relevant for McDonald’s.

Steve Easterbrook was appointed global CEO in 2015, tasked with repeating his turnaround of McDonald’s GB – the mammoth task of bringing McDonald’s sustainability and service into the 21st century. Three months later, and two new global comms functions were occupied: the position of Global CMO was taken by Silvia Lagnado, with responsibility for the global brand, menu and consumer insights); and former White House Press Secretary Robert Gibbs was appointed Global Chief Communications Officer. ‘Returning excitement to our business proposition’ was how Easterbrook described the challenge to Fortune magazine.

Sponsorship excels at creating an exciting platform for some businesses, and some entire categories (banking for example). But as Apple always reminds us, the optimum creative platform is a product that is relevant, timely, alive and valued. Sponsorship is no substitute for product development. And when your sponsorship is the most interesting thing about your business, frankly, it’s time to hire your own Easterbrook.

As for the FT, it’s worrying. On this one, Potato Business did a much better job.

Red Thread

Tokyo 2020: The challenges facing Partners

Organising Committees famously misrepresent the value of Games Partnership. ‘The country needs you to step up.’ ‘It’s a once in a lifetime opportunity.’ ‘The Prime Minister needs your help on this one.’ And the favourite: ‘It will be so good for your business.’

In London, LOCOG employed McKinsey to develop an elegantly simple model to show how modest uplift (not forgetting ‘halo effect’ and ‘legacy uplift’), applied across sales, employee productivity, absenteeism, and even reductions in resignation could easily recoup the Partnership investment. Beautifully seductive, but far from reality.

The truth is that these dials can indeed be moved – and dramatically, but, like shares, the value of Partnership can go up or down. Between 2008 and 2012 we analysed over 30 Partnership campaigns from the Sydney, Beijing and London Games. We interviewed key stakeholders, we reviewed online descriptions, we looked at the numbers. Generally, the passing of time meant that interviewees spoke more candidly about their actual experiences. What was most striking was how some businesses – such as GE, Samsung, Visa, AMP, VW China, EDF (to some extent) – were able to drive real strategic value out of their Partnership, whilst many others – including Cadbury’s, BMW and BT for example in London, struggled to generate sustainable uplift.

The challenge for Partners is that they’re starting from scratch on a journey without parallel or precedent. The power relationship with the Organising Committee is a shock. The landscape of sport is alien. Procurement departments – if they’re even allowed close to the Partnership Agreement – cannot begin to rationalise a rights fee which delivers just one hard asset – a logo. It’s a sponsorship – but it feels more like a merger. The intrinsic challenge of sponsoring the Olympic Games is one of the greatest facing any marketeer – because the impacts of Partnership far exceed the domain and influence of marketing. So every Games Partnership represents an unprecedented organisational challenge, especially for first time Partners.

In the words of Erica Kerner, formerly Global Olympics Games Director for Adidas ‘A lot of first-time Partners spend the first years of Partnership just figuring out the sponsorship. And of course, the Organising Committee has never done it either’. She meant it, of course, literally.

This situation is perennial. But Tokyo 2020 has its own unique set of challenges.

Famously, there’s little distinction between the rights of Tier 1 and Tier 2 Partners: both traditionally secure the full right to run consumer-facing promotions. And with a total of 42 Tier 1 and Tier 2 Partners to date, Tokyo has precisely three times the number of London. In effect, that means three times as many brands competing for attention – not just in consumer-facing activity, but also in more targeted business communications. This is a very real issue because brand equity gains (in particular) require a solid foundation of Partnership awareness. Not only will the presence of so many Partners aggravate that particular challenge, it’s almost certain to increase misattribution.

The answer is clearly not just advertising. BP was the largest spender on media, spending £14.2m to communicate their Partnership to consumers: by 2012, it had achieved just 25% awareness (Hall & Partners, 2012).

The presence of so many Partners presents another dilution of practical value: with three times as many Partners, ticket allocations for Partners of Tokyo 2020 will be proportionally smaller. Ticket numbers sound a mundane issue, but a Partner’s ability to guarantee a ticket to Tokyo 2020 to their oldest, or closest, or most profitable, or largest, or prospective clients is one of the largest direct benefits they receive. Tier 1 Partners at London were on average taking over 10,000 guests to both Games. Tokyo Partners will face some very tough decisions about their invite lists.

Category sharing is another issue which directly affects ten Partners in banking, aviation, security (and, to a lesser extent power supply and toilets). Now category exclusivity is customary in sponsorship for very good reason: it guarantees sponsors competition-free access to a target audience. But for the Olympics, lack of exclusivity is far worse, because a large part of the communications value is based on the notion that the Partner makes a unique and practical contribution to the delivery of the Games. This feeds into showcasing, into credentials, into client conversations, into employee engagement. This facet of Partnership is almost unique to the Games (shared only with ‘Expo’) – and completely impossible to maintain when your competitor is providing exactly the same contribution.

For a Partner, choice of Category is highly significant for two reasons. Firstly, because it creates a supply right: Partnership Agreements commit the OCOG and incentivise Partners to purchase the Category products and services from within the Partner network. Aggreko reputedly paid £5m for a Tier 3 position at London 2012: and billed LOCOG £15m. Secondly, because it broadly determines the product communications platform for the Partner. Ideally, the Category carries the flag for the entire business. Hence Atos use their role as IT Integrator to promote their ability to deliver the most challenging systems and Deloitte used their role at London 2012 to communicate their ability to handle complex programme management.

But many Partners of Tokyo 2020, in their desire to become a Partner and to support Tokyo 2020, and Japan, have bought Categories which have relatively little value, commercially or communication..ally. A quick look at the list of 2020 Categories reveals a number of Partners who will struggle to tell a story which helps their broader business. The narrow segmentation of IT across six Partners hurts all six.

The impact of all of this is aggravated by Japan’s corporate communications model.

Japanese businesses take a very integrated approach to brand – by which I mean that its primary drivers are seen as business reputation and product quality. (From my culturally bigoted position, reminiscent of the dominant B2B approach of 30 years ago.) There are intrinsic conservatism and formality about Japanese corporate communications. If the general direction in the west is for business communication to move toward the norms of peer to peer, Japan remains, by contrast, very ‘corporate’, with a marked resistance to stepping outside of the established protocols of business behaviour. The concept of brand in the west is generally closer to that of individual identity, with a clearly defined personality and attributes; and a recognition that corporate behaviour and communication needs to be a reflection of that identity.

The upshot is that many Japanese Partners of Tokyo 2020 will find the need to transcend the limitations of their Category culturally challenging. The best way for Partners to improve their corporate reputation is the thing they are most nervous about doing – standing out.

Looking back to 2012, each Partner looked for a unique way to express its identity or its message – for Lloyds Bank, it was taking the spirit of the Games around the UK, for BT, it was bringing the public together in celebration, for McDonald’s, it was supporting and celebrating the unsung heroes who make the Games such a success. Western brand methodology was applied to each distinct positioning to generate and shape each individual campaign – all in the service of achieving cut-through and superior levels of recognition and appreciation of the role played by the Partner.

It’s almost a platitude of Olympic marketing that the value of Partnership doesn’t derive from the six weeks of the Games (Olympic and Paralympic) but from the years before. What that means in practice is that Partners need to develop a campaign which leverages the Games association to increase relevance, and generates repeated touchpoints with key business audiences. But Tokyo 2020 Partners will find this particularly hard without unique, ownable stories. Their default cultural preference will be to adopt the position of ‘proud supporter’ of Tokyo 2020. This generic sponsor positioning no longer works outside of Japan. There is little to suggest it will work within Japan either.

It truly will be an exceptional Games and Partners are applying themselves wholeheartedly to the delivery challenge. I’m confident that Japan will demonstrate levels of innovation during Tokyo 2020 that surpass any Games, anywhere. The challenge I would like to see Partners embrace would be the challenge of communicating effectively outside of Japan.

The challenges facing Partners

Seductive ROI modelling suggests success is guaranteed

  • Modelling suggests that incremental improvements across sales, brand, employee engagement can easily pay the cost of Partnership investment.
  • This is misleading because even marginal incremental gains do not happen easily. There is no simple positive correlation between Olympic Partnership and commercial value.

They have less time than they believe

  • It is a common mistake of first-time Partners to waste two to three years of Partnership because, fundamentally, they believe there is no hurry.
  • The value of Olympic Partnership cannot be generated during the Games but requires four or five years of planned activity before the Games. Without timely planning, many will fail to recoup their investment.

They under-staff

  • Helen Nugent, Westpac Senior Exec, and later Macquarie Group Board member described Sydney 2000 as ‘the hardest challenge of her career’. Games Partnership cannot be ‘managed’ by a lower executive team.
  • Partnership cuts across every aspect of corporate life and requires active leadership with Senior Exec authority.

They have to create a five-year programme out of nothing

  • The marketing assets of Tokyo 2020 Partnership are largely limited to a logo, a designation and tickets. From that, Partners need to create an integrated, five-year campaign which touches every part of their business. Many Games Partners have unrealistic expectations of Organising Committee support and fail to take early responsibility for the success of their investment.

It is difficult to stand out

  • Tokyo 2020 has more Gold and Official Partners than any other Olympic Games, ever, many, with non-exclusive or very narrow Categories.
  • This means that achieving salience and cut-through for Tokyo 2020 Partners will be extremely hard; and harder with time.

Image credit: Night View with Tokyo Tower Special Lightup by t-mizo (CC BY 2.0)

Red Thread

The danger of being dazzled by the latest shiny objects in digital marketing

I imagine the entire marketing industry is now considering the impact of Proctor and Gamble’s Chief Marketing Officer, Marc Pritchard’s, groundbreaking presentation at the recent IAB Annual Leadership meeting on the issues around digital marketing.

Marc’s speech was refreshingly open and Mark Ritson in his recent Marketing Week piece describes it as the “biggest marketing speech for 20 years.” Marc Pritchard confesses that P&G has traded its usual rigour for the first mover advantage that “these shiny objects” might confer.

I don’t know whether you respond as I do, but having worked for over 30 years in advising clients about how to use sponsorship effectively, it struck me that there were parallels with the concerns Marc raises in digital marketing with issues facing brands investing in sponsorship.

Sponsorship has lots of “shiny objects” to dazzle a brand’s leadership and marketing teams and the usual rigour in marketing investment to which Marc refers can often go out of the window.  All too often there is a real lack of investment in time and internal or external experienced resource in:

  • strategic planning
  • appropriate audience segmentation
  • ROI modelling
  • clear target setting
  • evaluation methodologies

This assessment and ongoing audit process takes place for most major marketing investment but why do we still see massive investment in sponsorship assets without this process being adopted prior to, or during, significant investment in sponsorship?

Marc says “There is no sustainable advantage in a complicated, non-transparent, inefficient and fraudulent media supply chain”. He raises four major concerns for brands in their investment in digital marketing – viewability, supply chain transparency, fraud, and measurement verification. It strikes me that leaving aside potential fraud, three of these issues apply equally to investment in sponsorship.

Viewability 

Sports events’ ‘viewability’ is often represented by rights holders as ‘potential homes viewed’ or ‘broadcaster reach’. This is meaningless because it refers to the maximum potential viewers of a programme as opposed to the actual number of people viewing the programme.

Not surprisingly, those without a real understanding of programme audience measurement methodology get confused by the base data on which so much of the value of sports sponsorship platforms is still based. Compounding the problem, there is no consistent global audience measurement system, as audiences are measured differently in different markets.

Measurement verification

The problems with viewability and measurement verification are linked. We know the challenge of sponsorship value measurement – and the use of ‘equivalent media value’ as verification of value measurement. The many methodologies in calculating equivalent media value with discounts for ‘limited viewability’ or contrived justifications for premia are a complete smokescreen for assessing the measurement of the value of a sponsorship platform.

Measurement of any sponsorship must be based on an assessment of the actually anticipated outputs of a partnership for a brand whatever they may be, for example – relevant exposure in a new market, the targeting of a key audience, an association to move brand perceptions leading to consideration and purchase, supporting a clear CSR positioning, providing a powerful platform for retaining and recruiting talent etc.

These are the measurable outputs from a sponsorship partnership which must have ongoing measurement processes in place, prior to the securing of sponsorship assets, to enable the monitoring of progress and the finessing of campaign strategies and execution.

Measurement verification costs money and maybe even jobs if things don’t quite work out as planned, but as Marc Pritchard says, responsible marketers investment in any marketing investment must be transparent and accountable.

Supply chain transparency 

Even companies as sophisticated as P&G were unaware of the dissipation of their money i.e. what is actually spent on digital media, once the fees have been paid in the execution of digital media campaigns, in an opaque media placement process.

P&G were also were surprised at the assumptions they had made about their media agencies; they wrongly assumed they were batting exclusively on their side which, upon closer examination of the structure of their contracts with agencies, was not quite how it was in reality.

If clients looked at the activation of their sponsorship campaigns they may well find potentially a similar picture. Sponsorship campaigns are often complex and multi-channeled. A lead activation agency may frequently sub-contract to specialist agencies unbeknown to the client. Are there clear lines of responsibility to avoid unnecessary duplication, between the lead agency and the sub-contracted agency in terms of delivered outputs? Are contracts transparent between a lead activation agency, acting as the principal in the negotiation with rights holders? Are fees the agency may be receiving from the rights holder for securing a sponsor, disclosed?

The worst cases have been recent scandals around sponsorship managers collaborating with agencies to circumvent their own personal sign-off levels or funnelling money through their agencies to rent houses or pay for entertainment at events for their personal benefit.

More sophisticated clients are starting to identify the value that a company’s procurement team can bring in helping to address their assessment of how they approach the planning, activation and measurement of sponsorship, as long as they have an appropriate understanding of the reality of how the sponsorship market operates. Greater transparency in the sponsorship area would mean that clients would understand exactly what money is reaching its target and what is being diluted by undeclared management fees, commissions etc.

This will also highlight to clients the nature of the relationship they have with their sponsorship activation businesses and indeed the relationships their agencies have with rights holders. Does this issue over the transparency of agency remuneration sound familiar? As P&G have found to their cost – if you are not asking the right questions of your agencies you may be labouring under false assumptions.

Whether clients will be so distracted, trying to get their heads round exactly what digital marketing and their digital agencies are delivering and at what real cost, that sponsorship’s less than rigorous planning, execution and measurement processes will remain outside the radar of scrutiny, I do not know. I rather hope that the issues raised by Marc Pritchard may be an early warning siren for all participants in the sponsorship business to sharpen up their acts and deliver real measurable and importantly sustainable value to all parties through a more rigorous and professional approach. As Marc Pritchard said, better advertising drives growth. This equally applies to sponsorship.

So what is to be done? Let us see the more rigorous planning of sponsorship using best practice approaches adopted in other areas of marketing investment such as:

  • developing a strategic framework
  • proper audience segmentation
  • identifying a clear business case
  • clear target-setting
  • detailed negotiation strategy
  • developing a compelling sponsorship proposition and messaging hierarchy
  • organisational development and capability building
  • ongoing evaluation methodologies
  • transparency and accountability on activation delivery
  • transparent contracts and between all key rights-holders and agencies

We know how powerful, strategically driven and creatively executed sponsorship campaigns can be. But there are still too many sponsorship campaigns which simply do not make sense to the consumer and therefore have minimal impact because they have not been thought through properly. Marc Pritchard’s next groundbreaking speech may be addressed to the sponsorship industry, although it will probably come from the marketing leadership of another major global advertiser as P&G were responsible for ‘Thank You Mom!’ one of the most outstanding Olympic sponsorship campaigns of recent years.

The Olympic Baby

We were a little surprised when we saw the IOC was planning on reforming its Rule 40.

Rule 40 currently imposes commercial purdah on Olympians for nearly a month around the Games, preventing any use of name or likeness in association with non-Games partners. Penalties for contravention include disqualification and stripping of medals (although the reality is closer to a rapped knuckle for the superstar breaches that are the legends of ambush: Johnson, Christie, Phelps)

There’s a popular case for change. Dozens of athletes launched a Twitter campaign – #WeDemandChange2012 – during the London Games, to urge an end to the rule. Rule 40 limits the commercial potential of athletes at the greatest moments in their season or even their careers. Only the very top athletes, sponsored by official Games partners, would make real money in Olympic years.

But a change is still surprising. Not only because the IOC is a conservative beast…but because this reform is potentially … radical.

The premise is to allow pre-existing marketing campaigns based on Olympians to continue, providing they are ‘generic’ ie non Olympic. But as we saw clearly in the controversies about Scotiabank’s 2010 and Honda’s 2012 campaigns, it can be extremely difficult to differentiate between ‘generic’ and Olympic marketing. The strict IP of the IOC and Games are well-protected: the marques and designations. But … mood, colours, words even.: Champion, heroic, pride… The Olympic brand is way too big to be reduced to a few protected terms.

So it’s difficult to see how ambush marketing would not be encouraged by this move. And while simple cease and desist letters are effective in blocking flagrant breaches of Olympic legislation, rights protection teams would struggle to cope with multiple negotiations of the protracted sort required by the more subtle approach of a Honda or Scotiabank.

Although LOCOG successfully restricted the ability of non Partners to use outdoor or field marketing in ambush, Games-time clutter across multiple channels is also a real risk, with the threat of Atlanta-style backlash against excessive commercialism.

But it will be the NOCs around the world who are most likely to suffer, with the dilution of their main asset. Brands will have the option to steer clear of bulky rights packages and head, instead, straight to the athletes.

And the potential is for so many brands to develop ‘non-Olympic’ campaigns that official sponsors will have to reassess the value of official Olympic turf. Or for undesirable or controversial brands to tarnish the halo of the Rings. How much did Bodog offer Tiger? Any ISFs who already accept gambling partners will be hard-pushed to take a stand when the same brands turn to athletes…

The change surely has the potential to shift the entire Olympic sponsorship landscape. Sponsors in the Olympic family will be faced with the need to develop stronger, more differentiated sponsorship propositions. The marketing landscape would be shaken up, there’s no question about that.

An apocalyptic picture. Life rarely pans out exactly as predicted, but here at Redmandarin, we’re left asking ourselves: which is the baby and which is the bathwater?

Red Thread

brand purpose and sponsorship

Whatever happened to vision? It used to be a fundamental part of how businesses described themselves. I grew up with it…. Nowadays though, business vision is really hard to find. It’s been well and truly eclipsed by purpose. How a CEO responds to the ‘purpose’ question is currently one of the acid tests of leadership quality.

From the abundance of ‘purpose’ now visible, it would appear that the goal of ‘increasing shareholder value’ is no longer (sufficiently) defensible, and that the Zeitgeist is obliging businesses to embrace a more holistic, and more relativist view of their own existence. By relativist, I mean simply recognising their interdependence with the society and environment which surrounds them.

Definitions of brand fall out of date almost as soon as they’re codified – because brand is simply the name we give to our changing relationship with the commercial entities around us. Are the CEOs of major global organisations such as Unilever responding to a shift in public values and what we expect from a brand? Are they simply responding as human beings to those same changes?  The Damascene Conversion of Interface’s Ray Anderson is well recorded; and PwC’s Ian Powell is widely quoted as seeing the future of women in work through the eyes of his daughters. Even Richard Branson, whose early entrepreneurial existence was hardly characterised by a triple bottom line, is waxing messianic in later life. Or are they caught up in a C suite groupthink, the likes of which we experience with each fresh corporate scandal? Only time won’t tell because, like sponsorship, there are just too many variables.

Psychology helps us of course. There is plentiful evidence to indicate that people respond well to a sense of individual and of shared purpose. Viktor Frankl’s short but powerful account of life in a concentration camp, Man’s Search for Meaning, relates how only meaning and purpose made survival possible. A sense of purpose, as much as a sense of attachment or sense of self,  or a need for responsiveness, is a ‘human given‘ – a sina qua non of existence.

For all that it feels like a trend for Millennials, brand purpose has to be a good thing. The whole exercise of looking at purpose is healthy. It helps organisations look beyond the usual horizons of business as usual, and re-examine their customer relationships, with all the opportunity that brings to tap into the creativity, innovation and reinvention, writ large or small, that offers. Carol Cone, founder of the world’s most ‘purposeful’ brand agency, Cone LLC (and now at Edelman Business + Social) summarises nicely: it enables meaningful engagement with all an organization’s stakeholders, from employees to consumers to communities (see: Starbucks, Chipotle, PNC Bank); it drives growth, demonstrated by Jim Stengel in his book GROW; it inspires innovation, compellingly articulated by Michael Porter. ‘It transforms (B2B) sales conversations from price-based ‘beat up the vendor’ sessions to high-level strategy partner discussions. It turns senior managers into industry thought leaders.’ I’m not so sure about the intention behind this description, Sense Worldwide, but you land the point.

The debate about the commercial value of brand purpose is just a replay of the tired argument around the value of CSR. Writ larger of course, because purpose in this context is de facto integrated systemically. Like sustainability for smarter businesses, it has evolved from a separate, into a distributed function.

We have an opinion of course. It’s easy to get distracted by the rules of engagement of CSR: but CSR is sponsorship. We’ve alluded to the twin-like nature of the two in earlier Threads. They both play out in the real world, on the brand – audience relationship, they both live or die by the brand’s ability to add its own unique value. They both offer the opportunity to create proof-points for a brand’s values. Purpose, CSR or sponsorship without proof-points are just more rhetoric. They each require businesses to be emotionally intelligent enough to understand the proof-points which have the broadest relevance for its key audiences.

Our sense of purpose here at Redmandarin… is plural, not singular. As mistrustful as we are of the seductive soundbite… To push the boundaries, to add real value to our clients, to stand for something better within our sector and, if pushed, to help organisations deepen their understanding of their relationship with customers and employees alike.

Red Thread

the right rights: Orange Wednesdays

In the immortal words of Mr Dresden, “never underestimate the power of the orange side“. After a run of eleven years, the much-loved 2-for-1 cinema promotion will be withdrawn by EE, and the final curtain will fall on Orange Wednesdays in February 2015.

In many ways, Orange Wednesdays was a victim of its own success. The promotion was synonymous with the brand – so much so that even when EE absorbed Orange back in 2010, the offer couldn’t be separated from the original brand; the sponsored property had taken on a life of its own. The name ‘Orange Wednesdays’ stuck.

It was only a matter of time before EE decided to withdraw Orange Wednesdays, but the question was when?

From the perspective of the rights-holders, this grand scheme to help drive footfall to cinemas on their most quiet night of the week was a huge success – with some people even shifting their normal film night, around six million free tickets being issued each year, and with some customers using the scheme over 70 times. Orange estimated that around three million extra cinema trips were being generated each year.

Looking back on 2003, Orange Wednesdays was clever because – and it’s easy to forget how significant this was – it was getting ever easier to switch between operators. The campaign provided tangible reasons (beyond price) for customers to stay with Orange by rewarding customer loyalty. And at that time, Orange’s brand didn’t really stand out. Orange needed to find a way to be the top of mind brand among mobile operators.

But with the multi-million pound launch of EE back in 2012, the closing credits were in sight. I would like to think that in a board room somewhere in Hatfield, there was a pitch mirroring that of their long-running advertising campaign to rebrand the scheme as wEEdnesdays. But with film audiences shifting their disposable income towards Netflix, the brand saturation of Orange Wednesdays, and the potential sale of the brand to BT, EE came to the conclusion that this was the point when the logic behind the withdrawal had become so irrefutable that consumers’ emotional attachment to it wouldn’t cause a national uproar.

But while it lasted, Orange Wednesdays was great.

Hearts and minds is the only way

A personal thread, this one.

I’ve been pursuing an MSc in Organisational Development for the last 18 months. With a special focus on Gestalt and complexity theory. I’ve learned a lot about the frustrations of OD practitioners – and I’ve been reassured by the admission that many ‘change’ initiatives fail to secure much traction. (Which reflects my own experience.)

I’m not planning a change of career though: the study is just better to understand how sponsorship can sit and deliver within OD frameworks. And the conclusion is: very nicely.

OD suffers from a multiplicity of definitions: in short, its aim is to improve organisational effectiveness. The answer to ’What is organisational effectiveness?’ of course increasingly reflects a sustainability perspective and therefore centres around: whatever serves the long-term interest of the business.

There’s usually a structural component to OD – how can we restructure processes, systems, teams to perform better.  But there’s always a human component. After all, an organisation without people is no more than a collection of buildings, books and machinery. So I’ve been surprised by how much of OD comes down to how employees are engaged, motivated and aligned with the organisation’s values, vision and direction of travel. Surprised and delighted, because we’re squarely in the territory of sponsorship.

There is a growing body of research into sponsorship, especially into the factors relating to consumer purchasing decisions. Although an internal dimension to sponsorship is widely acknowledged, there has been very little research into its organisational impact.

Aila Kahn and John Stanton from the University of West Sydney are a notable exception, exploring the impact of corporate sponsorships on employees. In 2010, Kahn and Stanton published a paper titled, ‘Examination of the Effects of Corporate Sponsorship on Employees of the Sponsor‘. Kahn and Stanton established a positive correlation between employees’ opinions of corporate sponsorships, and Organisational Citizenship Behaviour (OCB). OCB is defined as ‘individual behaviour that is discretionary, not directly or explicitly recognized by the formal reward system that in the aggregate promotes the effective functioning of the organization’, and includes altruism, courtesy, conscientiousness, civic virtue, and sportsmanship,

Organisational identification, or the extent to which an employee identifies with the organisation, is a key concept here, because there is an obvious and thankfully proven connection to organisational commitment and OCB. The centre of gravity of Kahn and Stanton’s research was to establish that approval of corporate sponsorship enhanced organisational identification, a point we alluded to in an earlier Red Thread (October 2013).

There were a number of limitations in their research. Critically, their methodology did not take into account the differing impact of different types of sponsorship activity, treating high profile national sports sponsorship as equivalent to partnership with a local not for profit organisation. My own experience – and common sense – suggests that both the nature and management of sponsorship activity is a major determinant of organisational employee engagement.

Here are two extreme examples.

Barclays’ sponsorship of the ATP was widely regarded within the business as a personal expression of CEO Bob Diamond, disconnected from the business and therefore incapable of generating organisational identification. Most companies, by contrast, allow employees an open or semi-open choice of charity partner – and charity partnerships of this kind usually record extremely high employee engagement levels. (Although not generally considered sponsorship, the charity of the year falls within our definition framework – an organisational alliance, modelling brand values and with an intent to deepen relationships.)

To suggest that sponsorships should be put to a popularity vote with employees is to miss the real point. Even to suggest that sponsorships need thorough internal activation is off focus. The absolute point is that sponsorship design needs to ensure absolute genuine alignment with organisational values and needs.

The whole field of ‘charity partnerships’ is underutilised. They deliver against different objectives from most corporate sponsorship, under-delivering on media but over-delivering on engagement. But in a digital age, an age of social media, the ability for businesses to carve out and deliver messaging targeted carefully against audience and brand, the not for profit sector offers more than ever a fertile territory for brand expression.

The phrase ‘hearts and minds’ is usually evoked to suggest an extraordinary commitment to connect emotionally with people. The truth is, it’s the only way.

Red Thread

Move over, passion

While we’re on the subject of research, there’s a piece from 2008 which is particularly relevant. It’s called ‘How brands twist our hearts and minds‘.

It’s an MRI study of neural activity present in subjects considering brand choices in beer and coffee categories and hails from Münster University. It shows how brand affinity overrides ‘rational’ or objective selection criteria.

The study is based on Slovic’s theory of affect heuristic which, basically, proposes that rational decision-making can be short-circuited by our emotions, and how the development of these short circuits is part of how we make life easier – by removing the pain of choice. Anyone who dreads the breakfast cereal aisle in the supermarket knows all about that, and indeed, philosopher and sociologist Renata Salecl’s The Tyranny of Choice is about precisely that.

Jacoby, Olson and Haddock (and subsequently others) established in 1971 that consumers actually consider a very small set of product attributes to arrive at a purchase decision, and the first of these are brand name and price.

The sponsorship industry sells on its power to make people feel and behave differently towards brands and this research confirms the process by which this happens. So the next time someone tries to sell you passion, tell them it’s all about the affect heuristic.

It’s not all good news though. The authors make the case for MRI on the back of the futility of research techniques which depend on the conscious mind for an answer. The dreaded question, included: would you be more likely to consider…?

My belief is that, in mature markets especially, sponsorship needs to have deeper relevance than much sports sponsorship – and every touchpoint needs to work hard.