Hyping-up sports sponsorship in a receding economy - but does it work? #cycling #marketing

This free commentary is about professional cycling and related sponsorship, but generalises easily to any sport. It also is offered as opinion only. Whilst it represents honest analysis no non-public information is used and no guarantees are made.

Bearing in mind the state of the European economy in particular (given that pro cycling is heavily Euro-centric) and the pressing need to retain existing sporting sponsorships, you'd expect to see winning ProTour cycle-racing teams spruik both their successes and the pay-off for the sponsors. And thus in that context we see the Columbia-High Road team quoted in Cyclingnews:

Team Columbia-Highroad's domination of the first week of this year's Giro d'Italia has provided the team's sponsors with valuable brand visibility. In the first 10 days of racing the team garnered four stage wins and three days in the race leader's maglia rosa. Coupled with the added attention to the race due to centenary edition and the presence of Lance Armstrong, the value on the team's press is staggering. "This race has much bigger coverage than it did last year, I would say in the [leader's] jersey is worth around a million euro in advertising a day," the team's general manager, Bob Stapleton, told Cyclingnews. The leader's jersey went to Columbia-Highroad after the opening day's stage on Venice's Lido. Columbia's Mark Cavendish led over the line in the team time trial and wore the maglia rosa for the following two days.

It helps to be successful, of course, but even the smaller teams can have their day. Whilst the leader on the road is clearly the most-watched rider, anyone from any team can have a crack at a breakaway. For these teams a long, heroic and probably fruitless breakaway or - probably even better - a stage win in a Grand Tour (like the Giro or the Tour de France) can make or break a sponsorship deal. With intense European (and growing US) TV and general media coverage a team can leverage that exposure to delight existing sponsors and hopefully attract new ones. But competition for sponsorship cash is intense, both within and between sports, especially so when all indicators point downwards.

Without media focus a team may struggle for sponsorship. A dwindling team budget usually meaning fewer star riders and fewer successes - a downward spiral indeed. If the stakes are high for the sport, the payoff for the sponsor is just as critical. Marketing and advertising budgets are under stress as companies look for high returns at low risk. So in these straightened economic times, is such sporting sponsorship truly worth the investment?

On one level it's quite simple to verify a figure like the 1,000,000 Euro quoted above; just by adding up the minutes of clear TV exposure (when the sponsor's name is prominently shown) and the number of sponsor-name references made in the press or on radio, on enthusiast websites and blogs and so forth and multiplying by the typical advertising rates that would apply is a quick and dirty approximation. What's missed in that calculation is the number of spectators who may have caught the event live - a large number indeed in a travelling circus like a 3-week Grand Tour. You could do an approximation. But what does that 1,000,000 Euro number actually mean?

Not a lot, really. You can garner as much exposure as you like - be it by paid advertising or not - but if it's not targeted, what's the point? And if the exposure doesn't convert to a sale, well you've not won many friends among your shareholders. Of course you could try to write it off as a branding exercise (like stadium naming rights, for example), something that may in theory leave a brand memory that will trigger a later sale if and when the stars align. In pro cycling Mapei is a classic case. An Italian ceramics and adhesives company with a long and distinguished sponsorship of cycling, despite largely pulling out of the sport some years ago, Mapei remains a high-recognition name amongst cycle-sport enthusiasts world wide. But cycling fans don't need to buy floor tiles every day, do they? Hopefully enough such fans do remember and act on their fond memory of Mapei riders when they update their bathrooms (or their Opera House roofs, for that matter). Hopefully.

But in the case of the Columbia-Highroad team it does make sense on several levels. Firstly, the lead sponsor (Columbia apparel) appears in the team name as well as on the pro cyclist's jerseys, guaranteeing at least the level of potential exposure I mentioned above. (A nice spin off of team success will also be that non-professional race and recreational riders will seek out, buy and wear your branded jersey, too. In this way Mapei continues to trade on their sponsorship, years later.)

Secondly, it's targeted better than most sports advertising, in that Columbia is a specialist outerwear company with a good likelihood of translating the cycling enthusiast's general outdoor interest into sales of "adventure clothing", ski jackets and the like. Coupling cyclesport sponsorship with the company's corporate strategy of diversification and global expansion also makes sense. If Columbia, a US-based company, wants European exposure in the right demographics, it can hardly do better than pro cycling. Interestingly, whilst pro cycling is a long-established sport world-wide, it was momentarily (from about 1940 onwards) knocked on the head by the motor car in markets like the US and Australia. As the car industry and motorsport has subsequently become painted with a (much deserved) anti-environmental brush in more recent times, so we can expect to see a global resurgence in interest in bicycling, both recreationally and in professional racing terms. The 'Lance Armstrong effect' is a handy assistance, too.

But is it working? We don't have sales figures to look at (but we could find them if we wanted to trawl the web) nor can we easily do any statistical work to find the underlying correlations, but we can at least check out the Web stats.

Let's start with the team itself. If we do a search on Alexa we find that highroadsports.com (the ProTour team) is not amongst the top 100,000 sites, at least by Alexa's ranking (it's currently just under the #800,000 mark). Indeed the stats suggest that the team site has dropped in "reach" by 10% over the last 3 months. (Traffic may be seasonal, strongly coupled with specific races and indeed results.) The stats also tell us that the site is garnering 46% of its traffic from an aggregate of "other" countries, 30% from the US, 15% from Belgium and almost 8% from France. Indeed the team site ranks inside the top 30 in cycling-mad Belgium. Presumably the team's success at the Giro in May will drive more traffic from Italy, but it's not apparent as yet. (At least from these stats.) Alexa also offers some interesting demographic data if you want to delve further.

And how are the sponsors going? Alexa tells us that Columbia's web site ranks in the top 72,000 of all sites. Almost 60% of the recent traffic originates from the US, with "other" next, then China, Austria, Greece, Canada and Germany all between 2.6% and 4.8%. I'd guess that traffic may be seasonal with a bias towards winter clothing and colder countries (although Indonesia is a standout at 1.5%). The 3-month trend shows traffic down 36%, which again may correlate more closely with weather and the economic climate than anything else. Whilst at first glance this dip in traffic is disappointing, if we seriously wanted to explore the success of this sponsorship (and draw any serious conclusions) we'd need to remove the seasonality from the stats and focus on some clear targets for decomposition, regression and correlation. We'd also want to look at the sales figures by country, too and define our target period closely.

For comparison, checkout Google's search trend site for columbia.com. It looks like a steady decline in search requests over 3 years or so after a big launch. Of course you'd expect that people would search for a company that's promoting a launch, but you'd also hope to see some sort of spike when doing promotions.

So how about the team's minor sponsors, their "partners" ? I won't do any sort of specific analysis, but it's clear that - as you'd expect - these include mostly cycling-specific companies (like Shimano, if you exclude the fishing gear!), with the exception of the humanitarian Right To Play organisation. Now you may expect that the sponsors will show up in the upstream and downstream clickstream, but according to Alexa the biggest generator of clicks for Highroad as well as the biggest downstream receiver is one specific online bike shop. The connection? A "store" link on the Highroad site. I'm assuming that's a powerful and profitable relationship for that bike shop!

Alexa also offers "related links" for Highroad. I'm not yet sure how this is generated, but the main sponsor shows up top of that list. 2nd highest beneficiary is where we started this journey - Cyclingnews.com, followed by a group of bike messengers and some other pro cycling teams. If I was a minor sponsor with an interest in generating more web traffic I'd be looking at Highroad's server stats, doing some analysis and making some cogent suggestions.

There are better, more precise ways to go about analysing marketing data than looking at web traffic alone, and there are better sources of web stats than what Alexa's free service alone provides. But after all, what can you expect for free?