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?

Football, meat pies, kangaroos etc.. funny strange how it all links together #marketing #GM #rugbyleague

In my bizarre world it all makes sense. GM is a big US brand-accumulator that has taken over popular national car-making brands in several countries, such as Opel in Germany, Vauxhall in the UK and of course Holden in Australia. In doing so they have managed to either submerge the link with GM from public view, such as they have done with SAAB in Sweden, or use it to their advantage, as they did with the much grander-sounding General Motors-Holden's Ltd (since renamed). In this way GM has become huge, feasting on the success of brands both in the US and across the world. To complete the sleight of hand in Australia GM's advertising agency re-worded a very patriotic-sounding Chevrolet jingle that suited the US market to fit the Australian environment. That sort of pragmatic, yet shallow and empty marketing resonated with the public at the time, but to me has set the scene for what ultimately may be the end of the whole "as Aussie as a Holden" charade.

'Football, meat pies, kangaroos and Holden cars', goes the jingle. Ahhh, football. But which kind?

Well in Sydney, traditionally, it has been Rugby League, a professional working class spin-off from the proudly traditional 'amateur' code of Rugby Union. And of course Union is no longer amateur and the 'working class' League players (at least at the top end) are now as well off as any local pro sports star. As in very nicely paid, thank you. Which brings me to the whole system of competition, which has evolved over the last 20 or so years from a district-centred and loyalty-bound operation to a national comp where only the richest clubs can afford the best players and coaches (salary cap duly noted) and loyalty is largely meaningless, or very short-term. Yes, there are exceptions, in pockets of resistance (Souths and St George, perhaps, and maybe a couple of other clubs to varying degrees). But in essence the local developmental pathways that ensured local support have been eroded, leaving what remains of the loyal supporters clinging to a brand name rather than a meaningfully real entity. Whole clubs have been sacrificed at the altar of cash and flung into oblivion. Where those fans went I don't know - well actually I do, as I simply lost interest. Now I just look for the results, almost totally disengaged from any sort of active support. I won't be taking my kids to a game, I can tell you. Given the ill-disciplined attention seeking of these gifted but arguably over-paid "athletes", I'd rather they play - or watch - soccer instead.

OK, I know, that's professional sport these days. But some sports - cycling for example - have managed to merge the pros and the amateurs, retain the grass-roots club network and create a successful professional system without the same smell of filthy lucre. It doesn't help that the main financial underpinnings of Australia's Rugby League football clubs are the gambling dens of the leagues clubs and the money-hungry alcohol manufacturers.

Why am I thinking about all this? Well I read this statement:"I find it astonishing that someone would make those comments when they aren't even part of the NRL." That's someone from the Cronulla club (in financial peril and wanting to save themselves by playing a few more games 140km or more north at Gosford) having a go at someone who lives on the Central Coast but runs one of the clubs (Norths) that was outed from the national league some years ago. You can get all the sordid details at that link. Point is, Cronulla (itself a spin-off from the St George club) has about as much to do morally, ethically and culturally with the Central Coast as GM has to do with Holden. Perhaps even less, as at least GM rescued Holden's in the first place. Either way, it's all about money. They may spin a nice yarn, but I can't imagine anyone believing it. And as the 'astonished' Cronulla spokesperson said, if you aren't part of the national league, don't even bother commenting. The arrogance.

And in my bizarre world, that's the link. The short-term, dollar-focused arrogance with which consumers have been treated by the National Rugby League is akin to the ever-thirstier-and-ever-bigger car-making arrogance shown by GM. And we know where GM is right now - staring into the abyss.

Alpha 680 first Google Android to ARM-wrestle us to a new low-cost netbook platform? #tech #marketing

For a while there things were looking predictable, mature, even lazy. The next model would be smaller, faster, have more style, more color, with a bigger HDD, bigger screen and a smaller price. And it would trendily (and casually) drop legacy features in favour of ubiquitous unwired networking and further convergence with, say, the TV or the dishwasher. Of course the operating system would bulk up as we all headed to a multi-core, 64 bit world of living room and kitchen computing. PC Next would come in 2 tasty flavours: the delicious desktop or the desirable laptop. Yawn.

And then laptops became notebooks before morphing into something else again. Like an organic lifeform reaching some critical neuronal mass and gaining consciousness, the notebook became smaller, less powerful and yet, somehow, infinitely more attractive. The netbook was born and the PC marketplace began to look a bit different.

But the PC marketplace is a fascinating and wonderful thing, and more change is afoot. And this could be the most interesting recent play yet. Rather than a PC player invading the cell phone market, here we suspect it's a new broom, unencumbered with baggage: a low-cost Chinese maker wielding a smartphone's ARM chip, merging it with the Google Android OS and morphing the whole thing into a low-cost netbook. Well we knew it had to happen, and now it's here: the Alpha 680.

So what? Well, whilst it continues to follow the now well-trodden path to PC commoditisation that's seen margins fall and prices drop (less so with closed-shop proprietary boxes like Apple's) it's the first concrete sign that new players from left-field are about to wreak havoc on Intel's and Microsoft's respective cash cows. They have faced competition in the past and largely seen them all off, marginalised and niched into small pockets of loyalty, but this is different. Or is it?

A longtime engineer in the satellite industry, Wu, a 50-year-old Hong Kong native, co-founded Skytone in 2005 with another partner. Contrary to some reports, Skytone is unrelated to a similarly named maker of Skype telephone handsets. The company didn't have a firm direction until an encounter with American retailing giant Wal-Mart in 2006 turned them toward the low-cost PC market. "They were looking for ways to build a $100 PC. We had expertise in porting Linux to embedded systems, and so they found us," Wu said. "At the end of the day, we couldn't meet Wal-Mart's target, but we continued on this path, anyway."

The InfoWorld article gives some fascinating detail on what to expect next, including that vaunted $100 PC... and a taste of what the newly-enthused competition will do next.

Cars that still sell, despite the fear and loathing: Hyundai, Kia, Subaru...Jeep? #cars #marketing

I can't verify this statement for accuracy, but here it is, from Forbes mag: A handful of car models, such as the Jeep Wrangler and the Smart, are maintaining their sales despite the general auto collapse. But the only full-sized companies that are holding their own are Korea's Hyundai and Kia, and Subaru. I think he's looking at the US market, but let's look more widely at why these brands are successful.

First up, the Smart makes sense in these difficult times, although I do wonder which model is holding up best. I suspect it's the tiny, cultish FourTwo. It's both an economical, sensible city car and a niche hit. Just search YouTube for the whacky variations and mods you'll find for that diminutive sub-compact. Because it's a bit - or a lot - different, it stands out in the market - whilst garnering some respect via owner Daimler. And it doesn't hurt that it has green cred attached to it, either. If you drive one of these cars you are definitely making a statement, like it or not. Although it's had a rocky road at times, it's now doing exactly what the brand was created to do. It could be a car for the times.

Of course the Jeep Wrangler is another cult hit in a niche market, albeit a very different one to the Smart. Indeed it's almost exactly the opposite in every aspect, with street cred based on roots going back 65 years or so to the original general purpose vehicle. It thus couples a spared-back historical military style (think 'MASH') with a go-anywhere, thumb-your-nose-at-climate-change sort of "freedom" feel. Again, it makes a clear statement about you and your beliefs, or so we may think. Whilst it may not be the most economical car in the world it has a style and a practicality about it that has led to a self-perpetuating following.

On the other hand Hyundai and (Hyundai-owned) Kia are upstart Korean mass producers of a range of increasingly well-built but clone-like cars with little innovation in style, packaging or performance. Like the Smart brand they were created as a product line, rather than evolving out of the bicycle or horse-driven coachbuilding industries, car racing or from post-world-war reconstruction like many 'traditional' European (and Japanese) brands. As such, being late to the party as it were, they have leveraged the manufacturing lessons (and technical input) of companies like Ford and Mitsubishi and designers like Giugiaro to create a line of carefully targeted, inoffensively-styled lower-cost cars. They have also got a sizable local market to fall back on (something the Aussie car makers can only dream of). Whilst they lack the street cred of more traditional brands, their lower unit cost of production has meant that they can sell harder to gain market share, at times burdening each individual vehicle sale with thousands of dollars worth of advertising. To the company's credit they have continually reinvested in quality, style and dynamics, largely closing the gap on the class leaders whilst maintaining their cost advantage. So they have achieved market visibility, acceptance and a lower price point against their competitors. No wonder they are holding their own - surely they are now 'stealing' market share from Toyota, GM and the like.

Which brings me to Subaru, famously the 'ugly duckling' of Japan's auto industry. Subaru does have a legacy (US-market pun intended!) to draw upon, having evolved out of Fuji Heavy Industry's history of aircraft and motor scooter production. In many ways the company has paralleled the traditional car makers with their deep technological and evolutionary roots whilst keeping themselves firmly rooted in the "but strangely different" category. They have also indulged in some 'cred-creation' via motor sports, especially rallying. However their main claim to differentiation has been their strangely awkward approach to exterior car design and their dogged determination to hang on to horizontally-opposed 'boxer' style engines. Coupled with the more recent leveraging of their rallying heritage via a marketing-lead commitment to all-wheel-drive, Subaru has ended up making a name for themselves across a range of seemingly opposing niches. For example their WRX model achieved notoriety both as a world-class rally winner and the car of choice for Australian bank robbers; whilst their Outback model leveraged quirky styling, solid reliability and a bit of Aussie bushbashing charm. (Australia being both a key test market and the source of Paul Hogan, an advertising hit for Subaru in the US.) And as the Forbes article states, it helps sales in snowy or slippery climes if you offer traction built-in. In all, a strange brew.

There is a common theme to all of these brands. Firstly, none are the market leaders, although each may have a model in the top 3 in a segment, somewhere - so they are the underdogs in a way. (People like underdogs, generally, as long as they deliver.) Secondly, they successfully occupy - perhaps dominate - one or more sizable niches. But can they maintain these positions during challenging times? Indeed it will be interesting to see how the car market evolves over the coming months and years, given the spectacular changes afoot. This is a time of financial drama coupled with a game-changing conversion to alternative fuels. Whilst we may get another 50 years out of petrol, we will see increasing opportunities for new players to come in and undermine both the current oil-based fuel refiners and the current vehicle manufacturers. Hybrids and electric cars are just the start. Deep pockets will be needed to fund this shift.

Likely as not we will see struggling companies like Ford, Chrysler and GM partly consumed by - or partnered with - competitors like FIAT, Toyota and VW. And we will doubtless see the rise of Indian and Chinese manufacturers, playing a similar game as the Korean makers have done, leveraging huge local markets first before staking global claims. Whilst the big fish like VW and Toyota will probably maintain their overall positions, the niche players will be joined by companies on the way down, looking to hang on - somewhere, anywhere - and newcomers on the way up. Will trendy quirkiness be enough for Subaru and Smart? Will the up-to-now agile and lower-cost Korean makers cement their current Top 5 position and move up, or will upstarts like India's Tata consume the ground underneath their metaphorical feet?

Blu-ray moves to an early majority? A what? #tech #marketing

I know what an early adopter phase is, but what's an 'early majority' phase? Are they just making stuff up? Well, yes, of course they are - we all make stuff up. Being human we like to categorise and label - it's how we learn and cope with our environment. Aside from labelling poisons and food stuffs for purely practical purposes, we have invented 'baby boomer' as a broad demographic label for a real surge in births and then felt compelled to continue labelling each succeeding 'generation' whether it makes sense, or correlates with real research, or not. Mostly not.

So it is with marketing speak and the phases of a product life cycle. We are getting carried away with granularity whilst mixing in some hype and spin. Yes, Blu-ray has won the HD war, yes sales are growing and prices are falling. If it becomes compelling enough we'll all buy one. Unless something disruptive comes along first, like massive, cheap broadband and Internet-enabled home A/V gear. Who needs a disc in a data-on-demand world?

In any case 'Early majority' doesn't really make any sense - either you have a majority or you don't (and Blu-ray technology has less than 10% share no matter how you look at it, so 'majority' is a hard label to pin on it). So it's a majority of what? Nothing?