IEG SPONSORSHIP REPORT THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING

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1 IEG SPONSORSHIP REPORT THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING OCTOBER 9, IN DEPTH BEST PRACTICES: RESPONDING TO RFPS Marketing procurement grows in popularity, but poorly written RFPs present a challenge. Call them a necessary evil. Although companies have long used requests for proposals to source advertising agencies, media planners, PR firms and other marketing services providers, the bidding process has played a fairly limited role in the selection of below-the-line marketing agencies. But that is starting to change, with a growing number of companies using RFPs to select sponsorship agencies. Case in point: Farmers Insurance ( Who Does What: Auto And Home Insurers ), JPMorgan Chase & Co. ( Prepaid Cards Load Up On New Sponsorships ) and United Continental Holdings, Inc. ( Airlines Maintain Course Amid Industry Consolidation ) all recently used RFPs to enlist agencies with sponsorship expertise. Farmers earlier this year hired Culture Shop, JPMorgan enlisted Creative Artists Agency, while United last month brought on Momentum Worldwide as its sponsorship marketing agency of record. The growing use of RFPs to select agency partners is largely driven by one primary factor: The growing role of marketing procurement. It s taken a while for marketing procurement to get to below-the-line agencies, but they re getting there now, and they re applying the same principles, said J. Francisco Escobar, president & founder of JFE International Consultants, Inc., a business management advisor to major marketers, advertising agencies and other companies in the marketing services industry. HOW COMPANIES CAN IMPROVE THE RFP PROCESS Narrow search to the most likely prospects Take targeted approach, not shotgun Is incumbent in the running? If not, do not invite Be clear on scope of project Provide specifics of relationship Share marketing challenges Include mock assignment to assess capabilities Include live presentation Ensure cultural match Host Q&A session in closed environment Give agencies freedom to ask targeted questions Explain selection criteria Explain how and why decisions will be made Share decision-making timeline Host agency debriefing Let agencies know why they didn t get the assignment 2012 IEG, LLC. ALL RIGHTS RESERVED. 1

2 Those principles center on a process-driven, analytic approach to sourcing goods and services, with a focus on cost, transparency and accountability. Good For Companies, Not So Good For Agencies While the RFP bidding process can help companies become more cost efficient, it can be a major headache for agencies that want to work with them. One major hurdle: selling number crunchers. You have the same guy who buys paper clips making a decision on what sports marketing agency to hire. Their focus is on the net cost of hiring an agency instead of who has the best value proposition, said Michael Neuman, managing partner with Scout Sports & Entertainment, Horizon Media s in-house marketing agency. Intellectual capital and innovative ideas just don t resonate. Another major challenge is determining whether or not to respond to an RFP, many of which can be vague in outlining the scope of a project or relationship. Some companies do RFPs very well, and they are the ones that get the right agency. Unfortunately, the vast majority are poorly written and poorly executed, said Greg Busch, executive vice president of client management with GMR Marketing. Some companies use generic or repurposed RFPs, making it even more difficult to understand the true scope of the assignment, he added. And if that wasn t bad enough, it can take a significant amount of time and resources to respond to an RFP, often with negative results. That was recently the case with GMR. We responded to an RFP that had to be a turned around in a week. That was a tremendous amount of work and we didn t hear anything for three months. Why did they need all that information in a week if they didn t respond for three months? As a result, Escobar believes agencies should only focus on RFPs from companies where there is an existing relationship. If you don t have a mole inside the organization or have a strong tie to a key decision-maker, don t waste your time. It can be an expensive, time-consuming and energy-zapping process, he said, adding that the RFP process can sometimes be unfair. Many times a decision has already been made, sometimes they want to get an incumbents price down, and sometimes they re going on a fishing expedition and not serious about bringing anyone on at all. While both agencies and corporate marketing execs acknowledge the procurement process does have its flaws, it has resulted in mutually beneficial relationships IEG, LLC. ALL RIGHTS RESERVED. 2

3 Case in point: Diageo plc ( A global party: Inside Diageo s Approach To Sponsorship ) used an RFP to enlist Just Marketing International to help activate Johnnie Walker s seven-year-old sponsorship of the Vodafone McLaren Mercedes Formula 1 team. We see them as an extension of our work force. When you do that, your approach tends to be different. We are accountable for their development, and that ensures that we have a long-term relationship, said Gary Carey, Diego s global director of sponsorships. How The RFP Process Works The RFP process typically begins with the establishment of an agency selection committee comprised of key stakeholders. That can include marketing, procurement, finance, legal and other internal stakeholders. And other departments are increasingly weighing in on the selection process, each with their own hot buttons and interests. That can range from environmental issues to supplier diversity and drug testing. The number of departments getting involved in marketing is amazing. Those are issues that marketing never had to deal with before, said Escobar. With a committee in place, the team then establishes the scope of the project, fees and the criteria for selecting an agency. Most companies kick off the process with a Request for Information to establish a list of potential partners. That RFI typically asks respondents about agency capabilities, current clients, case studies and other information. Once the company identifies the most qualified candidates, it then uses an RFP to whittle down the list. The document should explain how a decision will be made and may include a mock assignment and in-person presentation. The RFP may also include a conference call where respondents can ask questions about the project. While the question and answer session can help agencies gain additional information, the process is frequently conducted in an open environment, leaving some participants hesitant to ask questions. If I ask twenty questions and another agency asks two questions, they are not penalized for not taking part in the engagement process. They all benefit from my analytical thinking, said Neuman. Some companies also use in-person presentations to ensure there is a fit with the agency, a process otherwise known as chemistry and tissue meetings. Best Practices: Responding To RFPs While some agencies are in the fortunate position of not having to respond to RFPs, most firms need to respond to the documents as part of their business development efforts. Below, Escobar shares seven tips for responding to RFPs. Be selective. Although most agencies cannot afford to ignore RFPs, many do not take the time to determine whether or not an opportunity is worth pursuing IEG, LLC. ALL RIGHTS RESERVED. 3

4 Service providers are hungry, and they re usually not selective on the RFPs they choose to respond to, said Escobar. As a result, agencies should ask the following questions when determining whether or not to follow up on an RFP: Is the project clearly spelled out? Does it have reasonable deadline? Does it explain how a decision will be made? Simply put, a proposal that is vague and nondescript is probably not worth pursuing. Be inquisitive. If a decision is made to move forward, agencies should take advantage of every opportunity to ask questions. The importance of asking questions is paramount at the start of the process, especially if the scope of the project is not entirely clear, said Escobar. In asking the tough questions early you may choose to proceed or not proceed. Be concise. When responding to an RFP, agencies should keep their responses short and sweet. Oh my god, the decks that some agencies put together, said Escobar, noting that some agencies have used presentation decks with more than 100 slides. If four agencies respond to an RFP, that s 400 pages worth of stuff. Corporate decision-makers don t have time for that. Answer questions thoroughly and concisely. Be punctual. As with any project, agencies need to respect deadlines. You want to be on time, and preferably you want to be early. Be accurate. While it may be basic, properties should always proofread documents prior to submission. That simple task is sometimes overlooked. For example, Escobar points to a PR agency that responded to an RFP with a document full of typos. Why would a company hire a PR agency that couldn t spell check? You need to proofread the document. Don t let them box you in. Many RFPs ask questions that may be difficult to answer in one cell of an Excel spreadsheet. In those situations, properties should put an asterisk next to the answer and include additional information in an addendum. If they try to put you in a box, give yourself an out. Don t let them pigeonhole you. As an example, Escobar points to a common question that asks agencies for their expected level of profitability. Most agencies like to make 20 percent, but some may say That won t be competitive, let s put in 15 percent. To overcome the difference, the respondent should include a caveat that says 15 percent is the expected minimum guarantee with the opportunity to explore an incentive based on meeting mutually beneficial results, he said. Take an active role in the entire process. Agencies should try to put their best foot forward at every stage of RFP procurement process IEG, LLC. ALL RIGHTS RESERVED. 4

5 Agencies don t come back from behind to win. The ones that nail every step and ask the best questions are the ones that get it, said Escobar. While the process can be burdensome, agencies should be as enthusiastic as possible. The passionate provider will be the most attractive one. Sources Diageo plc, Tel; 44/ GMR Marketing, Tel: 312/ JFE International Consultants, Inc., Tel: 214/ Scout Sports & Entertainment, Tel: 212/ IEG, LLC. ALL RIGHTS RESERVED. 5

6 IEG SPONSORSHIP REPORT THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING OCTOBER 9, ONE-ON-ONE A GLOBAL PARTY: INSIDE DIAGEO S APPROACH TO SPONSORSHIP Beverage giant toasts properties that are flexible and can adapt to changing business priorities. With a portfolio that includes Guinness beer, Sterling Vineyards wine and Johnnie Walker Scotch whiskey, Diageo plc is one of the world s few global beverage companies with products in the beer, wine and spirits categories. And the company supports its vast portfolio through a mix of global sports, music and entertainment properties ranging from professional rugby (Guinness/RBS 6 Nations) to Formula 1 (Johnnie Walker/Vodafone McLaren Mercedes) and music (Smirnoff vodka/madonna). Those sponsorships are overseen by Gary Carey, Diageo s Amsterdam-based global sponsorship director. In addition to vetting opportunities, negotiating deals and ensuring existing partnerships are working properly, Carey and a team of five sponsorship executives serve as an internal resource for local and regional deals initiated by local brand teams. IEG SR spoke with Carey about Diageo s approach to sponsorship, the growing importance of social media, the need for properties to accommodate changing marketing priorities and other topics. Below are edited excerpts from the conversation. IEG SR: Diageo is a global company with an extensive array of products. Tell me about your approach to sponsorship. Carey: There are two ways that we approach sponsorship. One is an out and out connection with a property where there is a big affinity among our target consumer, like Guinness and rugby. Rugby is a real passion point for Guinness consumers, so it makes sense to be involved in the sport. The second way we look at marketing assets is by using them to service our brand campaigns. An example of that would be Smirnoff and Madonna. We have an exciting brand engagement platform called the Smirnoff Nightlight Exchange Project that offers Smirnoff consumers the ultimate night out experience. We employed the services of Madonna to elevate the marketing platform to the next level IEG, LLC. ALL RIGHTS RESERVED. 6

7 IEG SR: Where do you see the industry going? Carey: Too many rightsholders haven t embraced the digital world. As a result, you have a disjointed meeting point of brand owners that are craving digital content and rightsholders who haven t got a clue how to service them. Some properties have embraced that world, while others have put their head in the sand. If they don t embrace digital media and second guess where brands are going, there will be an issue with their commercial viability. Another thing that is important to us are rightsholders who are flexible and can tailor their offerings to a brand s needs. We try to get gold, silver and bronze packages off the table very quickly. We say upfront that sponsorship has to work in service with our brand engagement platform, and we want an open, flexible conversation about exactly what we need to fulfill our requirements. It s quite unbelievable how many rightsholders are like a bunny in a headlight. They don t know how to be flexible. I think there is an opportunity for them as well. We can work with them to identify commercial assets they never thought of, especially with things like digital content and social media. IEG SR: Can you share an example of property that gets it? BREAKING IT DOWN: TWO RECENT DIAGEO DEALS Madonna MDNA World Tour Participating brands Smirnoff vodka (Europe & North America) Johnnie Walker whiskey (Latin America) Partnership overview Diageo in 2011 struck an integrated partnership that includes commercial inventory, intellectual property and other assets. Commercial assets/activation platform Tour sponsorship Smirnoff Nightlife Exchange dance competition Smirnoff limited-edition package with VIP access pack Use of likeness in ad campaign Greg Norman Participating brand Johnnie Walker Blue Label Partnership overview Diageo in 2010 partnered with golfer and businessman Greg Norman to support its expansion into the luxury spirits category. Commercial assets/activation platform Brand ambassador for JW Blue Label JW Blue Label co-branded Venturer travel bag JW Blue Label Trophy Tour, Asia Carey: The Vodafone McLaren Mercedes Formula 1 team. They have come on a journey with Johnnie Walker that started in At the beginning the relationship was all about branding and building an association with the team. Over the last seven years our needs have changed. They haven t always got it instantly, but we have gotten to a point where we have a very good and productive relationship. When the direction of our campaign changes we can sit at the table and explain where we re coming from and the assets that we need. It s not always easy for rightholders to be flexible. Motorsports teams have contracts with drivers, and it s not always easy for them to be flexible. But McLaren Mercedes is a good example of going from an association with the team to Step Inside the Circle with Johnnie Walker, a campaign focused on digital content. That required a complete shift in assets. Instead of a big chunk of driver time for TV commercials we needed 15-minute chunks over race weekends to shoot something that we can get to our consumers in a very short amount of time. McLaren helped us tremendously in getting to that place. Source Diageo plc, Tel: 44/ IEG, LLC. ALL RIGHTS RESERVED. 7

8 IEG SPONSORSHIP REPORT THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING OCTOBER 9, SERVICING QUICK HITS: SPONSOR SERVICING Properties place more focus on open communication and data-driven recap reports to keep partners happy. Although most rightsholders understand the importance of servicing corporate partners, many still fall short when it comes to providing the love sponsors need. So what are properties doing to service sponsors? How are they going beyond sponsor summits and post-event fulfillment reports? IEG SR asked those questions to three properties: the LPGA, NHL San Jose Sharks and Newport Harbor Corp., the producer of the Schweppes Great Chowder Cook-Off, Newport Blues & BBQ Festival and other events. Below, they share how they share the love with sponsors. Eric Mastalir, vice president of corporate partnerships, Sharks Sports & Entertainment Hosts special events to maintain relationships during NHL labor dispute; places more focus on data-driven recap reports. HOW VALUABLE ARE THE FOLLOWING PROPERTY-PROVIDED SERVICES? POST-EVENT REPORT/FULFILLMENT AUDIT AUDIENCE RESEARCH ON ATTITUDE/IMAGE AUDIENCE RESEARCH ON PROPENSITY TO PURCHASE ASSISTANCE MEASURING ROI/ROO AUDIENCE RESEARCH ON RECOGNITION/RECALL LEVERAGING IDEAS 37% 50% 50% 49% 45% 45% With the NHL labor dispute showing no signs of resolution, the Sharks are doubling down on servicing sponsors, corporate suite holders, season ticketholders and other stakeholders. AUDIENCE CONTACT INFORMATION THIRD-PARTY VALUATION STATEMENT AUDIENCE RESEARCH ON BUYING HABITS TRACKING OF PROMOTIONAL OFFERS 2012 IEG, LLC. All rights reserved. 21% 33% 28% 28% That includes creating special events designed to provide sponsors access to players, broadcasters and other notables. For example, the team has hosted wine tastings and other events that include locker room tours and meet-and-greets with coaches and broadcasters. We re placing more focus on servicing to make sure they get the information they need given the event of a protracted work stoppage, said Mastalir, noting that the team has asked each sponsor for marketing creative so that it can quickly roll out activation programs once the dispute is resolved IEG, LLC. ALL RIGHTS RESERVED. 8

9 In addition to hosting special events, the Sharks also plan to include more tailored information in mid-year sponsor recaps. That includes moving beyond a listing of commercial inventory and other basic information in favor of more specific data such as when a video spot ran and the number of people that saw it. The need for more specific information is driven by companies that are increasingly looking for data that will help them justify a sponsorship over a media buy or other marketing investment, said Mastalir. How does a billboard compare to something inside the building in terms of traffic and visibility? We re trying to get smarter with analytics. Jon Podany, chief marketing officer, LPGA Creates culture that recognizes the importance of sponsors Knowing that it can take more time and effort to secure new sponsors than service existing partners, the professional women s golf tournament focuses its business development strategy on retaining current sponsors. Our number one objective is to keep the sponsors we have. The best customers are the customers you currently have, said Podany. The LPGA supports partners through a role reversal strategy that focuses on placing employees in the shoes of corporate partners, ticketholders and other constituents. The LPGA rolled out the strategy in early 2010 following the appointment of LPGA commissioner Michael Whan in the fall of And that s just the beginning. The LPGA sends thank-you notes signed by employees to major sponsors after each event and keeps corporate partners up-to-date on TV ratings and other relevant news through a quarterly newsletter. The sanctioning body also distributes a one-sheet sponsor overview to employees and other stakeholders at each tournament. The document includes a summary of the sponsor s marketing objectives and key talking points. We make sure that anyone affiliated with the LPGA understands who is paying the bill and their key messages, said Podany, noting that the LPGA has found the document to be a very helpful tool in getting everybody onboard. Gail Alofsin, director of corporate partnerships, Newport Harbor Corp. Uses cloud storage technology in post-event recap reports While Newport Harbor Corp. has long offered post-event recap reports, the organization over the past year has placed more focus on creating documents that sponsors can modify for their own internal purposes. The event organizer accomplishes that task by using Dropbox and other file hosting services that allow sponsors to access and modify documents. Sponsors can modify the information so that it looks like they did all the work. We want to do everything we can to make their life easier, said Alofsin. Sources LPGA, Tel: 386/ Newport Harbor Corp., Tel: 401/ Sharks Sports & Entertainment, Tel: 408/ IEG, LLC. ALL RIGHTS RESERVED. 9

10 ABOUT IEG IEG leads the way in sponsorship solutions. With over 30 years providing insights, evaluation, and guidance, our teams bring unparalleled perspective and proven methodology to every challenge. We partner with top brands and properties to create fresh strategies, evaluate opportunities and maximize results. Our clients rise above competitors, meaningfully engage audiences and achieve lasting impact. A unit of WPP s GroupM, IEG is connected to specialty sibling communications companies in media, digital and activation. GroupM is the leading global media investment management operation that also serves as parent company to WPP media agencies including Maxus, MEC, MediaCom, and Mindshare. INSIGHTS EVALUATION GUIDANCE IEG LEADS THE WAY IN SPONSORSHIP ANALYSIS, INSIGHT, VALUATION & MEASUREMENT For more information about IEG and the sponsorship industry, please visit or call 800/ (outside the U.S. and Canada, 312/ ). WWW. SPONSORSHIP.COM 2012 IEG, LLC. ALL RIGHTS RESERVED. 10