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 MARCH 4, RESULTS HOW THE NATURAL HISTORY MUSEUM OF LOS ANGELES COUNTY HAS DOUBLED SPONSORSHIP REVENUE Nonprofit signs new sponsors and expands existing relationships after overhauling its packaging strategy. While dinosaurs, history and education may rule the roost at the National History Museum of Los Angeles County, the nonprofit s sponsorship program was until recently in serious need of updating. Since implementing a new strategy a year ago, the museum has doubled sponsorship revenue and is on track to triple earnings by Recent deals include a multiyear partnership with JPMorgan Chase & Co. and expanded ties with Farmers Group, Inc. ( Farmers Sponsorship Strategy Stretches Beyond Farmers Field Deal ), Wells Fargo & Co. and Bank of America Corp. ( Bank of America Banks On Cause Marketing ). NHM redesigned its sponsorship strategy in 2012 to support a $135 million capital campaign and kick start its 100th anniversary in We wanted to build up our sponsorship platform to take us into the 21st century, said Katie Adams, NHM s director of corporate and foundation relations. To accomplish that goal, NHM in March 2012 hired IEG to overhaul its sponsorship program. That included identifying assets across the museum s multiple campuses and developing new packaging and sales strategies. Below, IEG SR highlights four steps the museum has taken to contemporize its sponsorship program: Offer holistic marketing alliances. While NHM had a healthy roster of partners, most were low-level relationships centered on new exhibits and other one-off programs. To take its offerings to the next level, NHM bundled assets from across its campuses to create annual or multiyear integrated marketing packages IEG, LLC. ALL RIGHTS RESERVED. 1

2 Sponsorship is more than stamping a name on a random thing. We want to create partnerships that integrate sponsors and give attendees something they can remember, said Danielle Lacharite Brown, NHM s vice president of annual giving. Provide targeted activation platforms. As part of its new packaging strategy NHM now offers targeted activation programs to prospects and partners. While the museum previously helped sponsors activate such as aligning Toyota with a butterfly pavilion to promote clean air NHM now takes a much deeper dive to support its partners objectives. Case in point: Farmers Insurance previously activated NHM by sponsoring specific days at the museum as a platform to engage agents. The nonprofit has since taken the relationship a step further by providing deeper one-on-one engagement opportunities. That includes car seat safety inspections and events that support Farmer s partnership with m.i.l.k. (Managing Information on Lost Kids). We re trying to drill down into their marketing objectives and the exact audiences they re trying to reach. We used to address that in a more general way now we re getting more specific, said Adams. As part of that intiative, NHM offers turnkey activation platforms to make it as easy as possible for partners to activate, she added. They have to do very little we do most of the work. Establish steering committee. To ensure buy-in across internal stakeholders, NHM has created a steering committee comprised of representatives from advancement, education, exhibits, public programs, membership and art. The goal: break down internal silos, spur activation ideas and gain internal approval for a partnership before a deal is sold. In the past, we might have sold a sponsorship and forced program directors to put logos on marketing material. Today it s more about sharing prospects with the group and asking what they may have to offer to fulfill a partnership. The committee meets once a month, said Adams. Price packages based on fair market value. Using IEG Valuation Service, NHM now assigns a fair market value to sponsorship packages. The valuation helps the museum demonstrate the worth of its packages and ultimately secure larger deals. It has helped us set our sights higher. We had been talking to big companies, but we weren t asking for the right amount, or we weren t sticking to our numbers. As a result, we often ended up negotiating down. Source National History Museum of Los Angeles County, Tel: 213/ IEG, LLC. ALL RIGHTS RESERVED. 2

3 IEG SPONSORSHIP REPORT THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING MARCH 4, CAUSE MARKETING LESS THAN A THIRD OF NONPROFITS TREAT SPONSORSHIP DIFFERENTLY THAN PHILANTHROPY Despite differences in marketing-driven partnerships vs. donations, most nonprofits fail to draw important distinctions. Although the budget sources, decision-makers, goals and metrics are fundamentally different for corporate giving programs than they are for sponsorships, most nonprofits treat them similarly. According to IEG s ninth annual survey of nonprofit fundraising professionals, 68 percent say their organizations view sponsorship no differently than philanthropy or simply as a category of funding for events and programs. Less than one-third (32 percent) recognize the need to treat sponsorship differently from donations given that it is designed to achieve marketing objectives. The 32 percent figure is a decline of eight percentage points from the previous survey, conducted in November 2011, a surprising decline in the face of conventional wisdom that nonprofits have been getting more sophisticated and multi-dimensional in their approach to corporate partnerships. Chart 1: Recognizing that more than one of the following statements could be applicable, please select the one that best describes your organization s approach to sponsorship IEG, LLC. ALL RIGHTS RESERVED. 3

4 With a growing number of nonprofits seemingly unclear about what sponsorship is and what it is not, it is not surprising that two-thirds of survey respondents reported difficulty getting in the door with corporate personnel outside the corporate contributions department. That figure is up from 59 percent in the previous survey. Chart 2: Do you have difficulty securing meetings/conversations with corporate contacts in marketing and other departments outside of corporate philanthropy? Asked about other potential roadblocks to sponsorship success, this year s respondents also reversed course in a critical area. While the number of respondents who had difficulty in identifying marketable assets had declined to 42 percent in the last survey, it jumped up to 57 percent this year, putting it at the top of the list of seven potential obstacles to increasing income. On a positive note, internal issues such as turf battles and opposition to sponsorship continue to diminish, with less than a quarter of nonprofits citing them as notable challenges. Chart 3: What challenges do you face in growing sponsorship revenue? Returning to the idea of not distinguishing between philanthropy and sponsorship, some of the blame can be placed at the feet of corporate contributions staff and foundation personnel who seek benefits beyond the standard recognition typically afforded donors IEG, LLC. ALL RIGHTS RESERVED. 4

5 58 percent of nonprofits reported that half or more of their donors sought marketing-related benefits in exchange for gifts or grants. Chart 4: What percentage of your corporate donors request marketing-related benefits? According to nonprofits, at least half of the people they deal with on the corporate philanthropy side don t understand the value of what they are asking for. Chart 5: Do you believe that your corporate contacts in traditional philanthropic positions/departments recognize the value of marketing benefits you offer? Not surprisingly, the ability to be incorporated into a nonprofit s social media efforts moved up the list of marketing benefits that donors most often asked for, sliding right behind being identified on collateral materials. Seven out of 10 nonprofits cited inclusion in social media as a benefit asked for by donors, up from 61 percent in the last survey. Conversely, both category exclusivity and additional tickets and hospitality benefits proved not as popular as in previous surveys. Category exclusivity was mentioned by only 48 percent of respondents, down from 62 percent; while tickets and hospitality dropped from 54 percent to 45 percent IEG, LLC. ALL RIGHTS RESERVED. 5

6 Chart 6: What kinds of marketing-related benefits are corporate donors seeking? One indication that nonprofits are becoming somewhat savvier is the fact that fewer are giving away marketingrelated benefits to donors. While a majority still doesn t require an additional fee for such benefits, the percentage is the lowest in the past four years 58 percent, down from 64 percent last year and from 79 percent at the height of the recession in Chart 7: Do you provide corporate donors with marketing-related benefits without requiring any additional payments or fees? In terms of non-cash payments for sponsorship status or benefits, this year s survey revealed significantly more interest in receiving promotional or advertising assistance from corporate partners, with 79 percent of nonprofits saying they would accept such commitments in exchange for benefits, up from 62 in the previous survey IEG, LLC. ALL RIGHTS RESERVED. 6

7 Chart 8: Do you allow sponsors to pay for part or all of their sponsorship commitment in the following ways? The number of nonprofits that concentrate responsibility for working with business partners in one department remains low, with less than one in four having a single point of contact for corporate relationships, and a nearly equal percentage that have four or more departments interacting with for-profit partners. Chart 9: How many departments within your organization have corporate relationships? Similarly, less than one in five nonprofits have a dedicated sponsorship department, slightly more than the 14 percent that reported having one in the last survey IEG, LLC. ALL RIGHTS RESERVED. 7

8 Chart 10: Which of the following best describes where primary responsibility for sponsorship resides within your organization? The breakdown between the types of corporate relationships and how they relate to the total number of deals and corporate revenue remained relatively stable from the last survey, with just about half of nonprofits reporting that most of their relationships with corporations were philanthropic in nature and a third of nonprofits reporting they receive the bulk of their corporate revenue from sponsorships. Chart 11: In terms of number, which of the following accounts for the majority of your corporate relationships? 2013 IEG, LLC. ALL RIGHTS RESERVED. 8

9 Chart 12: In terms of income, which of the following accounts for the majority of revenue from your corporate relationships? A decline in the types of relationships defined as strategic philanthropy donations supported by marketing, advertising or promotional efforts continued in this year s survey. The percentage of respondents who reported that half or more of their deals fit the definition of strategic philanthropy fell from 35 percent in the last survey to just 28 percent this year. In 2010, the figure was 42 percent. Chart 13: What percentage of your corporate relationships involves the company providing a philanthropic donation and supporting the relationship with marketing, advertising or promotional efforts? 2013 IEG, LLC. ALL RIGHTS RESERVED. 9

10 IEG SPONSORSHIP REPORT THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING MARCH 4, SPONSOR PROFILE A GOOD INVESTMENT: INCAPITAL INVESTS IN SPORTS Televised sports properties should put Incapital on their prospect list. Sponsorship is playing a critical role in Incapital LLC s efforts to broaden its customer base. The investment firm which underwrites and distributes fixed income and other financial products is using sponsorship as part of a broader marketing strategy to promote new products and reach new audiences. Incapital over the past two years has added financial advisors, wealth managers and registered investment advisors to its prospect list. The company previously focused on institutional investors, trading desk managers and treasury executives at major corporations, all of whom it still targets. We went from a universe of several thousand potential customers to several hundred thousand, said Chris Clews, Incapital s executive director of marketing, who joined the company in 2010 to spearhead the new initiative. Incapital entered the world of sports marketing in 2011 with a tie to the Herbalife World Football Challenge. Since then, the company has signed deals with a handful of other properties including the NHL Florida Panthers and the Big East Tournament, both of which it has renewed for In addition, Incapital last year inked a partnership with the MLB Chicago Cubs that affords home plate signage in Wrigley Field. Tom Ricketts, Incapital chairman, co-owns the team with other family members. And additional deals are in the works: Incapital is negotiating deals with several other properties, said Clews. Incapital uses sponsorship to accomplish three primary objectives: build visibility, access hospitality programs and demonstrate community support. The company focuses on professional and collegiate sports due to the large number of professionals in the financial services industry that are passionate about sports, either as participants or spectators, said Clews. We needed to expand our marketing, and sports seemed like the perfect place. Our target demographic is heavily involved in sports IEG, LLC. ALL RIGHTS RESERVED. 10

11 The company also uses sponsorship to gain a positive rub-off through an affiliation with Fortune 500 companies involved in sports, he added. We want to piggyback those companies and build credibility. Incapital focuses on properties located in New York City and other markets with a large concentration of employees in the financial services industry. Other key markets include the Midwest, South Florida and Washington, D.C. The firm also sponsors properties located in other parts of the country that provide TV exposure and hospitality. For example, The Herbalife World Football Challenge provided media exposure and client hospitality at games in Dallas, Miami, Seattle and other cities. Some of those markets have a heavy concentration of financial advisors, while others do not. That s okay. The events were broadcast on ESPN and ESPN2, which gave us an opportunity to reach a larger audience. The company looks for unique hospitality programs that include player meet and greets and the chance to take guests on the field, said Clews. In addition to client hospitality, Incapital looks to activate sponsorship with programs that provide a point of differentiation from other companies in the financial services industry, some of which have larger marketing budgets. For example, Incapital has activated the Florida Panthers through a tie-in with Forgotten Soldiers Outreach, a nonprofit that sends care packages to deployed soldiers. The company supports the nonprofit by acknowledging active duty soldiers prior to games. It was a great opportunity to stand out, be different and do something people remember, said Clews. Incapital s marketing push also extends to personal endorsements. The company last year inked endorsement deals with Chris Weidman, Ryan Bader, Gray Maynard and other UFC athletes. Source Incapital LLC, Tel: 312/ IEG, LLC. ALL RIGHTS RESERVED. 11

12 IEG SPONSORSHIP REPORT THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING MARCH 4, MOTORSPORTS IZOD INDYCAR SERIES TURBOCHARGES SPONSOR VISIBILITY Motorsports series uses promotional partnerships to enhance sponsor visibility and build fan base. The IZOD IndyCar Series will turbocharge sponsor exposure following the July 19 launch of Turbo. As previously reported in IEG SR ( IZOD IndyCar Series Turbocharges Hollywood Presence ), the motorsports series last year inked a partnership with DreamWorks Animation and the new computer-animated comedy. The movie, which centers on a snail who dreams of becoming the greatest racer in the world, will feature a replica of the Indianapolis Motor Speedway and include cameo voiceovers from IZOD IndyCar Series drivers. Similar to other racing movies, Turbo will include sponsor integration. The movie will feature Chevy cars and Firestone tires, while Verizon, Sunoco, Hewlett-Packard and Target gain exposure on the vehicles. IndyCar convinced Dreamworks Animation CEO Jeffrey Katzenberg to include sponsors in the movie for a more authentic experience, said Greg Gruning, IZOD IndyCar Series executive vice president of business development. We told Jeffery if you want to make the movie authentic, sponsors and partners are critical to our sport. The companies will activate the tie-in through retail and online channels, providing the IZOD IndyCar Series incremental marketing exposure, he said. In addition to sponsor activation programs, the IZOD IndyCar Series will gain broad exposure through the film itself. DreamWorks defines Turbo as a four-quadrant movie, a term used in the movie industry for films that reach the broadcast possible audience. Below, IEG SR highlights three other sponsorship developments at the IZOD IndyCar Series for the 2013 racing season. More focus on video games. Looking to build its fan base among 18-to-34-year-old tech-savvy males, the motorsports series this year is placing more focus on the video game category IEG, LLC. ALL RIGHTS RESERVED. 12

13 The sanctioning body has secured two new online gaming partners Simraceway.com and iracing.com and is close to securing deals with two other companies in the category. Our number one goal is growing our fan base and reaching a younger motorsports audience, said Gruning. IndyCar will use the partnerships to promote the open wheel racing experience, added Gruning, noting that Simraceway will feature teams and tracks from the IZOD IndyCar Series and the chance to compete against IndyCar drivers. The return of the Triple Crown. After a 24-year-old hiatus, IndyCar this year will bring back the Triple Crown, a promotion that awards $1 million to the driver who wins all three superspeedway races: The Indianapolis 500, Pocono IndyCar 400 and the MAVTV 500 at the Auto Club Speedway. The promotion also creates new sponsorship inventory: Fuzzy s Ultra Premium Vodka will title the Triple Crown in New endemic partners. IndyCar this year has signed three new endemic sponsors: AutoDesk, Inc., Jostens, Inc. and SOS Global Express, Inc. In addition, Bridgestone Americas Tire Operations in late 2012 extended its partnership through the 2018 race season. The company sponsors the motorsports series on behalf of the Firestone brand. Source IndyCar, Tel: 317/ IEG, LLC. ALL RIGHTS RESERVED. 13

14 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 redefine what s possible, exceed expectations 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 2013 IEG, LLC. ALL RIGHTS RESERVED. 14