In event advertising, companies pay a set amount of money to have their names or those of their brands incorporated into an event title or used as the designated title. Examples include the Virginia Slims Tennis Tournament and the FedEx Orange Bowl. Between 1989 and 1997, annual event advertising expenditures in the U.S. grew from $2.1 billion to $8 billion.
Event advertising is similar to other forms of advertising in that it has a commercial objective: increasing brand or corporate name awareness. But a company that embarks on this type of activity may have other objectives, such as improving good will or enhancing its image.
Event advertising is used to reach a wide audience. Often the sponsor's name appears in all the media in which the event is being publicized. In some cases, particularly sporting events, the company's name is seen by those who attend the actual event, as well as by those who watch it on TV. Indeed, those secondary audiences may be more important than the primary ones.
Sports account for about two-thirds of expenditures in event advertising. One of the biggest sporting events is the Olympic Games. Companies now sponsor everything from an event to a team. In 1996, for example, companies paid up to $40 million to display in their ads the five interlinked Olympic rings that designated an "official" sponsor of the event. The reason they paid so much is that the Games were watched by an estimated 3.5 billion people worldwide, making it one of the biggest opportunities for reaching a global audience.
One of the problems for event advertisers is the practice used by non-sponsoring companies known as "ambush marketing." In ambush marketing, a company crafts its message in such a way that people believe it is an official event advertiser when it is not; ambush marketers buy their time at discounted rates or in local markets so that in those markets they look like official sponsors. Both American Express and Nike have employed this tactic against official Olympic advertisers Visa and Reebok.
Event advertising also provides important public relations opportunities. The company sponsoring an event may wish to impress stockholders, community leaders or employees. In the late 1990s, tobacco giant Philip Morris Cos. was the largest sponsor of dance performances in the U.S., along with many other arts events, a move that it hoped would help soften antagonism to it as the seller of a highly controversial product.
Yet event advertisers may be subject to criticism. Non-profit institutions may be accused of "selling out" if they accept funding from corporations that can then have undue influence on them.
A newer form of event sponsorship is known as cause marketing. Here, a company links its name or its brands to specific causes. Examples include Intercontinental Hotels' sponsorship of the United Nations Children's Fund or Toys "R" Us giving money to support the Juvenile Diabetes Foundation. In many cases, the link is made for strategic as well as altruistic reasons. By associating its name with a good cause, a company hopes to improve its image with customers and build up its brand name.
Another late 1990s innovation was sponsorship of a building, such as sports arenas. In most cases, a sports arena is renamed for the sponsoring company. For example, PepsiCo paid $50 million over a 20-year period to rename the arena in Denver the Pepsi Center; the former Candlestick Park in San Francisco was renamed 3Com Park; and the Chicago Bulls play in the United Center, named after the hometown airline. This type of sponsorship offers advertisers a continuous, long-term presence, regardless of the event taking place.
Naming-rights deals, however, are not as robust as they were in the 1990s, when they hit their peak. In 1999, for example, the Baltimore Ravens struck a 20-year, $105.5 million deal with the Internet firm PSINet. Two years later, PSINet was bankrupt and in 2002 the Ravens bought back naming rights for $5.9 million.
At the beginning of 2003, the Houston Astros were still looking for a replacement sponsor following the bankruptcy of Enron Corp., whose name had adorned the Astros' stadium as part of a 30-year, $100 million deal forged in 2000. In 2002, the Astros paid Enron $2.1 million to buy back the naming rights to what is now known as Astro Field until a new corporate sponsor is found.
One key problem for event advertisers is measuring the impact of the sponsorship. Some research companies offer sponsorship measurement and evaluation services. Joyce Julius & Associates, for example, provides event advertisers with a complete event "audit" that includes measurement of attendance, media coverage and media audiences, among other elements.