IBM re-examines sponsorships

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IBM Corp., conspicuously absent from the Salt Lake Winter Games after 40 years as an Olympic sponsor, will scrutinize its slate of sports and entertainment sponsorships as it looks to line up associations that align with specific business priorities.

The move comes as marketers, even those as big as IBM, seek a better return for their sponsorship dollars in a climate of flat or slashed marketing and ad budgets. IBM's own sponsorship budget is flat for 2002 though representatives declined to specify what percentage of the company's $1.7 billion global marketing budget is committed to sponsorships.

IBM, which concluded its Olympics sponsorship with the 2000 Games in Sydney-where it ran the results and other back-end systems, as well as created, hosted and managed official Games Web sites-is now re-evaluating its entire sponsorship portfolio with decisions expected in the second quarter. With IBM's exit, the Olympics split tech sponsorship into segments including information technology, Internet infrastructure and computers.

Tennis and basketball

While IBM spent an estimated $200 million (AA, July 10, 2000) on Sydney, with its Olympics commitment completed, it plans to reallocate the funds to other programs.

Among the handful of deals up for renewal is IBM's sponsorship of the United States Tennis Association's U.S. Open. Big Blue creates, produces and hosts the official U.S. Open Web site and runs the real-time scoreboard. IBM's Global Services unit uses the event to show customers Web-hosting capabilities at the National Tennis Center. The relationship will end with September's Open if IBM decides not to re-up. "We hope that IBM will come to the conclusion that the U.S.T.A. is a good long-term partner. We're in the process of discussions," said Pierce O'Neil, chief business officer of the U.S.T.A.

IBM has partnered with the National Basketball Association since 1992, redesigning and hosting its Web site, among other things. But the contract is set to expire in June. IBM has used NBA games to court key customers who are treated to pre-game "chalk talks" with coaches, according to Jonathan Press, NBA's VP-marketing sponsorships.

IBM's Australian Open sponsorship is also pending renewal, having ended in January; the company has one more year on the French Open. IBM inked a long-term deal with the PGA Tour until 2007; its Tony Awards sponsorship is reassessed yearly.

As it weighs its options, IBM will take a more cautious approach to sponsorship, demanding each event generate real stories of how problems are solved for IBM customers.

"These properties [IBM's current sponsorship roster] are all terrific, but the question is, can we come up with an agreement that meets our needs?" said Rick Singer, director, worldwide sponsorship marketing, IBM. "Our business strategy is shifting, and we need to pick the right properties to reflect that."

Mr. Singer said the review doe not mean fewer resources devoted to sponsorships, though the lineup may change. He hinted that entertainment, specifically theater, will play a larger role in the portfolio.

IBM will match sports and entertainment sponsorships with business priorities such as customer relationship and supply chain management, both of which are addressed aggressively in advertising.

A new return-on-investment formula has also been developed. "For the first time, we're looking at what revenues we can truly track because of these [sponsorship] deals," Mr. Singer said, adding that deals will be tracked by revenue generated. He conceded the difficulty in measuring the value of, for example, IBM's logo appearing on scoreboards or hosting customers at the Open. Still, "everything will be measurable or we won't do it."

Big Blue got into the sports-sponsorship game for the 1960 Olympics, where it provided the first electronic-data-processing systems. Since 1995, IBM has managed 48 Web events for sports and entertainment sponsors.

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