Like victims of a fender bender, massaging their necks and complaining of whiplash, Corporate America is grousing about the prices of today's prized sports sponsorships. "The numbers are getting bigger -- sticker-shock type of numbers," says Joseph Tripodi, exec VP-global marketing for MasterCard International, a longtime World Cup sponsor that's angling to ink a new eight-year deal but wary of the cost. Coca-Cola Co. earlier this year signed the kind of World Cup deal MasterCard wants -- and paid $80 million for it.
It's also Coca-Cola that has taught sponsors to stand up to sports rights holders. Flush from signing a $24 million-a-year sponsorship with Sprint in 1996, the National Football League wanted to renew Coca-Cola at $30 million a year, double its old deal. Coca-Cola scoffed. And it wasn't faking. In the end, Coca-Cola bought exclusive national promotional rights from the NFL for a mere $4 million annually.
Some properties, such as the Olympics or World Cup, can demand and get big deals, because for a sponsor there's value in being seen as contributing to the staging of events that means so much to so many people. Among pro sports, perhaps only in auto racing is that distinction worth paying for. That honor means nothing to fans of the NFL, NBA, NHL or MLB.
Coca-Cola's deal could have a transforming impact on sports sponsorship. Sponsors need properties that help them distinguish themselves from the competition, that can build brands and move product, that can be leveraged locally to support their retailers. But in an era where sponsors are demanding more measurement and accountability from the rights holders themselves, the properties units of pro sports leagues must lose the last vestiges of the sales mentality and function like an agency for their sponsors.
Sports leagues have no choice now but to do more to get more -- or maybe even less. Coca-Cola now has shown that it's OK to walk away, even from the best, if it just doesn't make sense. Ask the NFL: It's a humbling lesson. Why would anyone want to learn it from experience?
As has happened often in marketing, consumer products giant Procter & Gamble Co. has stepped in to set the example. For nearly 21/2 years, it has been working under a directive called Marketing Breakthrough 2000 to bring marketing expenses down 20% by that year. But the marketplace is dictating other action.
That other action -- as we focused on in an editorial just two weeks ago -- is new product initiatives. As we said then, growth is slow in grocery products and consumers are demanding "new and improved" to get them excited -- and, in turn, to spur growth. With older lines faltering and fading, the warning was up: Bypass research & development because of the bottom line and more painful decisions -- and expenditures -- would lie ahead. P&G seems to have concluded the same, and is scrapping Marketing Breakthrough 2000 -- although not ignoring streamlining and cost savings -- to unleash what one report called the "most aggressive new-product cycle in [the company's] history."
P&G's history is a long one, epitomized by the creation of brand management and, when the time came to change, a switch to category management. It has been marked by opportune moves into entirely new growth businesses. But, as always, the constant in P&G's record is a firm belief in and an uncomprising committment to marketing investment. And that, too, is worthy of emulation.