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Morgan:News:2010 |VANOC| #1581
AN INSIDE LOOK AT THE CONCEPT OF SPONSORSHIPS THROUGH THE EYES OF EXECUTIVES FOR VANOC AND 2010LEGACIESNOW[Editor's note: In this feature, we closely report on how three senior industry executives, two of them closely connected with the 2010 Winter Olympics on the seller's side and the third who is closely connected with the buyer's side, perceive the value of sponsorships -- and how companies can create that value. We'll also learn how some VANOC sponsors are activating their sponsorships now, nearly four years away from the Games. /Peter Morgan]
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Two of the key negotiators in British Columbia connected with sponsorship packages related to the 2010 Winter Olympics have consider able advice to offer businesses about what to look for and how to create value from them. And their advice comes at a time when the 2010 Games organizers are considering how to fill 35 or 40 sponsorship and supplier categories for materials needed by the Games. There may even be one more Tier-1 sponsor.
The Vancouver Organizing Committee for the 2010 Olympic and Paralympic Games (VANOC) is looking for between 12 to 15 sponsors at the Tier 2 level at a range of between C$15 million and C$50 million, and about 25 to 30 official suppliers. Airlines, hotels, couriers, perhaps Canada Post, food, office furniture, hospitality have all been mentioned as possibilities. The company's awarded exclusive marketing rights to the categories will also have the right to associate themselves with the 2010 Olympics and its logo in Canada.
Dave Doroghy, Director of Sponsorships for VANOC, and Susan Archibald, Director of Marketing and Revenue Generation for 2010 Legacies Now, a Vancouver-based BC society set up to spread the benefits of the 2010 Winter Games throughout British Columbia, have considerable experience on how sponsorships work. Doroghy, who came to VANOC from the Orca Bay organization, owner of the NHL Vancouver Canucks that supplied VANOC's Dave Cobb, senior vice-president of Revenue, Marketing and Communications, has worked in the sponsorship industry for about 20 years, starting with Rick Hansen's Man in Motion Tour in 1986. Archibald has 25 years experience in marketing, she also worked with the Man in Motion tour and came to 2010 Legacies Now from the Mark Anthony Group wine distribution firm.
A third expert is Ian Howard, president of Leverage, a Vancouver-based sponsorship consultancy, that he founded 30 years ago, and during that time he has advised organizing committees that stage Olympic Games about the inner workings of sponsorships.
Archibald says industry statistics show that sponsorship deals, and in particular, sports sponsorship, is growing much more quickly since the mid-1990s than other types of marketing, at an average of 8.7% per year to the most recent data, acquired in 2004. It is annually surpassing traditional advertising spending (6.9%) and sales promotion purchasing (5%), and is approaching the C$10 billion-per-year benchmark for North American spending by the latest data, in 2003. Extrapolating from the trend, it should be about C$12.5 billion about now. About 70% of sports marketing spending is through sponsorships. Many of the major companies in Canada, and in British Columbia, regularly use sponsorship as part of their marketing.
She says that there are three main things companies should consider when they are thinking about sponsoring, or are being approached by an event for sponsorship: understanding the value of the sponsorship packages, carefully thinking about the kind of resources and work that needs to be put into a sponsorship package to make it work for a company, and the kinds of "activation" creativity that will be necessary; how the sponsorship should be used in various ways, at various events.
"Let's start with a couple of fundamentals, with sports sponsorships," she suggests. "Obviously you're buying something, so there's a sponsorship fee, so you need cash, and there's usually a VIK (value in kind) component. But what are also critical are activation dollars, and many companies don't think about what it's going to cost to make a sponsorship work for the firm. Those are complementary activities: sales promotions, advertising, hosting opportunities, and on and on. Those costs could be up to three times the overall sponsorship fee being paid. And, to be frank about it, if you don't put these activation dollars against the sponsorship, you don't know the cost of it... You need an activation strategy and the resources for it." Howard adds that ignoring the execution costs, or not having enough money to execute the sponsorship, doesn't make business sense, "It's like buying time for a television advertising campaign, and not budgeting money to make the ads. It's just crazy."
From Doroghy's perspective as one of the main people at VANOC who sells sponsorships, it's equally important to understand the drivers of the companies VANOC is targeting, by researching them ahead of time. "With the Internet, the National List of Advertisers and annual reports, to help you develop the information, there's really no excuse for you to call on a company without understanding what they're market is, and understanding about what they sell or do. Before we even get into packaging the sponsorship, we have to understand what companies are after. There's nothing worse than somebody calling to sell you and they don't understand your business. Research, research, research. Make store visits. Use the company's product ahead of time. I can't put a package together until I understand what their business objectives are."
Doroghy says VANOC uses a collaborative approach. "We try to determine the answer to the question of how we can help them. And I listen, listen, listen. When I get to a meeting, I like to talk, but I always try to tone myself down and do more listening, so I can come out of that meeting knowing what the next step is going to be, and what are the key points they were trying to tell me that I can zero in on, and use as a hook to get this company involved. The days of having a prepared presentation and flipping through to your last page, and saying 'This is what the deal looks like', the halcyon days of the early 80s, are long over. The market has become so much more sophisticated now."
He also says its important from his point of view to understand the decision-making process, to know how much authority the person you're meeting with has, and when they have to take it to the next level. "Is it a city decision, a regional decision, a Canadian decision, an international decision? Landing a company for a sponsorship is a complicated process with big companies. Maybe you have to do research on that person you're meeting. If the companies want signage, make sure you put that in the deal. Eventually you can pull the deal together, but you can't do that until you've been to a lot of meetings where you're just listening."
Doroghy says making a sponsorship deal is akin to a dating relationship. "It might be five, six or seven meetings before a deal starts to get crafted. The first meeting you have is really to determine whether a second meeting is necessary. The second meeting might take place at a more senior level. Eventually you might end up in a marriage... And just like any relationship, you have to figure out how to satisfy each others' needs."
He says that in VANOC's world, it can often take the better part of a year to conclude a sponsorship. "There are lots of moving parts -- of VANOC's parts and of the target company's parts -- the deals are fairly complex. At Orca Bay, we were mostly in the renewal-of-sponsorships business. Initial sales are time-consuming; it's a lengthy and important process. It's important that both parties understand what they're getting into."
Archibald says its critical that a company's values match the values of a sponsorship. "There really isn't much value in buying the property unless that's the case." She says it's also imperative to figure out some way of measuring performance of the sponsorship. "The ROI is difficult to do, but there are all sorts of ways to do it."
Companies must also count on the management of a sponsorship property. "If you buy a sponsorship for a year," she says, "you're only going to get a year's worth of value. What you really need is a three- or four-year deal. By year two, you're starting to tweak things. By year three, you've really got it starting to sing. It's really important to understand the long-term investment you need to make, and that's why we think about what we call the value match. It's a commitment that you're making, and a partnership that you're forming."
Ian Howard, of Leverage, agrees, and connects the concepts to the six- and seven-year sponsorships offered by VANOC to its Tier-1 firms. "One of the oldest adages in this business is that you either buy a sponsorship early and maximize the value of the sponsorship, or you buy late, and minimize the cost. The theory of this is that the earlier you're in, the more benefits you can acquire, and the later you're in, you're at the point where the event organizers are trying to bring in the last dollars and maximize their yield. It's at that time that the pricing of the sponsorship usually becomes more flexible. You can save up to a third by doing that. In the one sense you're getting a discount, but on the other hand, you're getting what you're paying for, which isn't much activation time. The corollary of that is that you never buy in the middle."
Howard, though, doubts that VANOC will need to discount much by the time it's near the end of its sponsorship sales period. "It's the so-called creme de la creme. But I don't doubt that other pressures will come into play -- budgets will rise, for instance -- and 2010 will not stop looking for additional revenue."
Howard says that during the next three years, to about early 2009, companies will buy a sponsorship from VANOC, and pay about the same price. "It's not a huge thing to understand that those who bought in 2006 have until [December 31, 2010], to realize the benefits from that price." He also recommends companies, during the negotiation phase, trying to expand the scope of exclusivity of the sponsorship, and to carefully define what rights sponsoring firm gets from the sponsorship. "Even in super-sophisticated events like the 2010 Games, there is an area of flexibility where one can negotiate the benefits and rights." That's done, he says, in part to further eliminate competitors, noting that IOC sponsor for 2010, Coca-Cola, considers instant coffee to be a competitor. He also points out that the benefits lists offered by Archibald or Doroghy isn't necessarily definitive, and suggests firms think about what he calls "off-list benefits" that might reasonably be included in the deal, to see if the organization will include them, preferably without additional cost. "In many cases, they're willing to do that, and I've seen sponsorship contracts where as much as 25% of the package has been structured after it's signed."
Howard also urges sponsoring companies to consider their post-event strategy. All of the VANOC Tier-1 sponsors, for instance, have marketing rights to December 31, 2012; while the rights of those in Tier-2, at least so far, expire at the end of 2010. "What are you going to do after the Closing Ceremonies," Howard asks, rhetorically.
Archibald says companies do sponsorships for components from a long list of reasons: to drive sales, building a brand, product sampling, to rise above the clutter of other advertising and marketing, community involvement, customer relations and defining and activating within a target market. "We [in the sponsorship industry] saw a lot of that going on in the lead-up to the bid, there was a lot of Telus/Bell Canada, RBC, HBC stuff going on."
To put it another way, companies should be proactive, not reactive, when it comes to deciding on sponsorships, and chose a marketing strategy that's best for them before looking for a sponsorship, so that executives know what they want to do and why they want to do it. And those concepts should be evaluated against what a particular sponsorship is offering.
Archibald says customer retention is also one of underlying reasons companies use sponsorships, and she gives RBC's decision to become a Tier-1 sponsor of the 2010 Olympics as an example of this. "RBC's objective is to become the source of information for small-business. That's a British Columbian objective; it's not yet a national objective. What they're trying to do is underwrite all the small-business activity around this major event, and for other sponsorships that it does. Their solution to all this is to link small-business clients to all the key events that are taking place in the community, around business-building opportunities. That's why the sponsor business and economic-summits that are taking place, along with sponsorship of Small Business Week, sponsorship of the Small Business Guide, which outlines how small-business opportunities can be garnered from the Olympic Games, and sponsorship of the [2010 Legacies Now] Olympic Speaker series." The Olympic Speaker series is part of a transfer-of-knowledge program connected with the Games, where experts from around the world come to speak on what they've learned about business opportunities in their country leading up to and after the Games. "RBC's name is on that," Archibald says. "And in private-client functions, it's a key transfer of knowledge and relationships. Ultimately, that allows a clients to build a business strategy, which RBC underwrites. It's a creative way of looking at sponsorship."
She says the Vancouver law firm of Bull, Housser and Tupper, is another example that's connected indirectly to the 2010 Games. "They knew they couldn't afford a sponsorship with VANOC. But the partners wanted to be part of the excitement, so they talked with us and we created an opportunity for them. They felt an obligation to give back to the community that won the Bid for the Games. They wanted to be involved, but they couldn't be a direct sponsor, so what could they do? They started by looking at some developing athletes and following their journey through to the Olympic Games. Creative. Lots of leveraging. Then they wanted to find a way to engage their clients and prospects. They're solution was to sponsor the BC Figure Skating Association. This wasn't a donation. They created a relationship, a partnership with the Association. The clients, prospects and staff are meeting athletes, they're hearing athlete diaries as they're travelling around the world for competitions leading up to 2010. They're going to the rink and watching them train. They were getting clinics on the judging system before the Torino Games, One of the people who created the new judging system sat in the same room as Bull Housser's staff and clients and talked to them about how to understand the system, so when they watched it on TV, the knew what the commentators were talking about. They were able to share all that with friends and family, and with prospects, and there was this huge relationship established. In late March, they're all going to be jumping on the ice with the athletes, who will do a mini-clinic. Their family, their friends, their children are going to be out there and skate with the Canadian Team members they saw compete in Torino, along with all the other people who are aspiring to be on the podium in 2010. That's a creative sponsorship. It cost $25,000, which is huge money for the Association, but not a big investment for Bull Housser and Tupper."
On the other hand, says Archibald, part of Bell Canada's rationale for sponsoring the 2010 Winter Games is cause-related, and it dovetails with a promise that VANOC needed to make to the IOC for political reasons that evolved out of the makeup of the council of the host city, Vancouver, which was strongly aligned with left of centre and socialist causes. "Bell is up against a big challenge, with Telus, and they want to make sales in the west. They want to sell their devices for communicating to all of us, but they also want big sales: to governments, big business, universities, municipalities. They have lots of solutions, but this is one I'm particularly proud of: support the Downtown East Side of Vancouver. That's a philanthropic kind of sponsorship. They've 'partnered' with a number of other companies, including 2010 Legacies Now, but also Burton Snowboards, which supplies all the equipment for Downtown East Side youth, the drug-addicted on the streets. They've never had anybody offer them pride. They're provided an opportunity to go to the VANOC snowboarding venue, Cypress Mountain, and learn how to snowboard. For Bell, the sponsorship is a calling card to those officials in the city who have struggled with an issue in the downtown east side for years, and have never found a good solution. This one is working. And so Bell has created a relationship with people in the City, and introducing their sales people to the people in the City, who know the people who award the contracts for the business stuff that Bell wants to do, to drive up sales. They're following this same strategy in cities around the province. They're in Prince George now."
Howard, the consultant, also notes that being involved in a sponsorship, such as those connected with the Olympics, allows sponsors to do activation deals with each other. "There's a collegial atmosphere among the people involved with various sponsors," he says. "They go to meetings together, they get to know each other, each will have its own team. If you get to know these people, there are frequently opportunities for one to work with another in parallel to the sponsorship. For example, suppose you are working for Boston Pizza, and you buy a sponsorship. At 2010, there will be hundreds of thousands of pizzas. A method of working with the other sponsors is to go to them and say, 'Here are some coupons for you to distribute to your people for Boston Pizza'.
2010 Legacies Now's Archibald notes that Bell became the title sponsor of 2010 Legacies' mall displays that discussed the benefits of the games on a grassroots level, that went on a tour of BC communities last year. "Bell came to us and said they loved the project, but asked if they could do something additional. So we set up meetings with the business associations, where the BC government ministers or local government officials and small-business leaders in the communities where the tour went, and they talked during the luncheon about Bell was spending C$200 million on the Games. Why? Because Bell wants their business; they want to establish a relationship. And Bell is extremely happy about that project."
VANOC's Doroghy says a successful sponsorship works both VANOC and the sponsor. "It's a two-way street. You always want deals that make people feel good. I was glued to the TV set during the Torino Games, and I thought all of the 2010 sponsors activated well with their creative. You saw commercials on TV that were innovative and compelling, especially for the Olympics. Those two beavers of Bell's ads. I was watching the TV at my friend's house, and he calls his friends and says, 'Quick, Gordon and Frank are on. We haven't seen this one!' When a sponsor takes a property like the Olympics, and gets creative, running a fantastic campaign around it proceeding our Games, I think that's great activation. Bell did a great job of that."
Doroghy also says that when VANOC launched its logo about a year ago, VANOC wanted to get the word out. Bell ran a campaign in the newspapers starting the next day, which included a coupon that could be redeemed at one of their stores for a VANOC emblem pin. "That doesn't sound like the biggest promotion going, but it was important to us. And in the next 10-day period, 125,000 Bell pins were distributed through Bell stores across Canada. Store visits went up significantly, and that translated into sales for them. We got the word out, Bell got people visiting their stores, and this is four-and-a-half years in front of the 2010 Olympic Games. It was a smart activation."
He says VANOC also loved the fact that HBC made available the Team Canada uniforms in its stores during the run-up to the Torino Olympics. "We felt proud when the athletes marched across that field in Turin wearing that merchandise, and people could buy it in stores across Canada, that's a fantastic partnership." And, the RBC's Olympian program, in which Canadian high-performance athletes are invited to work in Royal Bank branches and are given flexible hours so they can train, is also held up by VANOC as a good example of activation. "When they get back from the Olympics, they come back to work at the Bank as ambassadors and speakers, and are given jobs when they retire from their athletic career."
Doroghy says General Motors, another VANOC major sponsor, "will be running a sustainability campaign highlighting their hybrid cars for 2010, and that they'll save us fuel as we stage the Olympics." And Rona, VANOC's renovations sponsor, "will be running programs that will demonstrate how they are building the venues in part with their products."
These are all business solutions, he notes, and a far cry from erecting some signage and putting a name on the back of a brochure. As he puts it, "All of our sponsors are doing great jobs. Some of them already have, and some will be coming out in the future."
RESOURCESA list of BC consultants that deal in sponsorships, along with their contact info:
www.sponsorship.ca/list/table.html#bc
Originally published to Morgan:News:2010:Gold subscribers on March 24, 2006
Morgan:News:2010 |Moguls| #1580
Here are three moguls we ran into today:
OLYMPIC/PARALYMPIC FLAGS RAISED IN WHISTLER
Whistler Mayor Ken Melamed, City of Vancouver Mayor Sam Sullivan, sit-skier Brad Lennea and volunteer coach, Phil Chew, raised the Olympic and Paralympic flags in the Resort Municipality of Whistler today. VANOC's Chief Financial Officer, Rex McLennan, chief Leonard Andrew of the Lil'Wat aboriginal group and the Conservative government member of Parliament, James Moore also took part in the event.
MT. WASHINGTON FUNDING COMPLETED FOR PHASE 1
Funding for Phase One of the Vancouver Island Mountain Sports Centre on Mount Washington on central Vancouver Island has been completed, now that the federal government, through its Western Economic Diversification Fund, has sent $100,000 in previously-promised funds. Vivian Dean, chair of the Vancouver Island Mountain Sports Society says that the $674,000 funding for the first phase, about C$330,000 each from the provincial and federal governments, means that the project manager has begun work. The society's Nordic centre is developing the facilities to improve its chances at getting national Olympic ski teams to consider the area for practice during the lead-up to the 2010 Winter Olympics.
WIRELESS CAMERAS USED FOR HD BROADCASTS AT TORINO
One of the advanced-technology systems used for the first time at the Torino Winter Olympics involved wireless transmission links for high-density television broadcasts. The company involved, Link Research of England, completed development of the first units to use the system in late 2005 and began delivering them to customers, and among the first to roll -- literally, in one case, since it was a new semi-trailer packed with the latest equipment for HD news-gathering -- went straight to the Italian Olympics. Intel SRO, which is Link Research's distributor in Italy, provided and support. It was also involved in the project management of some ambitious productions that used multiple feeds from wireless cameras and cameras mounted on board vehicles, such as live streaming transmissions from helicopters used by TV crews at the Torino Olympics. The systems are designed for live sports coverage, but will also be used to cover concerts.
Originally published to Morgan:News:2010:Gold subscribers on March 24, 2006
Morgan:News:2010 |Paralympic| #1579
IPC REPORTS TORINO GAMES HAD NO VIOLATIONS OF ANTI-DOPING RULES
The International Paralympic Committee reported officially today what was widely suspected: there were no violations of its strict anti-doping rules during the Torino 2006 Paralympic Winter Games.
A total of 242 doping tests were conducted during the testing period, which begin on the day of the opening of the Paralympic Villages and end on the day that the Villages close. In Torino's case, that was from March 4 to March 22.
Andy Parkinson, the IPCs Director of Medicine and Science, says the clean Games also had a clean run-up, “Not only were there no anti-doping rule violations in Torino, but we also experienced no anti-doping rule violations in the pre-Games out-of-competition testing program.”
The testing conducted at the Games was wider, deeper and significantly greater than what was conducted at the Salt Lake 2002 Paralympic Winter Games, which measured 97 samples.
BACKGROUND
The breakdown for anti-doping rule tests during the Torino 2006 Winter Paralympics:
Out-of-Competition Urine Controls: 59
Out-of-Competition Urine + EPO Controls: 28
Out-of-Competition Blood Controls for Human Growth Hormone: 16
In-Competition Urine Controls: 71
In-Competition Urine + EPO Controls: 32
In-Competition Blood Controls for Synthetic Haemoglobin and Blood Transfusions: 36
Originally published to Morgan:News:2010:Gold subscribers on March 24, 2006