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World Cup faces test of its brand value

The most popular sporting event in the world is about a year from commencing as the FIFA World Cup makes its maiden voyage to the continent of Africa. In the normal World Culp quadrennial cycle, the next 4-6 months (spurred by the Confederations Cup and the conclusion of qualifying) see the launch of major football-themed marketing campaigns by some of the world's largest advertisers. Amid unprecedented economic dynamics, however, we will discover how worthwhile brands believe it is to associate themselves with the event (either directly or indirectly).

In April, Zenith Optimedia reported that worldwide advertising spending will fall almost 7 percent in 2009. This number is more severe than those offered by other large media-buying agencies earlier in the year, which ranged from a 4 percent to 6 percent decline. Despite some variance in predictions, the point is well-taken that there will be a significant decrease throughout the year. Initial estimates for 2010 show a slight increase of 1.5 percent, again according to Zenith Optimedia.

So what does all this mean for companies looking to hitch their wagon to the World Cup marketing machine? Perhaps nothing and possibly everything. A significant point made in Zenith Optimedia's recent report said "the market continues to be hampered by limited long-term visibility and most advertisers wait until the last minute to confirm their spending commitments."

Unfortunately for marketers, the most successful World Cup advertising campaigns don't allow for last-minute decisions, as they are carefully constructed over many months and with a very large budget to support the campaign across every advertising medium available.

The official partners of FIFA (of which there now six) and the official sponsors of the 2010 World Cup (an additional six) are to a large extent, to steal a poker term, "pot-committed." Each is contractually obligated to its roughly $100 million investment -- and to not chase those initial dollars with an associated advertising campaign is akin to buying a Ferrari and leaving it in the garage because you don't want to pony up for gas. Even if it means sponsors have to cut advertising spending more dramatically in other, non-World Cup related areas, they should still be expected to make a significant splash in the time leading up to and during the event.

One great example of this is the lubricant giant Castrol. As an official sponsor of the 2010 World Cup, the company has gone to the impressive lengths of creating the Castrol Performance Index, a quantitative analysis that computes an efficiency rating for each player during each match of the current European qualifying campaign. In order to further support and market the initiative, Castrol also recently announced the signing of reigning FIFA Footballer of the Year Cristiano Ronaldo as a global ambassador. Ronaldo not only will promote the Castrol Performance Index but also will be featured in the advertising campaigns around the new Castrol Edge and Castrol Power 1 brands.

World Cup advertising
Official FIFA partners 2010 World Cup sponsors
adidas Budweiser
Coca Cola Castrol
Emirates Continental Tires
Hyundai/Kia McDonald's
Sony MTN Wireless
Visa Satyam

There are certainly case studies that show that aligning with the world's marquee sporting event can lead to an increase in sales. Going into the 2006 World Cup, adidas reported a 37 percent rise in first-quarter sales, and ultimately reported sales of $1.5 billion during the event, an increase of 30 percent. These figures included 15 million replica footballs (versus 6 million sold during the 2002 World Cup) and 1.7 million Team Germany jerseys.

What becomes more of a question, however, is how much of a commitment will be made by companies that traditionally look to leverage the excitement of the World Cup without paying for the right to be identified as an official partner. Many attempt this tactic, usually with varying degrees of success, and often at the risk of drawing the ire of FIFA and its considerably large cast of litigators. A few successful campaigns from the 2006 World Cup were the efforts of Nike, Lufthansa and, ironically, AIG, as follows:

1. Nike: Who can forget the "Joga Bonito" campaign centered around Nike's sponsorship of the Brazilian national team, largely considered the pre-event favorite. The world's No. 2 provider of soccer footwear poured hundreds of millions of dollars into the campaign that was designed to highlight the essence of the Brazilian game and its creative and beautiful flair.

2. Lufthansa: Although Emirates was and still is an official FIFA partner, the German airline took the creative step of painting a football on the nose of each plane in its fleet.

3. AIG: The poster child for the current state of economic woe did an outstanding job of simple and impactful media placement during the tournament, highlighting the fact that it was the shirt sponsor for Manchester United.

Do companies that are not as tied to the event as the official partners of FIFA or the World Cup still place enough importance on the value they receive from their advertising campaigns to invest the millions of dollars it takes to typically make them successful? The estimated ad spending for the '06 event was said to be $1 billion.

Clearly, advertisers as heavily invested in the sport as Nike are not going to be fazed. Although not an official sponsor of the event, Nike is committed on other fronts, namely national-team sponsorships and star-player endorsements. Since 1994, Nike has grown its annual soccer business from $40 million to well over $1.5 billion. A couple of rough years for the economy are not going to stand in the way of its quest to overtake adidas as the world's leading supplier of soccer footwear.

It is the multitude of fringe soccer advertisers that have the broadcasters and other forms of soccer-related marketing mediums wondering if the drop in overall advertising spending can be proportionally applied to what they should expect in the next 12 months. The scary uncertainty of it all is that one of two scenarios likely will play out:

1. Sellers will be pleasantly surprised with advertisers that decide the World Cup is an opportunity far too ripe with prospective customers to pass up, and they will see ad spending in and around the event continue to rise.

2. Advertisers will significantly pull back on the creation of soccer-specific ad campaigns and the media buys they normally would place to utilize such ads, therefore leading to a dramatic decrease in World Cup-related ad spending.

In either instance, it's going to make for an interesting and possibly innovative year in the soccer marketing world, as companies look within to determine where in their advertising hierarchy the World Cup stands.

Tim Martin is the president of Gallagher Sports, a soccer-specific marketing agency. He can be reached at tmartin@gallagher-sports.com.

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