Jul 27, 2009 at 08:10 PM
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Properties: Who's Your Real Competitor?

Not to be a Debbie Downer, but NASCAR is getting knocked around pretty good these days. As painful as it is to hear, you can learn a lot about business strategy in times like these.

Today SBD reports that All State, the first-ever title sponsor of the Brickyard 400, is ending their five year relationship in an effort to focus on existing relationships with college football (BCS Sugar Bowl) and the Olympics (USOC).

Pam Hollander, All State's Director of Sponsorships & Promotions had this to say:

"It just comes down to monitoring what we do and looking closely at all of our properties. We've been truly honored to be the first title sponsor of a race with that kind of brand and it's been a fantastic relationship. ... But when we looked at all of our business results, they were just stronger in the other properties."

Last week, Dewalt announced that it was ending its relationship with Rousch Fenway and Matt Kenseth's number 17 car in an effort towards “greater interface with the [DeWalt] end user on the job site."

Both properties by most indications were meeting anticipated metrics, but not well enough relative to other properties, shifting business strategies and perhaps the weight of public perception.

We typically think of a sponsor as walking because a sponsorship didn't hit its pre-determined objectives, but in reality there is a complicated mix of competitors that might stand in your way come renewal time. Bear in mind that you may only be able to control one (the ROO on your own property), but you can adjust your presentation to address your competitive advantages and offer flexibility relative to these other factors.

Some Common Competitors to Renewal

  • Yourself: your property didn't meet a pre-determined hurdle rate for ROO (Return on Objectives)
  • Shifting business/marketing strategies: perhaps the sales channel you catered to as shifted or the demographic focus is different
  • Public perception: in the midst of layoffs and salary cuts, it can be a lot tougher to cut a sponsorship check
  • New decision-makers: acquisitions and layoffs have made it a lot tougher to retain buy-in from a single DM at major corporations
  • Properties from within your sponsorship genre (i.e. other teams) that offer very similar assets.
  • Properties from parallel genres (i.e. film, music, etc.) with similar characteristics (demographic, thematic, etc.)

    And keep in mind, there are likely others. A little depressing huh? But you can't compete, unless you know who your true competitor is and develop an action plan to address it. The good news is, you can still bring your "A" game with a little preparation.

    At a time of such focus on measurement, sometimes we lose sight of the fact that sponsor retention is not simply a two-way street between property and sponsor. Marketing decisions aren't made in a vacuum. In fact, every renegotiation is a competition for dollars and if you're not careful a combatant for your corporate sponsorship dollars might step up and surprise you. So next time you're getting ready for a renewal, don't just show that you delivered x, y and z, but also consider the complete competitive context within which you're seeking a renewal.