Wednesday, June 23, 2010

Pirelli and F1 ink 3 yr global Sponsorship deal

Pirelli will be the exclusive tire supplier to the Formula One World Championship under a three-year agreement beginning in 2011.

The FIA (Fédération Internationale de l’Automobile); the race teams, represented by FOTA (the Formula One Teams Association); and Formula One’s organizing body, represented by FOM (Formula One Management) “have chosen Pirelli as their exclusive supplier based on the specific proposals from the Italian company to guarantee technical and operational stability to the competitors,” according to senior executives at the tire maker.

The global visibility guaranteed through extensive media interest in Formula One, together with dynamic plans to leverage Pirelli’s involvement in an activity central to the company’s core business, represents a unique opportunity for the brand to maximize its return on investment,” they say.

The new contract ensures that Pirelli will provide the racing teams with six different types of tires for the season: four slicks, with different compounds for various types of dry surfaces; one rain tire for heavy rain; and one intermediate tire for damp conditions or light rain.

“The current economic climate has led to a realistic and collaborative approach with all the teams, ensuring that manufacturing and logistical costs are shared fairly,” company officials note.

“Pirelli’s return to Formula One also has a firm eye on the future, with full collaboration with all teams,” they say. “Research into innovative new tire developments is a vital part of this exciting program.”

The company plans to make a significant investment in publicizing its Formula One involvement, especially in the emerging markets of Latin America, the Middle East and Asia- Pacific.

“Consequently,” company executives point out, “Formula One will become a vital calling card for the Pirelli brand, helping its commercial and industrial expansion without disrupting the company’s long-term financial strategy.”

Pirelli – which supplied tires for the GP3 Championship this year – will also be providing racing rubber for the GP2 Championship starting in 2011.

Friday, June 18, 2010

Quote of the Week

" In times of stress, the best thing we can do for each other is to listen with our ears and our hearts and to be assured that our questions are just as important as our answers."

-Quote from the book: The World According to Mister Rogers

Thursday, June 17, 2010

Case study: TurboTax experts take over Twitter

Tax software maker TurboTax has a unique problem. Their customers find them incredibly useful. But for a very short period every year. The company has gotten used to the seasonal nature of its business, but this year, they took that approach to Twitter.

By ramping up their staffing efforts on Twitter — and bringing some much needed expertise to the space, they happened on something great for business: an excellent customer retention program.

Chelsea Marti (@TTaxChels on Twitter), TurboTax' Social Media Manager, explained the company's approach at TWTRCON in New York this week.

The company wanted to scale its Twitter effort to help customers with their taxes during tax season. To do so, they follow the approach of Intuit's founder, Scott Cook. Cook created the concept of "follow me home" by literally hanging around Staples stores in the beginning of Intuit's history until someone bought his product. He'd then go home with them to see how simple (or difficult) the install process was for them. Says Marti:

"Getting that close to the customer, he was able to make better products year over year."

That philosophy has been ingrained in Intuit employees. And according to Marti, TurboTax has taken the same approach to its Twitter strategy:

"We've basically lived the dream of our CEO and founder Scott Cook."

The company's approach to Twitter has grown in importance and size over the last year. TurboTax now has over 20 million customers. And those customers are greatly interested in the company every year in the lead up to April 15th. Says Marti:

"We have a short period of time to get those customers the help that they need."

TurboTax' seasonal business is both a strength and a weakness. On Twitter, the company has the chance to own the users who are interested in and commenting on their taxes. But that means devoted resources to the endeavor. And until this year, TurboTax wasn't able to do that.

Before this tax season, the company had two people in corporate communications and marketing on Twitter. This year they launched TeamTurboTax. The feed went live in February, at the beginning of tax season and upscaled the company's Twitter efforts from two employees to 40 staffing the feed. They had a live community team — including experts — and scaled the idea of helping customers.

"During tax season, we see a running stream of our keyword," says Marti. "Two people handling that is not the best situation for a customer."

According to Marti, they've now utlized those customers and the conversations they're having online:

"Our overarching theme on Twitter is that it's a persuasion engine that lets us keep customers."

TurboTax has found that on Twitter customers can help each other. Corporate communications became the hub that farms out questions to the appropriate spokes. They company also uses cotweet to fetter out all the incoming customers.

Now if a customer has a complaint or a problem, it is assigned to the right person. As their Twitter feed bio reads, "TeamTurboTax is who you ask when you have tax, tech or TurboTax questions!"

And as the 2010 tax season progressed, the company realized people were using the feed differently than they expected. Mostly twitterers were coming to ask TurboTax personal tax issues.

"We set out thinking we'd have more technical questions," says Marti. "But we found out quickly we were getting tax questions."

The company had employed tax experts for their effort. They enabled them to find a buddy, train a buddy, or recruit a buddy. That effort added 10 to 12 people to the team. Says Marti:

"For us, Twitter was a great way to help customers, but it wasn't the be all and end all. What really made it for us was the expertise that people brought to Twitter."

Marti acknowledged if the feed had been staffed by herself and corporate communications alone, it would have been far less effective. With experts on deck, the response time was fast. It took an average of four minutes for TurboTax to get back to Twitter questions.

At least half of the people who came to the feed were about to finish a return. The company also found that most of the people seeking out tax help from TurboTax turned out to be existing customers. And they found those customers were 71% more likely to recommend TurboTax because of their interactions with the company on Twitter.

In the end, TurboTax' expanded efforts on Twitter became a great customer retention program. Says Marti:

"Everyone knows it's less expesnive to keep a customer than create a new one."

Wednesday, June 16, 2010

FIFA Playing Hard Ball with Ambush Marketing at World Cup

Beer company employs ambush marketing at World Cup Soccer 2010

Sports sponsorships usually come out to be huge. Companies pay millions upon millions of dollars to advertise their brands at major sports tournaments. They cut out expensive deals with an exclusive tag to go around with – all done in a bid to be the only brand of a certain category in sponsoring a major event. This phenomenon is highly evident at the FIFA World Cup where certain brands such as McDonald's and Budweiser pay top dollars to the governing body of soccer in order to win the right of becoming the main sponsors for the event. This concept was shaken up recently when a story came to the fore that a Dutch Beer company allegedly engaged in ambush marketing. The interesting part of news is that it is wrong to partake in ambush marketing when corporate sponsorship deals are in place. So can one assume that advertising has gone out of hand?

This interesting case of the supposed ambush marketing related to a recent first round game between the Netherlands and Denmark in a South Africa 2010 match. FIFA claims that a Dutch beer company named Bavaria handed out hundreds of tight fitting orange dresses to female fans before the game and asked them to wear them during the match. According to various allegations, the company also hired 36 beautiful women to wear the dresses during the match to cheer for the Dutch team. According to FIFA, the beer company knew about these women who were sitting near the pitch who received a lot of camera attention which helped in promoting the beer. FIFA spokesman Nicholas Maingot said, “What seems to have happened is that there was a clear ambush marketing activity by a Dutch brewery company”. He further said, “What we are doing actually at the moment is that we are looking into all available legal remedies against this brewery”.

What FIFA failed to understand was that if the company's intention was to bring awareness to their brand, then they succeeded in a big way. Most people apart from die-hard Dutch beer fans would have known that this stunt was done by the beer company. Others would have thought that the ladies were just a bunch of pretty ladies all sitting together in orange. But by ejecting the women from the stadium and making a fuss about it, FIFA actually gave this company the media attention that it wanted. The news was sprayed all across newspapers and online news agencies with the company's name and they probably got the boost they had planned for from the beginning. It seems to be a brilliant marketing strategy for the company, they knew the women would get media attention and they also knew that they might be thrown out of the match. It all planned out well for the company in the end.

Even if this is not what happened and it was simply a case of ejecting paying fans who wore orange, then the question comes back to the fact that has FIFA's corporate sponsorship strategy has gone out of hand. They police the sponsorship deals and its implementation is so stringently monitored that if anyone else wants to try and make a few dollars from the tournament, FIFA comes down hard on them. Over the years, it seems that sponsorship deals have been getting out of hand with the bank Santander recently insuring Alonso's thumbs for 10 million Euros in F1.

An article online explores the affects of corporate sponsorships as they are taking place now. “Sports sponsorship is now a highly developed communications tool with much of the spending being focused on sports events”. In this arena the protection of brands and sponsorship deals has gone a bit loopy. Since it is such a big business and so much money is pumped, FIFA’s organising body feels they have to protect their main sponsors from any sabotage by any other company.

This story may not have a happy ending for Bravia - the beer company - because FIFA is working with the South African police to try and gather enough evidence to prosecute the company. If they did, FIFA may make it very clear to all other companies out there that want to engage in ambush marketing to rethink on this strategy. If we did look at the footage of those ladies in the crowd, it seemed a little strange that 30 beautiful women just happened to be sitting together in the crowd all apparently friends with not a hair out of place and all made up to look their best. If even one of them had been dressed differently or worn a different costume, maybe the entire plan would have looked a little believable. But then again, football fans are known to dress up in the strangest outfits for most matches. The Dutch female fans will be closely scrutinised in the upcoming matches and if they don’t want to be arrested, they should definitely wear a different colour.

Monday, June 14, 2010

NHL ad sponsorship revenue up 66% this year

NHL ad sponsorship revenue up 66% this season and Merchandise sales rise 22 pct for playoffs.

Record viewer numbers during the Chicago Blackhawks' run to the Stanley Cup title helped fuel a 66% rise in National Hockey League advertising and sponsorship revenue, a top league executive said.

The Blackhawks' series-clinching Game 6 victory over the Philadelphia Flyers garnered the highest television ratings in the United States in 36 years.

"It was a great Stanley Cup run, really across every possible metric .... Our fans are consuming more hockey," NHL Chief Operating Officer John Collins said in a telephone interview on Monday.

The league said its annual growth rate for advertising and sponsorship revenue, which includes sales for and NHL Network, has been close to 66% for three consecutive years.

Merchandise sales for the entire playoffs were up 22% and the number of unique visitors on the website rose 17 percent for the playoffs after a 29 percent gain during the regular season.

"Going into the playoffs, if you would have said we would lose Crosby and Ovechkin fairly early in the playoffs ... you'd be hard pressed to think you'd end up having one of the best Stanley Cup finals in 36 years," he added, referring to the upsets of teams on which all-stars Sidney Crosby and Alex Ovechkin play.

Some analysts have pointed to struggles in the NHL's U.S. southeastern and southwest markets -- including the Phoenix Coyotes' bankruptcy -- as clouding the league's prospects outside its traditional markets in Canada and the Northeast and Midwest United States.

However, Collins said a renaissance in markets such as Los Angeles and a new crop of younger stars are helping the North American sports league.

He said the North American sports advertising market seems to have recovered and is starting to heat up. "That bodes well for us going into next year," Collins said.

The NHL is expanding the number of events on its calendar, including plans for two outdoor hockey games next season, as well as a season-launching event in Toronto, he said.

It also will continue its push in new technologies such as a mobile application with Verizon Wireless that was launched late in the season.

Wednesday, June 9, 2010

Sponsorship gives businesses more "bang for their buck"

When environmental campaigner Lewis Pugh swam across a lake on Mount Everest recently to raise awareness about global warming, he and his team had a small but prominent logo of a large South African supermarket chain, Pick n Pay, branded on their clothes.

Corporate sponsorship, especially of sports and arts events has generally been on the increase, says communications expert Victor Dlamini. He told me that despite the global downturn over the past two years corporate sponsorship has been "one of the few areas where at least there has been no decline, even if the growth has been minimal."

Pugh couldn’t have organized his Everest adventure without the support of the sponsors like Pick n Pay and SAP, the other sponsor. The companies paid $100,000 all in all to align their brands with Pugh’s message about global warming.

Gareth Ackerman, who heads up Pick n Pay, said it made business sense because "food safety, food security, is absolutely impacted by climate change and if we don’t look after food security, there’s no food in our stores. Prices go up. It’s not great for any part of the supply chain and we have to look out for that supply chain."

Pick n Pay has also contracted Pugh to speak at schools in South Africa about his trip and the issues around global warming.

As marketing budgets are slashed due to the tougher economic times, businesses try to get more “bang for their buck” as they look for more innovative and cheaper ways to sell their message.

So "cause-related" marketing is gaining popularity says Dlamini. He said: "Increasingly a lot of South African companies are beginning to say, ‘we care’ about certain community issues such as education, refurbishing sports fields, sponsoring the arts, and, interestingly enough, saving the environment."

So for modest amounts and the right branding, big companies can create opportunities for people like Lewis Pugh and they get across the message that they care.

Tuesday, June 8, 2010

Signs Point To Higher Scrutiny of Nonprofit Sponsorships By IRS

Signs Point To Higher Scrutiny of Nonprofit Sponsorships By IRS

Nonprofits should pay attention to IRS developments and continue best practices related to managing and reporting sponsorship income.

The Internal Revenue Service may be preparing to revisit whether certain types of nonprofit sponsorship revenue should be considered taxable unrelated business income.

While the IRS has taken no definitive steps in that direction, experts say nonprofit organizations and their corporate partners should be alert to the possibility of a review of the safe harbor for some sponsorship benefits and, more immediately, be aware of the government’s recent heightened scrutiny of sponsorship activity.

Marcus Owens, an attorney with law firm Caplin & Drysdale, and the previous director of the IRS’s Exempt Organizations Division, points to two developments that signal the service’s rekindled interest in sponsorship payments to nonprofits.

The first is the IRS’s increased use over the past several years of questionnaires as a tool to examine nonprofits’ sources of income.

“The IRS has greatly expanded its use of questionnaires, which allow it to collect information in greater detail than the Form 990 tax return would generate,” Owens said. “The IRS is becoming more sophisticated about data collection, and nonprofits need to be prepared for the distinct possibility that an IRS questionnaire will probe sponsorship arrangements in greater detail.

“It is far easier for the IRS to send a questionnaire than conduct an audit.”

The second indicator that the IRS is interested in delving deeper into sponsor/nonprofit relationships is the examination of sponsorship activity as part of the service’s current Colleges and Universities Compliance Project.

The investigation by the IRS into conduct, practices and reporting by one of the largest segments of the nonprofit sector (in terms of revenue and asset size) got underway in October ’08 with questionnaires sent to 400 public and private institutions of higher education.

According to the IRS, the project is focused on: “(1) the conduct and reporting of exempt or other activities that may generate unrelated business taxable income; (2) investment, management and use of endowment funds; and (3) executive compensation practices.”

One of the questions asked by the project is whether the institution engaged in corporate sponsorship activities. The IRS reported the results of that question and the others in its interim report on the project issued last month.

Survery says: Starbucks the most popular consumer brand on the social Web

A new survey of brands on social media finds Starbucks to be the most popular consumer brand on the social Web, based on an analysis that indexes consumer brands against the most popular personal brand on the planet: Lady Gaga.

UK-based Famecount took a snapshot on June 2nd of brands' followers on Facebook, Twitter and YouTube to come up with its ranking, a quantitative snapshot with no qualitative look at how brands engage with their fans, followers and subscribers across the social Web.

Starbucks came in #1 among consumer brands by having 7.4 million Facebook fans, 901,925 Twitter followers and 6,509 YouTube subscribers. American brands dominated the top 10, with Red Bull the only non-US brand to make the top 10.

read more....

Starbucks' business model had spiraled out of control

When Howard Schultz returned as CEO of Starbucks in January of 2008, he hadn't realized how bad things had gotten. With the company opening an eye-popping seven new stores a day at its peak, Starbucks' business model had spiraled out of control.

"We had embraced growth as a reason for being instead of a strategy," he said during a visit to Fortune's offices last week, as he outlined Starbucks' path over the last two years. Schultz, who was and still is the company's chairman, dropped his involvement with all other boards and outside distractions. From then on everything for him would be about only two things: Starbucks and his family. "The Brooklyn kid in me wants to make sure we prove everyone wrong," he says. (Note that while Starbucks might be from Seattle, Schultz is a born and bred New Yorker.)

He started the Starbucks (SBUX, Fortune 500) turnaround with what for many companies is the hardest thing to do: confessing its sins. Schultz had to tell his employees that the company had made mistakes and would pay the price by taking $600 million in costs out of the business. Part of that would come from laying off employees and shutting down 600 stores. 80% of them had been open for less than two years.

Even amid the cost-cutting Schultz refused to drop health care for his employees, a line item that tallies $300 million. That's more than the company spends on coffee. A shareholder called Schultz and said the crisis would provide him the perfect cover to cut benefits for part-time employees. He refused, and told his investor if he felt so strongly about it he should sell his stock. (The shareholder ended up cutting his position.)

Much to the dismay of Wall Street, Schultz decided to stop reporting monthly same-store sales in an attempt to move the pressure from producing good numbers to producing good coffee. "Monthly comps are like a harness around your neck," he says.

As the company cleaned up its internal mess, competition from serious industry players started to loom for the first time. McDonald's (MCD, Fortune 500) had rolled out its McCafe line and launched a marketing campaign that partly took aim at Starbucks. Dunkin' Donuts also was expanding, and independent coffee stores had turned into threats.

Starbucks' premium image also started to backfire. "Starbucks became the posterchild for excess," Schultz says. Consumers who had once embraced the brand's cachet now started to view the $4 latte as frivolous and a not very smart purchase.

Today Starbucks has managed to avert crisis and is diving into new areas of growth beyond simply opening new stores. Schultz says its VIA instant coffee line, which many saw as a move of desperation, will have 37,000 points of distribution by the end of the month. The company sees a hungry market in China and India, and in the U.S. the company is pushing out its newly rebranded Seattle's Best line.

Expect some of its stores to undergo a facelift with its recently renovated location on Spring Street in New York City as the model: community table, locally sourced and environmentally friendly materials, and a look that evokes its original location at Pike Place in Seattle. The Spring Street store uses a brewing system called Clover, which uses vacuum press technology.

Right now less than 20% of sales come from outside its stores, but Schultz plans to change that as he brings Starbucks more into the consumer products company realm. Because the company doesn't have any franchises, it can sell its products in supermarkets without having to worry about cannibalization from its stores.

Despite the one-time backlash against its premium image, Schultz says Starbucks has become a haven for people facing tough times. Job applications have never been higher. Employee turnover has dropped. The unemployed who have nowhere else to go spend their days in the company's stores. And perhaps its smartest marketing move of all: These customers can stay all day, and Starbucks won't ever ask them to leave.