Wednesday, September 19, 2018
Business StrategyMarketing

Surface Tension: Is There Value in Being the Official Sponsor of the NFL?

The Microsoft Surface has recently been getting some bad press due to equipment failures on the New England Patriot’s sidelines during this year’s NFL AFC Championship game.

The value of Microsoft’s $400 million dollar investment to become “The Official Sideline Technology Sponsor of the NFL,” has been called into question, but this may be part of a larger story. Does getting into bed with the NFL create true value for brands?

When “Official” Sponsorships Go Wrong

“I’m a little bit skeptical about the power of becoming ‘the official this or the official that,’” says Michael Lee, founder of Madam and frequent contributor to Forbes.  “I think everyone knows a brand is ‘the official ‘this or that’ because they bought it. It’s not earned. Take the official beer for example. Do we think all of the players in the NFL prefer the taste of one beer or another? Of course not – it’s bought.”

While this purchased positioning can be harmless for a brand like Coors Light, it can be deadly when the product is actually in use on the field. It was bad enough that the Surface tablets were referred to as “knockoff iPads” by Chicago Bears quarterback Jay Cutler and repeatedly misidentified as iPads by announcers. The in-game failure, however, created real negative value for the brand.

“It was a disaster,” Lee notes. “Here we had millions of people watching a two-minute commercial about the Surface and how bad it was.”

A look at trends in Google searches around Microsoft Surface bear this out.  If you look at searches 90 days out the queries are mostly purchase and product related.

Microsoft Surface Search

However, if you limit the searches to the last seven days, you can see the effect that the AFC Championship episode had on Surface searches. The queries are now focusing on the incident, rather than product details.

Microsoft searches story

“That’s what happens when things are live,” Lee says. “It can all go pear-shaped quite quickly. Live events are fraught, especially if you are involved – less so for a beer or a Big Mac. But in the case of Microsoft, you’re seeing the product in action, which is great when it works, but the chance of a mishap is fairly high. It’s a public demonstration of your inability to perform at the highest level, so it’s a very dodgy strategy for Microsoft.”

The Ads Themselves

Every year, there is at least one high-profile failure in the Super Bowl. This could be a brand that uses a Super Bowl ad as a last-ditch effort before going under (like Radio Shack in 2014) or a brand that runs a horrendously misguided ad (like Nationwide’s disastrous child death ad in 2015).

However, there seems to be a consensus that the ads are still valuable to sponsors, even as the cost for a 30-second spot in this year’s game passes $5 million.

“This kind of a program is much harder for advertisers to find; especially mass brands that need lots of eyeballs, like cars, soft drinks, fast foods and beer,” says advertising commentator Stuart Elliot. “There are big rewards and big risks, but my feeling is that these giant brand wouldn’t be spending all this money if they didn’t feel they were getting some kind of benefit from it.”

Hard to Stay, Harder to Leave

Some brands like Pepsi and Budweiser have seen annual decreases in market share despite heavy involvement with the NFL, with Pepsi in a very visible spot as the annual sponsor of the Super Bowl halftime show. So the question is, why continue these partnerships?

“You can make the case that the decline would be even worse if they weren’t doing that advertising,” Elliot says. “If they leave the spot, one of their arch rivals may snatch it up. For example, as soon as Pepsi decided they didn’t want to be the official sponsor of the New York Mets, Coca-Cola swooped in and took over the sponsorship.”

Additionally, Lee notes that there are audiences beyond customers that brands are concerned with reaching.

“We have to think of the audience beyond the consumer,” he says. “It’s a confidence bet as well.  Brands have employees, shareholders, chairmen and investors. Being part of the Super Bowl, as ‘the official this’ or ‘the official that’ or by taking a commercial says to shareholders: ‘The brand you are connected with made a statement on the biggest platform in the world.’ So I think the Microsofts of the world are speaking as much to shareholders, potential shareholders and employees and building internal goodwill as much as everything.”

How High Can Super Bowl Spending Go?

When will the price of a Super Bowl advertisement hit a ceiling? Is there a point where the reward is no longer worth the risk? Elliot doesn’t think that day is coming anytime soon.

“Not only one, but two networks are going to be disrupting their fall prime time roll-outs this year in order to broadcast football games,” he says. “That underlines the value to the networks because the demand for advertising time during football games just keeps climbing. The cost of an ad during this year’s Super Bowl game is estimated at $5 million for a 30 second spot – last year it was $4.4 million and the year before it was $4 million. It just keeps going up and up.”

The bottom line is still this: as television audiences have fractured, the big game represents the last, best chance for advertisers to reach a mass audience.

“The only things that bring people together and that they have to watch live are big sporting events,” Lee concludes. “No one DVRs the super bowl–it’s pointless. The reason these games exist is because you have to see them live, and brands have to play a role in that, especially the major ones. They know that this is the last bastion of big media purchases.”

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