When did marketing become wasteful?


Recently, several companies which have received TARP funds have come under fire for certain marketing expenses.  We can all acknowledge that bonuses for poor performance, excessive use of private jets, spa retreats, and other lavishness are egregious, but are marketing expenditures a luxury item?

Part of the purpose of these relief funds is to help certain key companies to get back on their feet.  How can they do that if they don’t market and promote their services?  How can they succeed if they’re being shamed into invisibility?

Citi’s decision to enter into a naming rights agreement for the Mets’ new stadium is not lavishness.  Nor is Barclay’s affiliation with the Nets, or Bank of America’s with the Yankees.  These are sound marketing decisions made after considering potential ROI.  The benefits of these deals to the sponsors are far deeper than their brand name on the building.  And without such corporate support, who do you think pays the price?  Take away the corporate sponsors, and watch how the price of tickets, parking, hot dogs and a beer skyrocket.  Is this in the best interest of the public?  

It’s actually gotten to the point where some companies have been lauded for letting paid assets go unleveraged in supposed “recognition of the current economic climate.”  General Motors had the contractual right to have a Cadillac on the field at the Super Bowl, thereby exposing their product to millions of potential buyers.  Yet they forfeited that high-value benefit for fear of criticism.  From our perspective, “recognition of the current economic climate” would mean the exact opposite – doing everything possible to make your product compelling and attractive, in order to effectively compete for customers.  Letting assets which have been fully paid for sit inactive can’t possibly be a recipe for success. 

The big word we’re hearing with respect to marketing is “wasteful”.  Are all marketing expenses deemed wasteful?  It seems that lifestyle and experiential marketing initiatives, like sports sponsorships, are being disproportionately targeted.  Do thirty-second television ads and internet web banners get a free pass?  Any marketing professional will tell you that the industry has been increasingly moving away from such “traditional” vehicles to more engaging tactics which provide experiences with the brand and resonate with consumers’ passions.

Time and again, during periods of economic uncertainty, war, and unrest, America retreats to its passions.  Baseball, football, racing – whatever one’s passion may be – that’s where America turns at times like these, and that’s why effective marketers need to be there.  The reason for this consistent growth of sponsorship marketing is that it drives business.  From direct revenue to promotional programs to brand enhancement, most of the world’s best-run companies continue to increase their involvement with lifestyle marketing programs because they generate measurable returns against specific objectives.

Companies that want to succeed need to break through heavy clutter to capture consumer attention, and our sense is that these sports sponsorships are being called into question precisely because they’re noticeable and attention-grabbing.  It’s our strong sense that brands that clam up and go into a shell now are doing themselves and their shareholders a huge long-term disservice.  Do we need to come down hard on extravagance and excess?  Absolutely.  But prominent marketing programs which gain attention and engage consumers according to their lifestyle passions are a business necessity, not a luxury.

David Grant, Principal, Velocity Sports & Entertainment, Norwalk, CT