The stock market is straining, banks are failing and most of the World’s economies are sputtering. The downturn is causing many companies to cut back on their marketing budget, but you can’t stop everything. You still have a product to sell; you still have a brand to build. For years companies like Nike, Adidas, Coke, Pepsi, McDonald’s and Gillette have furthered their brands by investing heavily in sports sponsorships and endorsement deals. Now, the question facing those companies and many others is, do we continue to spend on endorsement deals even during a recession?
The answer is unequivocally yes. If you have built your brand on sponsorships and endorsement deals, then pulling out is going to stunt that growth. Big companies need to market their brand, their competition will pass them by if they only focus on ROI. That’s because ROI marketing is building your coffers today, while brand marketing is going to increase your earnings capacity down the road. But if you are a company that has built your brand on the back of sports sponsorships and endorsements, there are new rules to play by during a recession.
1. Take risks. Now is the best time to land that one big deal that has always alluded you. That venue name sponsorship, signing up a mega sports star to an endorsement deal or aligning your brand with a professional sports league. Do it now! Why? Because money is cheap right now so you can buy more than you normally could. Leagues, teams and athletes are trying to generate more cash right now, just like the rest of us. So that deal you were quoted at X price in 2007 is now attainable at half X price. Citigroup’s $20 million dollars per year naming rights deal at Citi Field in New York raises eyebrows today, but in the long-term that deal will help to grow their business. Although Citigroup is probably wishing they inked that deal today rather than 2006, if they did they could have probably gotten the deal at 30% less than they paid.
2. Drive a hard bargain. Don’t accept the first offer and don’t be afraid to walk away. These rules should apply for negotiations during prosperous times as well, but many people don’t have the guts to walk away from a deal. The key difference today is there is less competition bidding on the deal you want, so if you walk the deal might fall apart entirely. The guy on the other side of the table knows that, so he’s more likely these days to agree to your terms. And just because you are getting a really good deal (say $0.50 cents on the dollar) doesn’t mean you cannot get a great deal (maybe $0.20 cents on the dollar). You never want to burn bridges, but that does not mean you cannot push to get the best deal possible. The best way to save money on these deals is to not pay more than they are worth in the current economy.
3. Maximize your current deals. Don’t spend so much time looking for your next deal that you forget about the deals you’ve already got. The same way new deals are more negotiable during a recession, so too are elements of your existing deals. Asking for more in your current deal is not akin to breaking the deal. In fact you may be surprised how many more miles you can get out of existing deals just because your partners have the inventory available. Well that, and the fact that they don’t want to risk losing your deal. Remember these words: don’t be afraid to ask.
So use these rules to help guide you through the troubled times we’re living in. Doing so will insure that your brand stays strong through the recession, and help you position yourself to grab market share from the competition once the economy is strong again.
