High-profile sponsorships are making a comeback — and not just at big banks.
A handful of small banks have also struck deals recently that will heighten their name recognition and allow them to cull customers out of massive audiences.
"Banks are coming around," said William Chipps, the senior editor of Sponsorship Report. Chipps said those that are signing deals have a thoughtful approach to building brand awareness, and that more companies will pursue such opportunities once the economy evens out.
Some community banks are acting now, including FirstBank Holding Co. in Lakewood, Colo. In March FirstBank bought naming rights to the Broomfield Event Center, a 6,500-seat arena in Broomfield, rebranding it 1STBANK Center. The venue draws parents taking their kids to see Elmo, as well as twentysomethings hoping to see noses get broken in Ultimate Fighting Championship matches.
For the $10.4 billion-asset FirstBank, the appeal of those age brackets might appear to be a no-brainer, but in an environment where capital is king, it was a long-studied decision.
"Demographically speaking, it gives us access to a big group of customers," said Jim Reuter, an executive vice president of FirstBank. "But there is more pressure on earnings in our industry, and that makes you more selective about where you spend your money," Reuter said. We debated it pretty carefully."
In July, EverBank Financial Corp. in Jacksonville, Fla., purchased the naming rights to the football stadium where the NFL's Jacksonville Jaguars play. Alltel Corp., a wireless company, let its naming rights for the stadium expire in 2007, and in the interim the stadium was known as Jacksonville Municipal Stadium.
The $11.2 billion-asset EverBank declined to comment on the transaction because it is in the middle of its initial public stock offering. In a July press release, Robert Clements, the company's chairman and chief executive, said the stadium deal gave EverBank the opportunity to build both its local brand and the brand it has built across the country as an Internet bank. EverBank did not disclose the price, but SportsBusiness Journal said the deal is valued at $3.3 million a year. That's a dramatic difference from the $7.6 million annual contract Gillette struck in 2000 for the home of the NFL's New England Patriots.
Such announcements for concert halls and football stadiums were frequent in the middle of the last decade. With the downturn, that changed. According to data from Sponsorship Report, which is published by IEG, in 2008 financial services accounted for 30% of all sponsorships, from naming rights of venues to sponsoring a community festival. In 2010 that slice of the sponsorship pie dropped to 21%.
In the wake of the Treasury Department's Troubled Asset Relief Program in 2008, several big banks shied away from high-profile sponsorships as community advocates and politicians criticized many marketing expenditures. As that stigma lifts, more banks are looking for high-visibility opportunities.
In September, BNP Paribas SA's BancWest Corp. inked a deal to sponsor the Pacific-10 Conference for collegiate sports. BB&T Corp. in Winston-Salem, N.C., last month made a similar move, becaming a sponsor of the Atlantic Coast Conference. Wells Fargo & Co. earlier this year agreed to put its name on the Quail Hollow Championship, a PGA Tour event.
Marketing experts said companies like EverBank and FirstBank are striking now because prices are way down. Banks that previously would have balked can expect to spend less now to see their names in neon.
"It is cheaper to do it now compared to sponsorships going back 10 years," said Michael D'Esopo, a senior partner at the New York brand strategy firm Lippincott.
EverBank did not disclose the price, though the Jacksonville Business Journal reported at the time that it would be worth almost $17 million over five years. FirstBank did not say how much it paid in its stadium deal, but Reuter said FirstBank's first naming-rights deal "came along at a good time, economically speaking."
Although companies can get a steal on naming rights, D'Esopo said a company must be prepared to spend much more to get a good payoff. "Beyond the signing of the deal, in our experience, best practices is spending another two times the initial amount to activate the sponsorship," he said. "You have to make sure it is going to pay off for the broader business."
D'Esopo said companies make the deals pay off by finding ways to leverage opportunities, such as setting up booths within the venues that advertise specialized services or finding other ways to connect customers to experiences.
FirstBank was able to strike a deal where its customers are able to buy tickets for events at its namesake venue a day before they go on sale to the general public. The company links that feature alongside its Internet banking.
"It is much easier to maximize that kind of benefit with the help of technology," Reuter said. "Our customers can click from here to there."
FirstBank also has two large suites within the complex — one for customers and another for employees. In late October the company brought social media into the mix when it created a drawing for its Facebook fans to win tickets to see a Halloween performance from the rock band Ween by naming their favorite songs.
"Social media has given us the opportunity to further leverage the experience," Reuter said. "You don't just put your name on the building. You have to constantly look for ways to create activities and buzz."
There's one other benefit that the company didn't anticipate — mentions during rush-hour alerts telling commuters about backups on the stretch of highway that fronts the building and connects Denver and Boulder.
"On days when the highway is really packed, you'll hear 'it is backed up to the 1STBANK Center' on the radio," Reuter said. "That is free advertising."