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Sponsorship ROI At Adidas

Is plunking down millions of marketing dollars every year to be associated with a major sports property such as a team, league or tournament actually worth the money? When you bear in mind that any particular branded product sponsor must not only commit to the partnership for several years, but must also match sponsorship dollars with what are called "leveraging/activation" marketing dollars, it becomes even more difficult to justify the expense. This is money spent by the brand to build awareness and reinforce the sponsorship among its target audience. But does sport sponsorship really work?

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Results depend on good planning and execution of marketing strategy more than any other factor aside from choosing the right brand/sponsor fit. Making certain that marketing efforts are adequately funded is also crucial. And in today's message-intensive environment, marketing through sport can help a brand cut through the clutter as well as provide myriad opportunities to build relationships with the team/league/event's customers. In the long run, brand marketers hope that the affinity that fans have for their teams will transfer onto their brands after repeated audience exposures to the brand/team combination. This is surely an example of associative learning if I've ever seen one. 

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Indeed, revenue is not really the best indicator of whether or not a sponsorship is working since there are many other variables besides the sponsorship that contribute to sales. Audience awareness of the sponsor versus the competition tends to be a much more instructive metric. But when a marketer such as Adidas sells products that are specifically tied to a event sponsorship like the FIFA World Cup, it is easier to say that one particular sponsorship did in fact contribute in a major way to any successes or failures of the company as a whole.

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This World Cup season, Adidas experienced strong revenue gains across the board with both North America and Asia coming in higher than the same quarter last year. Perhaps more importantly, profit almost doubled, and this at a time when Nike is stepping up efforts to grab market share with plans on further penetrating Adidas home market in Germany. In short, the company benefited from sales of high price point/high margin World Cup-related merchandise directly related to its sponsorship. The flagship brand posted double-digit revenue increases, offsetting poor performance by its Reebok unit, which continues to struggle with brand identity among other issues. While U.S.-based Nike continues to dwarf its competitors, Europe-based Adidas has held its own. Smart marketing strategies like the World Cup sponsorship are surely part of the reason for this success.


Discussion: Why do you think Adidas has been so successful with its World Cup sponsorship? What are some the ways that marketers can "leverage" sport sponsorships over time?

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