Tech brands getting a sporting chance

What do tech companies get out of sports sponsorships - and is this link-up a trend that's likely to last? Will Sturgeon investigates.

Anybody watching any one of this summer's major sporting events will be well aware that sport and technology enjoy a very healthy - and very lucrative - relationship in terms of partnerships and sponsorships.

From the Vodafone Derby to the Fifa World Cup (brought to you in association with Avaya, Toshiba and Yahoo!), it seems sport and technology are inextricably linked. But why? Is it purely because sport represents the largest billboard on the planet or is there something more strategic afoot?

Mike Read, CEO of Pipex, told silicon.com his company's decision to sponsor Premiership football team Fulham - at a reported cost of £1m per season - was indeed made in part because England's top flight represents one of the largest billboards in the world for any brand.

Read said: "We get a lot of media coverage on television and in the newspapers just by being on the shirt."

Paul Wright, MD of Aura Sports, a digital advertising agency specialising in sports brands, told silicon.com many brands will recognise the value of such coverage.

Wright told silicon.com: "In a fragmented media world any event that provides mass audiences will attract sponsors and sport does this in bucket loads."

But simply because people know the name 'Pipex' doesn't mean anybody really knows what the company does. This is a point Read accepts.

He said: "Sure, people know the name but they may well ask 'what the hell do we do?'," adding that year one of the Fulham deal was very much about building brand awareness, and this year will see the shirt sponsorship complemented by a wider advertising campaign intended to bridge the consumer gap between brand awareness and people actually knowing what Pipex does.

Read told silicon.com: "We could have put 'Pipex broadband' on the shirts or 'Pipex.com' but we did our research and were told that the more you have on the shirt the less people see it and remember it."

Shirt sponsorships, which can cost as much as £15m per season, have also proven popular with companies such as O2, Samsung, Siemens, T-Mobile and Vodafone in recent years and the appeal of consumer-oriented brands is clear, as sports fans are often regarded as being a key demographic with disposable income.

But sports sponsorship for business-to-business brands and those targeting the enterprise are also big business.

Keith Turco, SVP of global branding strategy at CA, told silicon.com his company this season decided to end a sponsorship deal with Formula 1 team McLaren and instead has focused its energies - and budget - on golf.

Turco said: "McLaren was very good to us. But looking at McLaren and F1 from a global perspective it didn't serve CA as well as we would have liked.

"F1 didn't cover a large area of where our business is - which is North America."

However, the flip side of that coin is that many US sports, such as baseball or American football, also lacked the right fit as they didn't have worldwide appeal.

According to Turco that left just tennis and golf to choose from and in the shake-up of the two Turco says golf was the clear winner - with CA now sponsoring the World Golf Championship. Such a deal is likely to be worth millions of dollars to the organisers as one source confirmed to silicon.com that golf, because of its advertising cachet, can command vast sums from sponsors.

Turco told silicon.com: "Golf is a global sport and we have a global reach as a result of our involvement. A lot of the demographics we target have an interest in golf."

CA also gets a prime positioned pavilion at tour events which can be used for business meetings, customer entertainment or "staff appreciation". This is a popular deal-breaker for many sponsors.

It's a similar situation back in Fulham where Pipex's Read says the company has a boardroom - which doubles as a hospitality suite on match days - and 26 seats in the stands for hosting customers, potential customers, partners, staff and even competition winners - all part of the brand-building exercise.

But critics of the beautiful game may suggest sponsorship and the corporate touch is spoiling football though clubs undoubtedly benefit from the money it brings in. Never has the criticism been stronger than with the Fifa 2006 World Cup staged in Germany this summer where 15 sponsors accounted for 25,000 match tickets each, many of which are alleged to have found their way onto the black market.

For the companies involved it is the biggest stage in the world with around 30 billion pairs of eyes watching the tournament.

Laptop giant Toshiba was one of the 15 premier sponsors of the event, having also sponsored the World Cup in Japan and Korea in 2002 as part of an eight-year deal. Toshiba's Manuel Linnig told silicon.com the World Cup is simply the biggest opportunity in sports sponsorship.

But despite Toshiba also being the IT partner for the event, Linnig insists all the laptops used by Fifa have been paid for and Fifa counters that Toshiba certainly paid in cash, rather than kind, for its sponsorship deal. The value of the deal, according to one source, was likely to be around $15m to $20m for two World Cups and Toshiba has not yet renewed its agreement with Fifa to sponsor South Africa 2010.

And although the sponsors benefit from unrivalled exposure in terms of brand awareness, Avaya was another of the 15 sponsors and is a company which plays to the large enterprise and, as such, may appear at odds listed alongside consumer brands.

Doug Gardner, World Cup programme managing director at Avaya, whose deal is believed to be comparable to that of Toshiba's in terms of cash value - accepts a business-to business brand looks a little out of place alongside the likes of Budweiser and Coca-Cola (rumoured to have paid $500m for a 16-year deal) but said beyond brand awareness the event is also a major testing-ground for the company. As network partner for the World Cup, Avaya is able to show off what it is capable of, said Gardner.

He said: "It sends out the message that if we can do this we can do anything."

Another increasingly popular move is stadium sponsorship deals.

In the UK, companies such as Ricoh, which sponsors Coventry City's Ricoh Arena, is among the early movers in the tech space for this naming rights option - valued at around £300,000 per year. The deal not only gives Ricoh access to a box overlooking the pitch, which it can use for match day hospitality or when the stadium is used for concerts, but it also means the Ricoh brand is writ-large around the ground and across the stadium roof.

A member of Ricoh's marketing team jokes the name "can be seen from space" but in seriousness it's a level of visibility that does help brand awareness further - even when it is least expected.

Pipex's Read said an added bonus of the location of Fulham's Craven Cottage stadium is its prominent position on the Boat Race course, when the giant Pipex logo on the stadium roof managed to find its way into much of the footage filmed from helicopters tracking the race along the Thames.

In the US - where many marketing trends are born - the stadium naming trend, as well as tech's love affair with sports sponsorship in general, is clearly in evidence.

And worldwide as tech remains buoyant and big brands exercise their marketing muscles it is likely this marriage between technology and sport will become an ever more lucrative alliance for as long as sport remains the biggest draw on the planet.