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Victory Lane

Best's Review, October 01, 2008

Insurers are racing into motorsports sponsorships to turbocharge both brand awareness and consumer outreach.

By Lori Chordas

When Carl Edwards took the checkered flag at the Samsung 500 at the Texas Motor Speedway in April, he wasn't the only one enjoying a winning moment. An insurance company shared the glory as millions of NASCAR fans saw the No. 99 Aflac Ford Fusion speed into the top spot.

That recognition is what a growing number of insurers are looking for, as they turn to motorsports sponsorships as a way to reach consumers and magnify their brands.

The strategy is paying off. A Performance Research survey of 1,000 nationwide NASCAR fans found more than half said they had a higher trust in products offered by NASCAR sponsors, and 71% said they almost always or frequently choose a product involved in NASCAR over one that is not, simply because of the sponsorship.

For more than 50 years, corporate sponsorships of the National Association of Stock Car Auto Racing, better known as NASCAR, have been the core of"making the sport go 'round," said Ryan Kurek, chief executive officer and founder of Leverage Sports Agency LLC.

And companies spend big bucks to make that happen. Primary sponsors often spend about $10 million to $20 million, while associate sponsors spend anywhere from $250,000 to $1 million.

Sponsorships as a whole continue to climb. This year, total spending by U.S and Canadian companies should top $16 billion, up from $14.91 billion spent in 2007, according to Chicago-based IEG, a sponsorship consultancy and research firm.

Event Qualifiers

What's the appeal for companies?

IEG analysts say motorsports sponsorships increase brand loyalty, create awareness and visibility, change or reinforce a company's image, drive retail traffic and sales, showcase a company's community responsibility and differentiate products from its competitors.

Not only that, "the cost of such exposure in any other advertising medium is often 10 times more expensive than the cost of having a logo visible on camera during TV or trackside coverage," according to an article on topspeedracer.com. The sport's loyal fans also add to the draw.

"Without corporate sponsorships, there's no sport and no cars racing around the track," said Ken Cohn, vice president of sponsorship strategy and activation consultation agency Millsport. "Fans recognize how integral sponsorships are to the health of the sport."

Aflac knows that value firsthand. "NASCAR gives us a great opportunity to reach many different people, and we felt the demographics of viewers and fans matched up with our products and services," said Al Johnson, vice president of marketing services. Today, auto racing is the No. 1 and fastest growing spectator sport in the United States. NASCAR alone has more than 75 million brand-loyal fans and is the No. 2 regular season sport on TV, behind the National Football League, according to Business Wire.

NASCAR fans fit the customer base many carriers want. The Performance Research study said fans are predominantly 42-year-old married males who are homeowners with a median household income of $35,000 to $50,000. Companies also can broaden their reach into female and multicultural markets, with drivers like former world-class Formula 1 driver Juan Pablo Montoya joining the NASCAR circuit, said Karen Uhler, senior marketing manager for Allstate. Forty percent of NASCAR fans are women, according to Sports Illustrated.

Sponsorships also help boost employee morale, said E.J. Trosclair, vice president of agency for Southern Farm Bureau Life, which is sponsoring the No. 18 Nationwide Series team with Joe Gibbs Racing for six races this year. "There's much pride now among our more than 4,000 agents. Now when they see a race, they see our car running next to big brand names like M&M and Red Bull."

Not only that, Cohn added: "Sponsors gain nearly year-round exposure, which provides a great landscape for brands." Carriers, Start Your Engines Companies are finding those benefits.

"Insurers continue to be extremely active in sports sponsorships, and motorsports and NASCAR are no different," said Cohn. "Their brands are involved in all levels--from sponsorships of teams and drivers, to series, and to the sport itself."

But that wasn't always the case, said Kurek. "Initially, the industry was reluctant because they didn't want to be associated with an inherently dangerous sport that involves car crashes. But carriers realize that fans can separate what's factual and what happens on the track. Insurers figured out there's 75 million fans, and if they can get make an emotional connection there's a chance to increase business 10- to 15-fold."

Last year, Principal Financial Group raced into NASCAR by advertising on the broadcast and teaming up with Ginn Racing, which was acquired by Dale Earnhardt Inc. in 2007. The company also sponsors NASCAR's No. 01 and 8 cars driven by Mark Martin, Regan Smith and Aric Almirola and others.

"We're trying to connect with businesses, individuals, and brokers and advisers, all of whom are sports fans," said Steve Whitty, Principal's vice president of corporate marketing. "When we set our sponsorship objective we look at whether it will give us an opportunity to connect with our target markets. NASCAR does that because of its big fan base."

In 2005, Allstate took the wheel by sponsoring Gillette Evernham Motorsports, featuring driver Kasey Kahne in TV, print, radio and online advertising. It's also the title sponsor of the Allstate 400 at the Brickyard, with a multiyear entitlement with the Indianapolis Motor Speedway.

Feathers are flying with Aflac's affiliation with NASCAR. Not only does the Aflac duck ride on No. 99's hood for numerous races throughout the year, the company recently rolled out its 34th commercial for the duck featuring Edwards at the Atlanta Motor Speedway. Aflac is the official supplemental insurance company of NASCAR through 2010.

Aflac entered the NASCAR circuit last year, running as Greg Biffle's primary sponsor for four races and as the sponsor in the then-Busch series races with other Roush Fenway drivers, said Johnson.

"We sell 98% of our policies through the worksite, so getting in front of business decision makers is important," he said. "This relationship allows us to get in the door much quicker with many major companies." There are also other sponsorship perks such as access to pits and hospitality areas to network with consumers, agents and potential clients, he added.

"This is all about driving sales. It's great to win races and have a strong finish on the track, but at the end of the day it's about how we can use this to drive business," said Johnson.

One of the biggest moves by an insurer came when Nationwide Insurance--the official auto insurance provider of NASCAR--announced it would become the title sponsor of the NASCAR Nationwide Series this year, replacing Anheuser-Busch's Busch brand. The seven-year partnership gives Nationwide the exclusive rights to tie its brand to NASCAR.

John Aman, associate vice president of strategic sponsorships for Nationwide, said, "NASCAR respects and understands its sport, and its economics are largely built on sponsors being there.

"On TV broadcasts we don't have ad exclusivity, but through the integration of graphics, features, car and driver branding, the Nationwide brand appears for more than an hour throughout a 2-1/2 hour telecast. In addition, when on-air talent mentions us as a series, we have weight and presence that can't be overcome simply by buying an ad or sponsoring a race team," he said.

There's also the opportunity to connect with fans via Nationwide's community safety events, which are held in local race markets and educate young adults and parents about the dangers of driving while distracted, Aman said.

Outside of NASCAR, several carriers are racing into other motorsports. This year, ING Group kicked off the Formula 1 season as the title sponsor of the new ING Renault F1 car, the R28. The company also has on-track branding at more than a dozen 2008 Grand Prix races.

Points System

Many companies are seeing an increase in return on investment from their motorsports sponsorships, according to IEG."A decade ago, companies often threw money at a sponsorship hoping for some ROI. Now there's more focus when signing a deal or shortly thereafter, to establish metrics up front to use to determine success from sponsorships based on a company's marketing objectives," said William Chipps, senior editor of IEG Sponsorship Report.

The ROI from Nationwide's sponsorship includes nearly $2 million of media value per race, said Aman. "That's the combination of about one hour of visual exposure and 90 oral mentions by on-air talent, not including additional radio, print and online exposure outside of the television broadcasts."

At last year's Allstate 400 at the Brickyard, Allstate received 2.7 billion impressions, twice as many as in the prior year, said Uhler."Internally, I think it's further strengthened employee and agency morale, promoted some goodwill and allowed us to contribute to our overall business goals. Our Allstate agencies are being recognized and rewarded in terms of sales incentives we've provided for them, so this is really working holistically for the company."

Pole Position

It's a green flag for motorsports sponsorships going forward. "And all data supports NASCAR is a place to be for insurers," said Cohn.

He said, however, there are a few things companies should consider before rounding the corner into the sport. "It's a sport certainly not without clutter, so companies have to be strategic about the platform they carve out for their brand so that it's unique and resonates well with consumers."

And, he said, carriers should do everything they can to solidify the emotional connection they have "so customers don't consider going elsewhere."

"Because the price of the sport isn't going down, companies need to be smart about the assets they select and how they deploy them," said Cohn.

In 2002, a premier NASCAR team cost sponsors about $2.1 million in the Nationwide Series, said Kurek. Today, those costs top $7.5 million. Johnson said not only will Aflac dedicate more dollars toward its sponsorships to help grow its already 90-plus awareness recognition level,"we'll continue to use the multiple approaches to NASCAR, whether it's getting to know decision makers, focusing in on building relationships with brokers or staying in front of consumers who will be purchasing our products."

Victory Lane: On the Throttle

Rising fuel costs have contributed to a nearly 7% decline in attendance at many NASCAR venues during the first 15 races this season. So, do those costs and the sluggish economy have motorsports sponsors running on fumes?

"It's had little impact because our sponsorship is not focused at the track," said Steve Whitty, vice president of corporate marketing for Principal Financial Group. While attendance is down, he said, TV viewership is rising full throttle. "And that's a big part of the value we derive from NASCAR."

Fans are consuming the sport in different ways, said Ken Cohn, vice president of sponsorship strategy and activation consultation agency Millsport, the affiliate of The Marketing Arm. "Overall, the health of motorsports remains strong."

While the economy is having some impact on overall sponsorship spending, William Chipps, senior editor of IEG Sponsorship Report, said some industries, such as retail banks and mortgage companies, are feeling the biggest effect. However, sponsorship spending globally is expected to increase 14.8% this year to $43.5 billion, according to IEG.