American Express Appears To Value Experiences Over Reach With New Title Sponsorship
BY ADAM GROSSMAN
American Express announced a multiyear title sponsorship deal that changes the name of the PGA Tour event most recently called The Desert Classic to The American Express. The primary reason the company appears to be returning as a title sponsor for the first time since 2006 appears not to be what many people expected.
In a past post on the recently-named Allegiant Stadium, we discussed how Allegiant Air would leverage its new naming rights deal with the Las Vegas Raiders for two reasons. The company wanted to maximize brand awareness in multiple, target markets while also creating unique experiences for its targeted customers (leisure fliers). Emphasizing both reasons was a change in the standard approach to naming rights. Maximizing brand awareness, rather than creating unique experiences, had typically been considered the primary value driver for these deals.
The American Express deal appears to be different than Allegiant in that unique experiences are now the primary value driver. Chairman and CEO of American Express Stephen Squeri called the new partnership a “perfect match” because “golf consistently ranks as one of the top passions of our Card Members, and the TOUR provides some of the most exciting experiences at some of the best venues the game offers. We’re looking forward to making The American Express a ‘must-see’ event for fans and Card Members alike.”
American Express appears to be building on an experience-driven strategy that has been honed from its successful U.S. Open partnership. Why focus on experiences rather than reach? Companies, particularly the size of American Express, recognize that there are more options than in the past to reach a large number of people through partnerships within or outside of sports. This makes reach less valuable as increased supply can reduce overall demand.
It is also often more frequently easier to measure reach. For example, partners and properties can relatively easily obtain television ratings, social media followers, digital traffic, and event attendance to determine how many people they have reached with sponsorship activations. The old adage of what gets measured gets managed applies to sponsorship valuation.
Yet, what partners are finding is that reach is not always the best reflection of ROI. The goal now for many partners is to increase engagement with targeted audiences that can drive specific business outcomes for companies. This has led partners to want to quantify the tangible business impact of engagement and experiences in non-traditional channels and platforms where there are a relatively small number of impressions.
Block Six Analytics’ (B6A) Corporate Asset Valuation Model (CAV) accomplishes this goal in a clear and concise way. The CAV examines fit, sentiment, and engagement to determine the value of a partnership in addition to overall reach. From a fit perspective, companies typically want to reach the demographics that can or will drive revenue most effectively. Experiences, like The American Express tournament or the U.S. Open, will reach a relatively small number of customers.
However, American Express likely has discovered that its best customers really value these events. These customers are worth more to a company than its average customers or the average person. Providing access to the experiences that align with the “top passions” of these card members, such as through professional golf and tennis events, creates product and brand differentiation in market with large competitors.
Customers also value experiences because they usually feature engaging and interesting content. B6A’s proprietary research has shown that reaching people in ways that increase brand engagement, sentiment, and awareness have statistically significant correlation with increases in revenue. This is another important and quantifiable way that companies can attract and retain their best customers even without reaching the largest number of people.
There is a reason we focused on a new title sponsorship for this post. Title sponsorships and naming rights deals have in the past focused on value creation by maximizing reach. If partners are now focusing on experiences even with these types of deals to better reach the right customers then it is likely they are using the same lens to evaluate other sponsorship opportunities. Having the tools to measure and communicate fit and engagement will be critical to understanding value for future sponsorship activations.