Harvest Season

In little more than 18 months Farmers Insurance has launched one of the most ambitious sponsorship programmes in the world of sport. Through three very different deals, Farmers is already beginning to reap what it has, and in some cases hasn’t, sown.

6 September 2012 Michael Long
SHARE THIS ARTICLE

“I have a bias against sports sponsorship,” declares Paul Patsis, who as president of enterprise marketing at Farmers has overseen the biggest push in the US insurance giant’s 83-year history into, well, sports sponsorship. “I’m biased against it because the word ‘sponsorship’ implies charitable giving,” continues Patsis, “and certainly our relationships in the sports world are not strictly sponsorships; they’re business partnerships – that’s how we view them. We view them more as partnerships than sponsorships. Internally, I’m trying to change the way we think about them.” Regardless of the terminology, the 25,000-strong Farmers workforce will be spending a lot more time thinking about their sponsorships in the coming years. In the space of some 18 months, the Swiss-owned, LA-based group has launched something of an assault on the higher echelons of the sports industry – a key event on the PGA Tour calendar, perhaps the most famous team in Nascar and one of the most ambitious sporting venue projects in the world have all been swiftly assimilated into what is already a blockbuster portfolio. :           and activation is taken into account, Farmers will have spent easily US$1 billion on these three sponsorships, a considerable investment in the future and one that Patsis, who retired in December, was happy to spearhead. “Our plan was that we typically wanted        3  %   valuable partnerships – that’s what we’re after,” explains Patsis of the philosophy that, since early 2010, has seen Farmers sign deals with the Torrey Pines PGA Tour event, Nascar’s Hendrick Motorsports, and AEG and its US$1.4 billion LA stadium project. Although all three partnerships are in their early stages, they are already bearing considerable fruit. “We measure all our partnerships in a very similar vein, which is the effect on unaided consideration; the cost per impression; what’s it generating in terms of leads; and then how we do with respect to agent activation. And we use third parties to do that so we get objective measurement,” says Patsis. “I can tell you that Nascar, the NFL [which, ultimately, is what the LA stadium is being built for] and Torrey Pines really hit our customer. Some index higher than others, but they are all indexing over the minimum threshold that we set for ourselves.” ‘Breakthrough’ is the one crucial quality Patsis looks for in a property. And the more unique the breakthrough the better. “Then we have several evaluation criteria: what’s the market value? What’s the potential impact on our consideration? Can we get a feel on the cost per impression? Is there a regeneration   «6 3 %   « That’s a huge one. And then we have 15,000 exclusive agents at Farmers, which is a very large distribution system. So we look for our agent activation opportunity as well. Is there a way we can involve our agents in the community? And last but not least, and it’s something we really care about, is there some way that we can give back to the community?” The community-giving element does provide Patsis with something of a caveat for his opening statement. Although he is inclined to view each deal as a business partnership, the CSR initiatives in each one mean that, by his own measure, he isn’t necessarily wrong if he calls them sponsorship deals. ’  !  %  involved,” Patsis explains. “If we don’t see In little more than 18 months Farmers Insurance has launched one of the most ambitious sponsorship programmes in the world of sport. Through three very different deals, Farmers is already beginning to reap what it has, and in some cases hasn’t, sown. HARVEST SEASON By James Emmett Paul Patsis has led Farmers Insurance’s biggest ever sports sponsorship drive FEATURE | SPONSORSHIP 84 | SportsProMedia.com A classic car owner and a fully paid up motorsports fan – “If it’s got wheels, I tend to be interested” – Patsis is understandably most excited by Farmers’ Nascar deal. Having tested the water with a one-off race title deal in 2009, in deals brokered by Zak Brown’s JMI agency, Farmers %   C   !    agreement with Hendrick Motorsports in April 2010 and followed that up by signing a US$17 million-plus annual sponsorship with the team for 22 races in each of the next three seasons. “When we saw that opportunity to grab Mark Martin,” Patsis says, “we jumped at it. He’s listed as one of the top three favourite drivers – I mean, I love this guy – and as it happens, and this is a pure coincidence, he is insured by 4  <  “•    both Patsis and Farmers, were more than persuasive. “When we looked at Hendrick there,” he says, “we thought, all teams are not created equal. When you look at the US market it’s pretty hard to ignore Nascar. It seems to be the number one spectator sport in America. They get over 125,000 people – which is Super Bowl numbers – at one race, and they do it 38 times a year. And they also have the most loyal fans of any sport I’ve ever seen. So what happened was that we had a unique opportunity. 7  ;     organisation; the number of championships they have won [14 in total] is unbelievable. I think there’s only a handful of teams that     3         3¤ I think it’s the Montreal Canadiens, the New York Yankees, the Boston Celtics and Hendrick Motorsports. They have done an incredible job. “There are lots of good teams, but I’ll tell you this, we would not have considered partnering with a team that wasn’t going to be considered a world class championship type of contender. You can measure what’s the payback in terms of what positions the cars are in. If you’re not in the top 15, you’d say, ‘Well, is that really an effective use of our money if the brand’s not going to be at the front?’ Plus, I think the quality of the drivers and the ability of the drivers to represent us was huge. Mark Martin was big; we’ll be doing 22 races next year with Kasey Kahne, and in addition to his 11 race wins he’s had 21 pole positions, 55 top  L*  ”‘ 3   like Hendrick and we think that’s how you break through the clutter there and really get noticed. “There are other great teams in Nascar that we would consider, but Hendrick are the best of the best as far as we’re concerned.” FEATURE | SPONSORSHIP Only the best will do some type of way for us to be seen as sort of a net giver, to give back something, then we generally don’t get real interested in the partnership opportunity. It’s not really separate from the business side in that sense.” Although the sponsorship industry has grown increasingly sophisticated in recent years, there are still major spenders whose primary goal is exposure. Farmers, says Patsis, is unashamedly one of them. The extensive and continuous research carried out on the company’s various target markets % %      “  ” “Sports sponsorship is going to play a huge role for us,” explains Patsis. “Because in the US, the personal insurance market      !     ”  business doesn’t necessarily always go to the low cost provider, in spite of all the ads out there. Because on average when the customer shops, the statistics show that they get about 2.6 to three quotes and that’s it, and there’s thousands of companies. So the issue becomes: do you hit the consideration set or not? In terms of awareness and consideration, are you even in the ballpark? So the major way that we typically try to raise our name into consideration is through advertising. But also, we need something with a different reach and a broader reach. Sports sponsorships play a very big role for us there.” Patsis’ goal, then, is to ensure that Farmers is almost always one of those 2.6 to three insurance companies that gets to provide a customer with a quote. With Torrey Pines, Hendrick Motorsports and AEG’s LA stadium project, he believes he has done that. But of all the deals, the one that could prove the real masterstroke is the latter. It is also, inevitably, by far the most expensive. < 4  !*+//”     naming rights deal with Farmers Insurance reportedly worth between US$600 million and US$700 million over 30 years, the largest deal of its type in the world.  !3  %      C breaking, it was made more remarkable by the fact that no team has committed to being the anchor tenant of the venue, no events have been secured, no planning permission, even, has yet been granted. Indeed, Farmers’ commitment was the  !        ”’<  really important the partner you pick in these SportsPro Magazine | 85 ventures,” Patsis says of the thinking that led his company to push the button on the deal. “So it wasn’t an accident that we picked  !) 3           % !     comes to that tournament. Also when we look at Farmers Field and our partnership with AEG, that weighed very heavily in our     3  3 ”  class organisation; they’ve done great stuff with the O2 in London, with the Mercedes Arena in Shanghai, they’ve done the Staples Center here in LA. We know that they not only know how to do these deals in terms of getting the property up and running, they also  33          company. That played a key role in our decision to go forward and our willingness to take the risk. I think what really pushed us over the edge to say this is a risk we’re willing to take was the partnership with AEG.” After     !”     plans ready for the city council’s approval in late summer and then have the facility up and running for the 2016 NFL season. The San Diego Chargers, St Louis Rams and the Minnesota Vikings are widely believed to be targets, but, given the backing that the project has, attracting a team should prove a formality. According to research released by the city of LA, over a 30-year period the facility would generate some US$410 million in taxes; AEG chief executive Tim Leiweke has indicated that around 40 to 50 events per year will be  >         ” “When we heard about the project, we let it be known that we’d be interested and AEG then approached us. It sort of then became a no-brainer for us,” says Patsis. “We have deep roots here. So when we saw the Farmers Field opportunity we said, ‘Here’s something   !   ¤ > ¤  %¤  3    and we can be part of an effort to improve the local economy through construction, service and tourism jobs and through tax revenue.’ Bringing the NFL back to LA is exciting and was always going to give us a lot of media attention even before we spent a dime. But it was about more than that. We’re going to have 30, 40, 50 events a year in that venue – some of the biggest events in the world; there’s the geographic location right here in California with Hollywood, the entertainment capital of the world, and the weather. And it’s in conjunction with a much larger convention centre complex which will host some of the most prestigious expos in the world. So there were lots of great reasons for us to do this. I’ll tell you another thing that people don’t consider in the these types of sponsorships – there’s a lot of big stadiums out there that are looking for naming rights partners, and they end up getting a popular name in the vernacular. I’m not going to take a shot at some of the other deals out there, but you come in and offer to get the naming rights on that stadium and people will never call it your name, because they always knew it as this other name. So one of the things that we really wanted to do here was get in early so people only knew to call it Farmers Field and we don’t have to spend however many marketing dollars changing it from a previous  “• ”  %  !    too. The sponsorship payments will only kick in if and when the stadium construction begins, a process that is still some years off. Yet, the nature of the project, and probably partially because the stadium already has a name, has meant the deal has already has a big   4   ”’<     information so I can’t give you the number of impressions but it’s in the billions,” explains Patsis of the media coverage the stadium name has already received. “That’s worth a lot and we haven’t even spent a dime yet. So worstcase scenario is we have the goodwill of trying to bring jobs and tax revenue to the city, so we’ll be seen as a positive part of it if it doesn’t happen, and we still get a lot out of media.” “Bringing the NFL back to LA is exciting and was always going to give us a lot of media attention.” 83 2012 02 James Emmett {filedir_26}SportsProMag_issue40_83-85.pdf [26381] [sportspro_february_2012] SportsPro February 2012