During economic downturns, marketing departments are often among the first to suffer budget cuts. But for car makers, it creates a cruel catch-22: manufacturers have less profit because of fewer sales, but to win customers the companies have to spend money. Companies are therefore forced to review the efficiency of their spending. Do they look at sponsoring cultural and sporting events as unnecessary indulgences? For some, this may be the case, but others may see it as a more efficient and effective way to target their specific customer base.
Obtaining exact figures on the cost of sponsorship to companies is difficult - manufacturers don't like talking about their budgets and expenditures. But an events manager who did not want to be named was able to give general figures of sponsorship deals, with cheaper packages starting around Dh400,000 and higher-end packages going for around Dh1.5 million and beyond, especially if a company wants naming rights to an event.
Given the economy, it is understandable that car makers are thinking long and hard before making decisions to spend this kind of money on events that, on the surface, may not appear to be directly sales-related. Audi and Nissan have taken different approaches to sponsorship of events which may not be obviously car-related, with the aim of keeping their brands foremost in consumers' minds. Both companies have spent large sums of money, but on carefully chosen events. This may prove to be a smart move.
Infiniti, Nissan's premium brand, is aligned with Cirque du Soleil, the Canada-based circus that has been a global sensation with innovative acts by street performers, stunning art direction and a refreshing lack of caged animals. Abhijeet Pandit, general manager of the Infiniti business unit for Nissan Middle East, explains why the brand fits well with Cirque du Soleil. "Inspired performance is the motto for Infiniti and this also sums up Cirque du Soleil," he says.
"Both attract the same customers - the Cirque du Soleil audience has a high net worth, they are both male and female, just like Infiniti buyers. "The age range is usually 25 to 40 - they are young, adventurous and like to do things that are different." Cirque du Soleil is running from March 5 to April 5 in a tent at Dubai's Ibn Battuta Mall, and Infiniti's UAE involvement is part of a global partnership between the two brands. Infiniti's involvement in the Dubai event includes branding in the tent and on banners, VIP tickets for customers, reserved parking for customers and two models, the FX35 and the G37 Coupe, on display. An FX35 will also be raffled via a radio contest.
While Pandit says the Infiniti sales representatives who will be present with the display cars at the Cirque du Soleil will not be "chasing people around", they will be taking the details of people who express an interest in the cars to create sales leads. "It's important to get sales leads, but that's not the main reason for this," says Pandit. "It's more about brand awareness and brand association. We will not be actively selling cars at Cirque du Soleil."
Pandit would not reveal exactly how much has been spent on the sponsorship for the UAE, but says "this association is not cheap". "Of course, the recession means we have cut spending, but we decided that an important event like Cirque du Soleil would be a good one to sponsor," Pandit says. "But we are not sponsoring anything and everything, we have to be selective." Infiniti Middle East used key performance indicators from the brand's sponsorship of Cirque du Soleil in Canada to gauge whether it would be worth getting involved in the UAE. "Pre and post event research was undertaken, and it showed that awareness, familiarity and the opinion of the Infiniti brand were all enhanced by the sponsorship of Cirque du Soleil."
Audi went one step further than merely attaching their brand to an event when the German car maker launched the Audi Quattro Cup in 1991, a global series of amateur golf tournaments. Last year's event involved Audi dealers from 52 countries organising 750 tournaments worldwide with more than 86,000 golfers participating. The Middle East dealerships have been involved since 2007 and the 2009 season started last month in Abu Dhabi.
Bernd Rosenbichler, marketing director and deputy managing director of Audi Middle East, explains how owning a tournament has been beneficial. "Owning an event rather than sponsoring takes a lot of organisational effort and investment, but it can make a world of difference to the customer," says Rosenbichler. "Buying a sponsorship sticker is easy." "We can put our enthusiasm into every little detail and ensure quality and continuity. The guest can feel this difference and many of them have become regulars at our events."
Setting up a global golf tournament is, according to Rosenbichler, a good fit with the Audi brand. "With Audi being a sporty, premium brand, golf gives us the chance to present the brand in an athletic and exclusive environment." Rather than being a blatant sales pitch for Audi, Rosenbichler says the Quattro Cup is an opportunity for a more relaxed style of marketing. "It's an ideal place for relationship building with existing and potential customers," he says.
"Continuity is very important in maintaining and establishing our customer relationships," says Rosenbichler, when asked if the recession will have any impact on the Quattro Cup. "Recession or not, with every Audi event we do, we try to spend our budget as effectively as possible and with a twinkle in the eye." As well as the Quattro Cup, Audi is not showing any signs of making wholesale spending cuts on other events. Under the Lifestyle Experience banner, Audi has hosted after-work lounge networking functions and, under the Art Experience, Audi has brought concert pianist Lang Lang to Dubai, and there are plans for more events.
One large event that will be minus its usual automotive sponsor next year is the Dubai Jazz Festival. For three years, Cadillac, part of General Motors, has been a major sponsor of the festival, with many of the big acts performing on the heavily branded Cadillac stage. Different Cadillacs were dotted throughout the lawns of the Dubai Media City amphitheatre during the 10-day event and a VIP lounge was provided by Cadillac with a direct view of the stage.
But this year's festival, held last month, heralded the end of Cadillac's presence amongst a collection of musicians that, over the last three years, has included acts as diverse as Kool & The Gang, Dee Dee Bridgewater and Robin Gibb. The sponsorship contract ended and will not be renewed for 2010. Adib Takieddine, marketing manager for Cadillac Middle East, described the sponsorship as "very valuable in bringing Cadillac's brand values of performance, refinement and luxury to a wide audience of jazz fans."
Budget-conscious sponsorship There are more affordable ways to have a presence at events, as Jaguar demonstrated with a post-Oscars party in Abu Dhabi last month. The party screened the Oscars as well as the work of local film-makers from the New York Film Academy. Jaguar, along with the brand's Abu Dhabi distributor Premier Motors, provided some sponsorship funds, but their main presence was more practical and obvious, providing luxurious cars to decant glamorous guests onto the red carpet at the Abu Dhabi InterContinental Hotel. The ballroom where the party was held was also festooned with Jaguar and Premier Motors branding on banners and on the big screens between Oscars moments and the short films.
Event organiser Aleksandra Sycz was delighted with Jaguar's support of the event. "Doing these things is very difficult for companies at the moment so it's great that Jaguar is involved," says Sycz. Mini, Maserati and Gargash Enterprises, the Dubai distributors of Mercedes-Benz, have become involved with selected exhibitions at Artspace Middle East, a gallery in Dubai International Financial Centre.
Sossy Dikijian, the gallery's art consultant and business development co-ordinator, says that, while anyone's sponsorship dirhams are useful, that it is important for the car companies that sponsor the art exhibitions to "feel connected" to the works in the exhibition, rather than just sponsoring exhibitions for the sake of having some branding in the gallery. "Some companies feel an appreciation for a particular artist," she says.
"The Gargash family have been great supporters of the arts community, they have a real passion for it," says Dikijian. The gallery is selective about what car companies get involved with their exhibitions. "We are a high-end gallery, so we like to associate with high-end car companies," she says. Dikijian sees the sponsorship as a win-win for the gallery and the sponsor. "Obviously, sponsorship helps cover our costs, but we have an exhibition every month and the sponsors get good exposure," she says.
"They get their logo on all printed material, on the website, on press releases, in the gallery; we really market our sponsors." As well as the brand exposure, sponsors can also use the gallery as an alternative, stylish venue for meetings and functions, and they are offered lounge areas at the gallery for events such as the exhibitions' opening nights. "If you're going to spend, say, Dh50,000, it's really good value compared to other ways to market and advertise the brand," says Dikijian.
"If a high-end car company brings high-end clients into the gallery, it's a great experience for them and it exposes our gallery to high earners who might also buy art." Trading Enterprises, Dubai distributors of Dodge, found a cost-effective way to become involved in sports during the recession. A sponsorship agreement between Trading Enterprises and E-Sports has resulted in a grassroots football tournament, the Dodge Junior Football League in Dubai. As well as branding at the games, three Dodge Durangos will be provided to E-Sports to transport players, coaches and equipment to the games.
"Naturally, if the type of people who participate in the event are the type of people who are interested in our brands, then we have a win-win situation," says Yolanda Delport, general manager of marketing for Trading Enterprises. While remaining quiet on exact costs, the long-term future of this sponsorship collaboration is uncertain, according to Delport. "Generally speaking, sponsorships are reviewed on an annual basis," she explains. "We have a responsibility to represent our group appropriately and, of course, the challenge of managing budgets effectively."
With the state of the auto market expected to get worse before it gets better, car companies who have to balance maintaining brand awareness with good financial management are going to find 2009 a very challenging year. Unfortunately, that means some organisers for sports or cultural events might have to be just as creative in digging up their own dirhams. firstname.lastname@example.org