Competitive Energy Markets Power New · PDF fileCompetitive Energy Markets Power New...

© 2010 IEG, LLC. All rights reserved.

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September 27, 2010 800/834-4850 | www.IEGSR.com

CAtEGory UpdAtE

Competitive Energy Markets Power New SponsorshipsProperties should provide competitors to incumbent utilities with platforms to educate and interact with residential and business customers.

While sponsorship activity on behalf of energy suppliers cooled off over the past several years, the category has recently found a second wind.

As in years past, new sponsorship activity is more intense among competitive energy providers in states where electricity and gas distribution have been deregulated, including texas, Illinois, new Jersey, ohio and pennsylvania.

the new activity includes properties big and small.

For example, reliant Energy retail holdings, LLC last month announced a partnership with the nBA houston rockets in a deal that includes official electricity supplier status to the team and toyota Center. Branded retail Energy Co. this summer announced new partnerships with the University of texas athletics and texas A&M University athletics, around which it is offering co-branded electric power. the company reportedly plans to strike similar deals with schools located in Illinois, pennsylvania and other deregulated markets.

on the smaller side, this summer the QuickChek new Jersey Festival of Ballooning in association with pnC brought on six new non-exclusive sponsors from the category in low-level deals that included booth space and lead-generation opportunities.

the companies included Constellation newEnergy Inc.; Gateway Energy Services Corp. and Viridian Energy.

A New Deal Structure: Affinity Partnerships Branded retail Energy’s relationship with the texas universities represents a new twist for the utility category:

SIDEBAREnergy Supplier Activation Case Study: Direct Energy and Dallas CowboysDirect Energy, LP is activating its partnership with the NFL Dallas Cowboys with a new mobile marketing tour that will visit seven music fests, sports competitions and other events in the Dallas/Fort Worth area from August through October.

The goal of the program: Engage consumers and get them thinking about energy and energy providers.

“Most people don’t think about electricity or natural gas until they don’t have service or have a bad customer service experience,” said Shana Santoni, Direct Energy’s manager of sponsorships. “The Cowboys partnership lets us cut through the clutter and gain a unique positioning that helps us start a conversation.”

The tour features a co-branded 50-foot trailer that includes a replica of the Cowboys locker room outfitted with autographed jerseys, cleats and other items, as well as information on Direct Energy. “We’re trying to humanize and communicate the power thematic using fan passion,” Santoni said.



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affinity deals offering co-branded products, around which the company pays property partners a royalty fee for each customer.

texas Longhorn Energy and Aggie Energy are marketed to residential and business consumers in deregulated areas of texas. Branded retail Energy has contracted with houston-based Champion Energy Services to provide the 100 percent renewable energy.

to promote texas Longhorn Energy, each year of the deal Branded retail Energy will purchase media inventory valued in the five figures from IMG College, the multimedia rights holder for Ut athletics.

the energy company will share revenue on a monthly basis once a predetermined number of customers sign up for the program, said Christine plonsky, Ut’s director of women’s athletics.

Branded retail Energy is promoting the service through www.texasLonghornsEnergy.com. It also uses the site to compile a prospect database through a power your passion sweepstakes that offers a free year of texas Longhorns Energy, football tickets and autographed footballs.

the company also dangles the chance to win team-themed merchandise to incent sign-ups.

roughly 10,000 alumni and fans have signed up for texas Longhorn Energy since the service was launched in August, said plonsky, noting that the university will use funds generated from the program to underwrite recycling and other sustainability programs on campus.

Tips On Selling Competitive Energy ProvidersBelow, IEG SR offers tips on selling companies in the competitive energy provider category.

Provide visibility and educational opportunities. Most competitive energy companies use sponsorship to build awareness and gain one-on-one marketing opportunities to educate consumers about their offerings.

As a result, properties should offer media inventory, on-site display space and promotional platforms for lead generation.

Offer to purchase energy. When pitching an energy provider, properties should be prepared to purchase energy from the potential partner. Companies typically look to be a property’s exclusive supplier in the electricity, gas or energy category, a status they use to build credibility among potential business and residential customers.

Know the status of local deregulation. Where it exists, deregulation varies from state to state, with some deregulating

Direct Energy also is using the tour to promote The Most Electrifying Cowboys Fans promotion, which offers the chance to win two regular-season home game tickets and other prizes. Fans enter by recording a 30-second video that demonstrates why they are the most electrifying Cowboys fan.

The top 50 videos as chosen by a panel of judges are posted on ElectrifyingFans.com, where visitors can vote for their favorite. Participants also can share their videos through their Facebook and Twitter accounts.

Events visited by the tour include the Bedford Blues & BBQ festival, InTouch Credit Union Plano Balloon Festival and the Historic Mansfield Music Fest. Direct Energy purchased sponsor status at some of the events, Santoni said.

The program is Direct Energy’s largest activation program around its five-year-old Cowboys tie, she added, noting that the company did not have funds to properly activate the partnership in recent years.

Not being able to properly leverage existing deals prompted Direct Energy to significantly cut back its sponsorship portfolio in 2008 and 2009, Santoni said. The company dropped a number of pro sports ties, including the MLB Cleveland Indians, MLS Toronto FC, NHL Toronto Maple Leafs and NBA Houston Rockets and Toronto Raptors.

“We pulled out because we didn’t have the activation dollars to put against them, and now we’re focused on the Cowboys.”

Direct Energy also sponsors minor league sports teams and community events in Texas on behalf of its CPL Retail Energy and WTU Retail Energy brands.

Those deals include United League Baseball’s San Angelo Colts and the San Angelo Stock Show & Rodeo for WTU and the Poteet Strawberry Festival and Jalapeno Futures Duramed Golf Classic (CPL).

SourceDirect Energy, LP, Tel: 713/877-3500



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both electricity and gas, with others deregulating just one. deregulation also can vary from county to county as well as differ between residential and business accounts.

properties can learn about the status of deregulation by visiting the Web sites of state public utility commissions.

Watch for expiring rate caps. the expiration of utility rate caps typically prompts increased competition as competitive energy providers try to woo business from incumbent providers.

“Shopping for utility providers typically picks up as rate caps expire,” said diane Francis, a spokesperson for FirstEnergy Solutions Corp., noting that caps are set to expire later this year in several markets in pennsylvania.

the unregulated subsidiary of FirstEnergy Corp. markets electricity in Illinois, Maryland, Michigan, ohio, pennsylvania and new Jersey, and sponsors the MLB Cleveland Indians and several minor league baseball teams, among other properties.

Be prepared for pay-for-performance deals. Some energy providers try to strike revenue-share agreements in which the property’s sponsorship fee is based at least in part on the number of customers it brings to the table.

In such cases, properties typically market the service through their Web sites, email databases and other outreach vehicles.

In some cases, energy sponsors have attempted to make the entire fee contingent on new business. howard Freeman, president of promo one—producer of the QuickChek new Jersey Festival of Ballooning; rocks, ribs and ridges; and other events—turned down several such offers this year.

“We were not interested unless there was a guaranteed upfront payment,” he said. “Everyone has to have skin in the game.”

Offer unique experiences and other perks. In addition to gaining borrowed imagery, competitive energy providers frequently use sponsorship to obtain perks that can be shared with customers and prospects.

For example, direct Energy, Lp leverages its partnership with the nFL dallas Cowboys by offering a guided VIp tour at Cowboys Stadium for consumers who sign up for the company’s Cowboys power package.

Play up the green angle. Both incumbent utility companies and competitive suppliers have grown their clean energy products and look to promote environmental stewardship.

For example, Veridian Energy has leveraged its partnership with University of Connecticut athletics by distributing information with a “green awareness” theme at one of the school’s football games.

Account for employee recruiting and retention goals. In addition to talking to potential customers, some energy companies use sponsorship to recruit sales people and other employees and reinforce their commitment to their current workforce.

Sources FirstEnergy Solutions Corp., Tel: 800/633-4766 University of Texas, Tel: 512/471-4602 Promo One, Tel: 973/882-8240



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rESULtS

Volkswagen Sees Positive Results, Adds New SponsorshipsProperties must provide consumer engagement opportunities to showcase vehicles and capture leads.

Adding to a robust local and regional sponsorship push begun earlier this year, Volkswagen of America, Inc. (“VW Charts Local/regional Sponsorship Course.” 5/10/10), has forged a new partnership with the nhL new york rangers and plans to continue to sign additional deals.

the ties are part of the automaker’s effort to boost familiarity and consideration of its expanding product lineup.

For example, VW will use its rangers partnership to promote the 2011 Jetta—a redesigned vehicle currently hitting dealer showrooms—and to drive traffic to dealerships in the tri-state area, said Ben Freidson, VW’s manager of sports marketing.

“We have 40-plus dealers in the area, including a recently opened dealership in downtown Manhattan. We felt the launch of the new Jetta warranted a signature partnership in the new york City market.”

the automaker is drawn to nhL teams due to the high level of fan loyalty to both the sport and its corporate sponsors, said Freidson, who recently renewed and expanded existing partnerships with the St. Louis Blues and Washington Capitals.

Similarly, the company sponsors MLS and its d.C. United and houston dynamo teams based on research that shows the high level of sponsor loyalty among soccer fans.

“Brand loyalty is certainly something that we’ve taken into account when setting out our strategy,” Freidson said.

VW will activate throughout the rangers season with a “Shoot. Score. drive. Challenge” promotion offering the chance to win one of ten different vehicles. Fans win the vehicle by scoring a goal from the far blue line.

Consumers can enter the program by texting a keyword to a shortcode that will be revealed in stadium, through broadcaster MSG network and on rangers.com. VW will seek to add the contact information for those registering to its prospect database, Freidson said.

VW is introducing the promotion after seeing positive results from a similar initiative with the Capitals. the Volkswagen rock the red sweepstakes dangled the opportunity to win a ride in a vehicle that competes in the Jetta tdI Cup, the automaker’s proprietary racing series, as well as other prizes.

photo credit: Angela Cranford/MSG photos



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“In a short period of time we saw great success in terms of overall data capture and leads,” said Freidson noting that the promotion ended earlier than expected due to the Cap’s upset loss to the Montreal Canadiens in the Eastern Conference quarterfinals of the 2010 NHL playoffs.

the rangers partnership affords in-ice logo placement, exposure on a Zamboni and vehicle displays in the mall area at the renovated Madison Square Garden during select games. It also includes exposure on the MSG network.

“We wanted to have visibility in the arena itself, as well as exposure across the country during game highlights in affiliate markets,” Freidson said.

VW will tout the sponsorship and “Shoot. Score. drive. Challenge” at area dealers through point-of-sale materials and Jettas wrapped in rangers logos and colors. In addition, the automaker is supplying dealers with team assets for use in local media buys.

VW plans to offer the rangers-themed wraps as an option for Jetta purchasers, Freidson said. VW may roll out vehicle wraps in connection with other sponsorships, as well.

“It’s still to be determined. But it’s a good formula, and we will be pushing for it.”

Greater new york City dealers also will wrap routan service vehicles with the rangers insignia, something VW has done around its sponsorship of d.C. United and the 2010 MLS All-Star Game in houston.

More Local Deals Added To Portfolio, With More To ComeIn addition to pro sports teams, VW continues to sign new deals with local properties such as food festivals, air shows and community celebrations.

The majority of local deals are driven by VW’s four regional offices, with the Northeast the most active.

For example, the office has signed first-time sponsorships with two October events: The Stop & Shop Tastes of Rhode Island and the Long Island Fall Festival. other recent ties include the Boston-portsmouth Air Show and the QuickChek new Jersey Festival of Ballooning in association with pnC.

“We continue to look for different opportunities that give Volkswagen a localized connection and get consumers into vehicles,” said Scott Cohen, account supervisor with ad agency deutsch, who helps evaluate and execute ties in the northeast.

Cohen looks for the following criteria when evaluating potential partnerships:

Geographic reach. properties need to provide coverage across multiple dealers and ideally cover a complete market.

Extended on-site engagement. “We show preference to events that draw attendees that are there to spend the day, as opposed to just an hour or two,” Cohen said. “down time provides a better chance for success in consumer engagement.”

Multiple on-site benefits. Events must offer vehicle display, premium location and activation and data-capture opportunities.

Multiple touchpoints. “We favor events where we are not just an activated vehicle display but an involved participant with multiple levels of exposure. We want to be an active participant, not simply a vendor.”

Sources Volkswagen of America, Inc., 703/364-7000 Deutsch, New York City, Tel: 212/981-7600



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onE-on-onE

Inside IBM’s Approach To SponsorshipFrequently updated customer-centric activation programs, disciplined approach to measurement among keys to technology giant’s continued success.

With an estimated annual sponsorship spend of $20 million to $25 million, IBM Corp. has long used its partnerships with the Masters golf tournament, tennis’s US open, the nFL, Broadway’s tony Awards and other top-tier sports and cultural properties as a platform to demonstrate its technology expertise and build relations with clients and prospects.

IEG SR recently checked in with the company’s longtime sponsorship point person, rick Singer, vice president, client executive marketing, about Big Blue’s approach to sponsorship, how it keeps its partnerships fresh, and what sponsorship sellers should keep in mind when pitching potential corporate partners.

Below are edited excerpts from the conversation.

IEG SR: What role does sponsorship play in IBM’s marketing?

Singer: It is a terrific platform that allows you to do different things. For example, with the US Open we get advertising, PR exposure and client engagement opportunities. Sponsorship does a lot of things if you execute it right. It helps the company move forward, not just from a sales perspective but from a brand standpoint as well.

We are loyal to the properties we sponsor, and they are loyal to us. they are all global, iconic properties, and they are not easy to drop.

the interesting thing about all of our relationships is that they are very much partnerships. they are sponsorships with money going back and forth, but we are very much involved in the business of all those organizations.

our management is very supportive of our relationships. I know a lot of people in the sponsorship business that are dropping events or trying to figure out how to justify them. People here are comfortable with what we are doing.

IEG SR: As you mentioned, IBM has long-running sponsorships with a core group of properties. For example, you have been involved with tennis for more than 16 years, the tony’s for more than ten years, and the nFL for eight years. how do you prevent those partnerships from becoming stale?



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Singer: We use sponsorship for storytelling. our sponsorship strategy hasn’t changed in years: We sponsor events that our clients are passionate about as a platform to tell our story.

But if the story doesn’t change, the experience gets stale. two or three years ago we began to see our return diminish, so we did new things around the US open and other properties.

We know that our clients are passionate about everything we sponsor, but we also need to keep it fresh and have something unique to tell them every year. that relates to them personally, as well as being business people.

At this year’s US open we had many new things to talk about, including our augmented reality mobile phone app. people with a GpS-enabled camera phone could download a US open app that provided information at different places around the tournament site.

If people were hungry they could point their camera at the stadium, hit a dining tab and locate restaurants. If you were passing by an outdoor court and heard cheering, you could point your phone at the court, hit the scoring tab and find out the score of the game.

It’s a very cool technology that has many applications for our clients and their different businesses. It also led to interviews on Fox Business and other media outlets.

We piloted the technology at Wimbledon last year with Android phones. We had good success, so we launched it more broadly this year.

IEG SR: Football season has just started. have you rolled out any new activation programs around your nFL partnership?

Singer: We just completed their new data center in Mount Laurel, N.J. We made it greener and more efficient. Green data centers don’t get the same kind of publicity as cool augmented-reality phone apps, but they help businesses save money and gain more out of the same space.

that’s a big story for us. We are talking to our clients about it, and they are very interested in it.

IEG SR: Is there any consideration being given to expanding the IBM sponsorship portfolio?

Singer: We are looking at our growth markets. We have long-running partnerships with properties in our established markets, and we are looking at taking that strategy to other places, such as China, India and Brazil.

We are taking a close look at sports and cultural properties in those markets and how we might impact them. We’re looking at 2012 and beyond.

It will take a while to determine the right fit. We talk to our clients and try to understand what it is that excites them. Those are the kinds of things that we want to do.

IEG SR: you can’t have a conversation about sponsorship these days without addressing return on investment. What is your take on sponsorship roI, and how does IBM measure success?

Singer: that is something we have been doing for years. It’s really a prerequisite for sponsorship. A lot of people say, “you can’t measure sponsorship; either you believe in sports marketing or you don’t.” that just kills me, and it sets our profession back when people take that perspective.

At IBM, we measure different things, and it shifts year to year based on our marketing priorities. But we always look at



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revenue and client engagement opportunities that arise from sponsorship, and how they are influencing client reps that have deals on the table.

We have proprietary methods that give us an accurate feel for return on sponsorship. that’s not to say that one year a sponsorship may not pay out based on what we put into it.

Measurement helps us understand what we are doing and diagnose what we need to do to improve our return on investment.

IEG SR: Can you share any success stories?

Singer: It is always gratifying when we show clients what we are doing behind the scenes at an event, and they ask if they can talk to someone about the technology. you know you hit the nail on the head. that’s why we do these things; it leads to new opportunities.

IEG SR: Any pet peeves when working with properties?

Singer: We are fortunate to have a group of properties that we feel comfortable with. Some other properties don’t think about putting themselves in the shoes of procurement or other people they are dealing with. they only focus on what they need to do to make their numbers or please their management.

Some properties were always trying to sell us something after we bought the sponsorship, and they did not focus on helping us figure out how to get value out of the relationship. They came knocking on our door after we signed a sponsorship. That is why we dropped them.

properties need to think about the pressure that their client at company ABC is getting, and how they can help that client, instead of “how can I help myself and relieve pressure from my boss.”

I worked for the nBA, and one of my bosses told me not to forget that we were in the renewal business. properties need to think about what they need to do to make the renewal easier.

Source IBM Corp., Tel: 914/499-1900

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