Where’s Your Arena?: Looking For ROI In All The Wrong Places

On Union Square in the bustling metropolis of Manhattan, there’s an escalator that takes you up from the subway platform to the street level. Well, at least in theory. This particular escalator, however, broke down at least six weeks ago and has yet to be put back in service. Boldly emblazoned on the side of the defunct escalator is the logo of the eleventh largest bank in the U.S.

It made me think how eager companies are these days to slap their logo on everything without much regard to what kind of impression they’re making or even what return they might be getting on their investment. I’m sure the board at Capital One would much prefer to be known for the nattiness of Samuel L. Jackson in their TV spots than for an escalator that forces commuters to take the stairs.

Often that “brand slapping” happens on a grand scale. Consider the case of crypto.com. In November of 2021, they paid $700 million for a twenty-year naming rights deal on the former Staples Center in downtown Los Angeles where the LA Clippers play—now known as the Crypto.com Arena. I would say that these guys must have deep pockets when it comes to their marketing spend, although when we’re talking about a business that deals in “virtual” currency, I’m not sure that metaphor actually works. So let’s do the math. That’s $35 million a year for twenty years—which coincidentally is what wide receiver Justin Jefferson is now getting after a four-year contract extension negotiation with the Minnesota Vikings, making him the highest paid non-quarterback in the NFL.

I have a number of problems with this. First, we can only assume that crypto.com has money to burn—but maybe crypto currency doesn’t burn as quickly as real tens and twenties—because who in their right mind would spend $700 million on a marketing ploy and expect to get a return on their investment that was anywhere close to that number? See, there’s this thing called “targeting.” The better you’re able to target your message at people who are likely to buy your product or service, the more efficiently your ad dollars work for you.

Which leads us to another concept in marketing called “waste.” In this context, waste is inefficient ad spending that happens when you spend a ton of money in an arena where a good portion of the people you’re spending it on aren’t really your customers—now or ever. It’s possible that somebody at crypto.com crunched the numbers and found an affinity between fans who bet on sports and people who believe crypto currency is a real thing. And let’s say hypothetically that this affinity amounts to 35 percent of the fans that show up at the Crypto.com Arena to watch the Clippers on any given Sunday. Again, let’s do the math. In a 20,000-seat stadium, the 35 percent that just might be your customers amounts to 7,000 people. That means for the other 13,000, you’re wasting your money. By the way, they were just as happy when it was called the Staples Center, because they actually do buy office supplies. 

This is good, too. Some spoilers at Morningstar decided to do a study on the survival rate of companies who sponsored professional sports stadiums. Of 46 companies who sponsored NFL, MLB, and NBA arenas since 2002, 20 of those companies have completely disappeared from the corporate map. Only 16 survived. In Morningstar’s words, “That’s a high fatality rate.”

The other big fallacy of these ventures is believing that branding is somehow subliminal. In 2007, Yankelovich, a respected public opinion research firm, found that the average person sees up to 5,000 advertisements every day. Since then, and largely thanks to the blossoming of internet advertising, that number has basically doubled to 10,000 ads per day. In other words, consumers are inundated. Yours is just one logo among 9,999 others. So back to that escalator. Did the good folks at Capital One marketing really think that a harried NYC commuter who currently banks with Chase was going to pause, see their logo on the side of the escalator, whip out their smartphone, and call Capital One to switch banks?

With a good agency, some solid strategic work, and dynamic creative product, $700 million would go a long way to funding a sustained brand campaign that would achieve results. 

Unfortunately, a lot of advertisers still think consumers behave like Pavlov’s dogs, that the mere sight of their logo is enough to stimulate a buying decision. Think of the stadium. You could put your logo on everything from ticket stubs to urinal cakes. It won’t make anybody do anything Except (I hope) remind them to flush.

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