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    Tuesday
    Jul242012

    Is Penn State Crippled as a Marketing Brand?

    Are sponsors now less likely to invest in Penn State football because of the Sandusky scandal? Ad Age addresses the issue in this analysis. "The marketing ship has sailed, as it were, for anything related to Penn State football for the immediate and extended future," said Kevin Adler, president of Chicago-based sports-marketing firm Engage Marketing. Perhaps, but it's a difficult puzzle to solve.

    Which factors will drive marketers' decisions? Some will want to disassociate themselves from the University because of the scandal itself. What company wants to have their name next to anything as awful as criminal acts committed against children? For some, however, the staunch support of Penn State's large alumni and fan base provides a degree of protection against outside criticism. These people might develop even greater loyalty to the brands that continued to support the University in its time of crisis. Separating the act from the institution may provide additional cover.

    The bigger question is whether or not sponsors will begin pulling out because they believe the football program will no longer be a national powerhouse, fan support will dwindle and the marketing investment just won't be worth it anymore.

    It's cruel, but true. Sports marketing dollars flow to the winners. A few years ago, when LeBron James was still in Cleveland, the Cavaliers were a winning team, regularly featured on national TV, playing before sellout crowds with advertisers lined up to associate their name with a winner. When LeBron took off for Miami two years ago, the marketing gravy train packed up right behind him and left Cleveland. No more winning. No more national TV. No more sellouts.

    Experts predict Penn State will not be a viable national contender for at least a decade and probably more, due to the severe penalties handed down by the NCAA on Monday. Winning will be difficult, if not impossible, as current players leave and high school recruits head to other schools. Beaver Stadium seats almost 107,000 fans, the second largest college stadium in America. If the team doesn't win and the stadium is half empty, the value of the advertising Penn State sells will be diminished.

    Sponsors weigh these type of investments in two ways: value for their dollar (size and quality of audience reached, category exlcusivity, perks for customers, etc.), and emotional attachment (the boss is an alum, doing something good for the community, personal recognition). Ultimately, the value of the sponsorship is in the perception. For more than 40 years at Penn State, it was a no-brainer: good team, strong support, high character organization. What's the peception now? Loser, bad reputation, potentially eroding fan base.

    Penn State's sponsors may have been relying on their emotional attachment to stick with the school as the scandal came to light. But when the on-field product deteriorates and the fan base begins to shrink, value for the dollar will take center stage and sponsorship dollars will eventually shift to activities perceived to be on the upswing.

    I'll take you back to Cleveland for one final example. In 1994, the Indians opened a beautiful new ballpark that really put Cleveland on the map. The team was up and coming, and long-starved fans welcomed the new experience. A year later, the Cleveland Browns moved out of town while the Indians won their first pennant in 40 years. Jacobs Field was the place to be. 455 straight sellouts. Winning teams every year. Sponsor dollars flooded into luxury suites, billboards and television ads. The Indians became one of the most profitable teams in baseball.

    Four years later, a new Browns team was born, with a new stadium. Sponsor dollars moved from the Indians back to the Browns. A few years later, LeBron James arrives and the Cavaliers became the place to be. More sponsor dollars move. Indians fans buy fewer season tickets. The team's winning streak ends and the downward spiral begins. Now, almost 20 years later, the Indians struggle to attract sponsors and fans. The Browns and Cavs aren't doing so well either, but that's another story.

    The moral of the story for Penn State: better start planning for a significant reduction in sponsorship funding. That money is reserved for winners.

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    Reader Comments (2)

    I'm sure it's going to be tough for them in the short term...only time will tell to see if they can recover.
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    August 29, 2012 | Unregistered Commenterchad

    Yes are in a really difficult position right now.
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    September 5, 2012 | Unregistered CommenterLendar

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