IEG Responds to Federal Initiative to Prohibit Financial Institution Sponsorships

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IEG, LLC chairman Lesa Ukman has weighed in on Sen. John Kerry's call for a ban on sponsorship by financial companies who receive TARP funding. This proposed legislation could have a devastating effect on sponsorship and the communities it serves.

IEG, LLC chairman Lesa Ukman has weighed in on Sen. John Kerry's call for a ban on sponsorship by financial companies who receive TARP funding.

This proposed legislation could have a devastating effect on sponsorship and the communities it serves.

Sen. Kerry, Sponsorship Is Not Wasteful Spending
Lesa Ukman

Asserting that sponsorship is an "idiotic abuse of taxpayer money," Sen. John Kerry is introducing legislation prohibiting financial institutions receiving TARP funds from using sponsorship.

The senator's grandstanding may make for good sound bites, but it is bad business. By any measure--awareness and attitude shifts, customer acquisition and retention, increased market share, and shareholder value--sponsorship is as effective, if not more, than any form of marketing.

Take Red Bull. It built a billion-dollar brand and an entirely new category--energy drinks--from scratch exclusively using sports marketing.

Coca-Cola's Olympic sponsorship transformed its business in China, moving it from the number three brand in the country to number one.

For Visa, the Beijing Olympic Games resulted in five million new card holders; 90,000 additional ATMs in China; acceptance by an additional 216,000 Chinese merchants; $10 million worth of charges per day by Olympic tourists during the Games; and an 11 percent spending increase among Chinese card holders compared to the same period the prior year.

And, for every dollar invested in its PGA Tour sponsorship--including expenditures on food, beverages and hospitality--Bank of America receives three dollars in measurable new business. Bank of America clients who attend a PGA Tour stop as the bank's guest, increase their investment balances an average of 20 percent.

Sponsorship's ability to concurrently build businesses and the local and global communities in which they operate is why sponsorship's growth rate has outpaced the growth of advertising and sales promotion for each of the last 15 years.

The power of sponsorship has been recognized far beyond Madison Avenue. Consider, for example that every U.S. state and territory reached settlements to prohibit sponsorship by tobacco companies because they were alarmed by the effectiveness of the medium in marketing cigarettes!

Unless Sen. Kerry's goal is to handicap the very banks the TARP funds are meant to assist, he should withdraw his legislation.

Lesa Ukman is chairman of IEG, LLC, the world's leading provider of independent consulting, valuation, training, research and analysis on sponsorship.

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Jim Andrews
IEG, LLC
312-944-1727 ext. 270
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