High-tech looks to the sports world
| 'PC Expo is loud and no fun, and nobody wants to be there anyway. But the U.S. Open ... ' -- Reed Taussig, CEO of Callidus Software Inc. |
"Computer companies attempt every trick in the book to get time in front of you," said a CIO who attended the opening game of the World Cup courtesy of Hewlett-Packard Co., one of several technology sponsors of the soccer tournament. "But if the event is interesting, then it might work. It's all about building relationships, and that's what these events do." The value of face time with key customers isn't lost on HP. During the monthlong World Cup, the company is bringing as many as 5,000 customers to France.
Hot seats, demonstrations
To help kick off the tournament, HP invited dozens of customers to Paris for a three-day event that included tickets to the opening match, demonstrations of technology HP built for the tournament, a tour of HP manufacturing plants in France and dinner with executives.
Large sporting events, because they generate a huge volume of scores, statistics and other information, also provide a forum where vendors can show off their technical prowess.
Creating complex systems to manage the reams of data can, in some cases, lead to commercial products.
"The sporting event allows us to showcase our technology," said Wynne Willis, director of marketing programs for EDS Corp.'s EDS Global Sports, in Plano, Texas, another sponsor of World Cup 98. "The ability to create and deploy massive technologies and applications that highlight our abilities is key to our involvement. If we do the job well, it shows that we can do the job for anyone."
Small vendors play too
While sponsorships remain the domain of the industry's biggest players, smaller vendors are turning to sports events as well. In doing so, they are taking advantage of a cultural gap that has emerged between departmental and corporate buyers.
"Our customers are [chief financial officers] and CIOs. It's very difficult to meet that kind of buyer at a PC Expo, for example," said Reed Taussig, CEO of Callidus Software Inc., in San Jose, Calif. Callidus, an accounting software startup, hosted its coming-out party at the U.S. Open golf tournament in San Francisco earlier this month.
"We thought it would be better to launch at a place where [customers] would feel more comfortable," Taussig said. "PC Expo is loud and no fun, and nobody wants to be there anyway. But the U.S. Open ... "
Gains in mind share
Taussig conceded that hosting such events does little to grow a company's bottom line, at least initially. But the gains in mind share could pay dividends down the road.
IBM, for example, discovered that its involvement with this year's Winter Olympics increased product awareness to 40 percent from 11 percent prior to the Olympics. Likewise, 24 percent of those surveyed by IBM after watching the Olympic Games considered the company a technology leader.
Not surprisingly, the battle to land a key sponsorship is intense. HP outbid Sun Microsystems Inc., a 1994 World Cup sponsor, for this year's tournament. As a consequence, HP has gotten its name on the marquee and its technologies deployed to help manage ticketing, security and information systems.
Landing the sponsorship is only half the battle. Pulling together the event is a project that takes several years and several million dollars. Executives won't divulge how much HP is spending on the World Cup, but sources close to the company say the price tag for advertising, promotions, and hotel and travel costs will come close to $50 million. Executives believe the expense is worth it--as long as they can close some deals with customers.
"If 10 percent of those who attend sign a new contract with us, we have paid for the event," said Alex Sozonoff, vice president and general manager of marketing and operations at HP, in Palo Alto, Calif.
Other vendors say they need to spend top dollar to be a top player in computing markets. The industry norm is this: For every dollar a company spends to get a sponsorship, it can expect to spend three to five times that amount on creating promotions and the technological infrastructure at the event.
"It's called leveraging," said Eli Primrose-Smith, vice president of worldwide Olympics and sports sponsorships at IBM, in Armonk, N.Y., which is sponsoring the Wimbledon tennis championships and the 2000 Summer Olympic Games. "Those expenses are not just associated costs but are really at the heart of a very complex worldwide marketing plan that you have to put together if you want to be successful."
New approaches
Sybase Inc. is once again a technology sponsor for the World Cup; but this time, it's taking a different approach.
"In 1994, it was primarily a hospitality event. This time, however, we're basing our entire marketing and branding strategy around our involvement in the World Cup," said Mindi Butterfield, corporate vice president of marketing at Sybase, in Emeryville, Calif. "It's a success story, and we're using it to reflect our corporate strategy as we move into new markets."
With demographics essential to finding and sponsoring the right event, some companies are finding new ways to tie their products to sports.
This fall, for example, Sun will open a major CyberCafe at the San Jose Arena as part of its sponsorship of the National Hockey League's Sharks.
Sun, meanwhile, will soon announce plans for a made-for-TV golf tournament. Executives would not divulge details, but they said the format and the technology behind the scenes will demonstrate the Mountain View, Calif., company's hardware and Java technologies.
High risks
While the upside for vendors participating in major sporting events is large, so are the risks. A technology failure while on the world stage could have devastating consequences for a company's business.
"It can be a good thing if everything goes as planned, but if it fails, then you have some serious problems to deal with," said Peter Pollack, chief technology officer at the MTV/Showtime division of Viacom International Inc., in New York.
These events don't reflect the technology issues IT managers must deal with on a daily basis, Pollack added.
"There is no way that you can look at these efforts as a real-world test of the software," he said. "You don't know just how much time and people are involved behind the scenes for these 'cannot fail' events."
Additional reporting by Scot Petersen, in San Francisco