Question came from thinking of Emirates Airline who sponsor Arsenal, Real Madrid and Milan (and others). This costs them over £100m, surely they cannot be seeing a return on that investment?
In: Economics
Brand awareness is very powerful, and lack of brand awareness is difficult to overcome, even with a superior product. The only reason I’ve ever heard of Emirates is because of the soccer team, and I’m not even a soccer fan lol. That’s how powerful it is.
OP, your post is an example of this sponsorship money at work.
I never would have thought of Emirates today and same with hundreds of redditors if they never paid for these sports sponsorships that people see and talk about as you have.
The obvious advantage is if you go to book a flight tomorrow and see option a) Emirates Airlines or b) John Smith Airlines. Then you’re almost definitely more inclined to trust the known brand “Emirates” and fly with them. Millions of people see and talk about Emirates due to this reason, that has a measurable impact on their sales figures.
Companies such as Emirates who spend millions on sponsorships conduct research and measure sales figures before and after starting a sponsorship deal. The reason they can continue spending millions of dollars today is because in the past they have spent a little money then measured a larger return on money earned through sales, so now they continue to spend more money on sponsorships that continue to show these kind of results.
If it didn’t work, companies wouldn’t invest the money. They do it because it works. Your brain works on associations. If you see the logo frequently on things that you like, the product will seem more appealing to you. Emirates is a massive airline with billions in revenue.
Emirates Airlines had $33B in revenue. The £100m expenditure you mentioned is the same as spending 40¢ out of a $100 bill.
Some additional context with Emirates is that they are a state-owned airline in a country that is trying to diversify their heavily oil-based economy, so there are other motives at play along with some government math that may not equate to how a normal company operates.
Welcome to the wonderful world of ad buying. Essentially, when you sponsor anything, all that matters is how much free advertising you receive.
For example, a 30s ad slot on ESPN can cost up to $500k. So if your logo is shown on ESPN in that time slot for 30s, you have just received 500k in advertising. If the benefit of that advertising is less than the cost of your sponsorship, you have a net positive result.
Advertising nd marketing are everything. It’s everything you think, want, buy etc even if you don’t know it or realize it. It’s why you say breakfast is the most important meal of the day or do a dollop of daisy. Everything is advertising and companies pay a premium to have attention grabbing people attached to their product or the product placed in places lots of people see it. Get a million people looking at your logo and it’s more likely to get some kind of result wether it’s someone buying a coke or visiting a website.
Earn 100s of millions off of the advertising?
They definitely see a return on investment, otherwise they would not have the 100 million to budget on their marketing. This is why so many companies rely on advertising for revenue.
For some of these companies the sponsorship money is a drop in the bucket compared to their revenue
I forget the exact wording but I listen to a podcast called No Laying Up (which has a focus on golf) but before staring a podcast/golf company one of the main hosts was in accounting working for the company’s that are hired by the huge businesses to audit their books. He mentioned that for some of these giant companies, a $50 million discrepancy was not large enough to trigger an investigation.
So now think about these sponsorships in that context. $10 million is basically nothing to them
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