Corporate sponsorship of a sporting event seems to be a decent way to boost sales. After all, millions, and sometimes even billions, of people watch the event in question. The company gets to use phrases like "official sponsor of the 2006 World Snowshoe Racing Finals," and it can keep the competition out so that its message is the only one seen or heard.
Unless, apparently, the competition is advertising on a pair of lederhosen.
You see, at the World Cup, Anheuser-Busch's (NYSE:BUD) Budweiser has paid big money to have "pouring rights." That keeps competitors like Heineken, the corporate sponsor of Dutch soccer, and Bavaria, a smaller Dutch brewery, locked out of the advertising at this biggest of sporting events. Or so you think.
Last Friday, many thousands of Dutch fans, going to the first-round match between the Netherlands and Ivory Coast, were dressed in orange to support their team. Apparently, many hundreds of them were wearing orange lederhosen that had both a lion's tail attached to the back -- the team mascot is a lion -- and the Bavaria brewery's name on the front.
FIFA officials, aware of Budweiser's contractual right to be the only beer advertiser, required that the fans remove the offending lederhosen before they could attend the match. According to one source, the pants were actually confiscated. Many of the fans allegedly ended up watching and cheering in their underwear -- and to good effect, apparently. Holland won the game.
Advertising dollars are precious and have to be spent wisely, especially if your company can't pay the $50 million or so to be a sponsor of a major sporting event such as the World Cup. So what to do? You could engage in some so-called ambush marketing, which is exactly when Bavaria did with the lederhosen. As it turned out, the very lack of the company-marked lederhosen at the game did exactly what the sponsor wanted -- it brought people's attention to its brand.
Sometimes, a company doesn't go the sponsorship route even if it does have lots of money to spend on advertising. Nike (NYSE:NKE) is a famous -- or perhaps infamous -- example. The footwear giant ambushed the 1996 Atlanta Olympic Games. It had billboards plastered all over the city, gave out "swoosh" pennants for fans to wave at the games, and erected a large Nike pavilion outside the main stadium -- all for less than the $50 million fee to be an "official" sponsor. Yet in later surveys, many people thought Nike had been an official sponsor. With an estimated Olympics sponsorship yield in excess of $700 million in revenue, successful ambush marketing such as Nike's can be a great way to increase the return on investment. After all, would you rather spend $50 million or, say, $20 million in advertising to see $700 million worth of revenue?
Is ambush marketing ethical? As much as advertising ever is. Is it legal? When done carefully, yes. Is it effective? Most certainly. And when companies consider the return on investment from advertising -- whether on billboards or lederhosen -- that's what really counts.
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Fool contributor Jim Mueller ambushes the occasional beer, which never stands a chance. He owns shares in Anheuser-Busch but of no other company mentioned. The Motley Fool is investors writing for investors.
