Right now I’m sitting at home watching game five of the NBA finals. Mind you, it’s not because I like the NBA or have watched any of the prior playoff games, I’m just bored and there’s no World Cup games on at the moment (other than the replays on the Spanish channels).
According to Ad Age, the marketing story of the NBA Finals is the fact that both the Dallas and Miami arenas are sponsored by American Airlines. As the story notes: “American Airlines could reap more than $60 million in brand exposure as a result of the National Basketball Association Finals between the Miami Heat and Dallas Mavericks that begin tomorrow night.” This is apparently quite a windfall, because American Airlines “only” paid something like $20 million for the naming rights for these areas over the course of something like 10 years.
So $60 million minus $20 million – that’s a $40 million profit, and 200% margins. Surely some vice president of branding is getting upgraded to a corner office at American Airlines’ headquarters.
Ah, if only it was that easy. Let’s think about this for a minute. American Airlines sells air travel. Most people I know base their air travel on three factors: 1) price; 2) schedule; 3) frequent flyer membership. In other words, in the event of equal price and schedule, people will opt for the airline where they can get the most frequent flyer benefits, but for the most part, air travel is a commodity, like table salt, electricity, or paper napkins.
That begs the question: what exactly is the “benefit” American Airlines receives from all of this branding? Will travelers opt to pay higher fares to fly on American Airlines (instead of a competitor) as a result of seeing their name emblazened on NBA Arenas? Will viewers flock to American Airlines’ Web site to learn more about the company products and offerings? Will frequent travelers switch to the American Airlines frequent flyer program as a way of supporting their favorite NBA team?
Of course not. In short, I doubt that American Airlines will reap any financial benefit from the increased exposure from the NBA Finals. I suppose branding works when you are marketing a car, or perfume, or something that people make an emotional connection to prior to a purchase. But no one cares what airline they use. Assuming the seats are about the same width, the safety record is fine, the schedule works, and the price is right, it just doesn’t matter.
So let’s revisit that $60 million of branding exposure. If that’s how much it would cost to buy advertising during the finals, I guess that’s a good deal if you really wanted to buy that much advertising for your commodity-product (can you imagine Morton’s Salt paying $60 million for branding? I can’t). But you aren’t going to see an additional $60 million of profit or even revenue on the American Airlines quarterly earnings report.
Which would you rather have: a) exclusive branding rights to two arenas, or b)120,000,000 clicks on Google and Yahoo? If you answer “a”, I’ve got a bridge to sell you in New York . . .