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Home Depot putting the brakes on NASCAR deal

June 24, 2014

Home Depot is not going to renew its sponsorship of Joe Gibbs Racing (JGR) when its contract expires at the end of the NASCAR season, according to a report by SportsBusiness Journal.

The DIY chain has been the primary sponsor of JGR going back to 1999, but has cut back its commitment to Mr. Gibbs' team and NASCAR in recent years. Instead of promoting its primary business, Home Depot has featured its Husky tool brand as the sponsor this season.

Home Depot has also allowed Dollar General to serve as the primary sponsor this season for 27 of 38 races run by Matt Kenseth of the Gibbs team. Expectations are that Dollar General will play an even more prominent sponsorship role once the Home Depot deal ends. Neither Home Depot nor JGR offered any comments on the report.

A Harris Poll released earlier this year, via USA Today, found that auto racing (all types, including NASCAR) was the fourth most popular sport among adults in the U.S. Seven percent of respondents said auto racing was their favorite sport compared to the National Football League (35 percent), Major League Baseball (14 percent), NCAA Football (11 percent), the National Basketball Association (6 percent), the National Hockey League (5 percent) and NCAA Basketball (3 percent).

Attempts in recent years by NASCAR to attract a younger and more diverse fan base have yet to achieve the results expected. The company's predominantly white male audience has not reacted positively to some of the changes made in recent years, according to Bleacher Report, while NASCAR fans were hurt by the recession and its after-effects.

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Discussion Questions:

Are sports sponsorships becoming more or less important to retailer marketing efforts today than in the past? What is the key to making the most of sponsorships of NASCAR and other professional sporting leagues?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Are sports sponsorships becoming more or less important to retailer marketing efforts today than in the past?

Comments:

Companies should take a long, hard look at sports sponsorships. Do they fit the brand image and core story? How much is being spent to achieve this exposure? How can the sponsorship be used to activate the brand message and directly drive sales? Can they measure a return on investment?

The key to a successful sponsorship is activation. It's no longer good enough to simply generate impressions, unless the sponsor is a relatively unknown company. Sponsors need to get consumers at events and at home to interact with the brand. Give consumers a reason to try or continue to buy the sponsor's products.

With the cost of sponsorships rising, look for more brands to find ways to better target and then activate their sponsorships or withdrawal from the pool of potential sponsors.

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Max Goldberg, President, Max Goldberg & Associates

Whether it be NASCAR or any other sports sponsorship, the keys are the demographics and the environment. If the sponsorship is delivering your target audience in a place where your message even subconsciously resonates then the deal makes sense.

Unfortunately, over the last decade or so, sponsorships have taken a life of their own without much thought given to making sense.

NASCAR has an additional challenge. The age demographics are playing against NASCAR. It is a sport that rose with the Baby Boomers and apparently is dying with the Boomers (the same can be said about golf). The following generations are much more interested in things other than cars.

I don't know the demographic target for Home Depot, but I can guess they are more interested in the children of Boomers who are building families and households than they are of us grandparents.

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Gene Detroyer, Professor, Independent

Sponsorships are still too much like mass media (advertising) rather than actionable and measurable in terms of customers and sales. Marketing accountability, and the increasing number of options for large and smart brands (including retailers) to know customers and connect with them directly, will continue to put pressure on sponsorships that aren't able to deliver those measurable items above.

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Phil Rubin, CEO, rDialogue

Well, I have never bought a product due to a sports sponsorship. I have bought many products that were advertised during a sporting event. Being a sponsor is best used as an internal PR effort. A sponsor gets prime tickets and access to locations in which the sponsor can entertain their clients. This can be an incredibly cheap way to do corporate entertaining.

Yeah, a sponsorship might cost a lot, but can be used in numerous venues over the course of a season. This is especially good if the customer is a wholesaler as opposed to John Q Public. Home Depot can't entertain its walk-through-the-door customers at a NASCAR track and is just basically advertising on the car. A billboard on the way to the racetrack would do just as well, especially since no one believes that having Home Depot on the hood makes the car go faster! The advantage that can be of benefit is using a sponsorship to move the customer out of the business environment and move the relationship beyond the office. I have done this for years and it has worked very well. I would advise anyone to put their money in event entertainment. Work out a personal services deal with a driver. Have him interface with your customers and their wives. Spend your money on VIP suites at the tracks and invite your customers and their wives to a luxury box view of the races.

Don't put the money on the cars. Put you money where you can leverage it into building relationships.

Ed Dennis, Sales, Dennis Enterprises

Home Depot and NASCAR have been good for each other. NASCAR fans are probably a large portion of Home Depot's business. But they would probably have the same or close to the same business without the NASCAR sponsorship. Not being the major sponsor would be a better "track" for them. The name would still be out there with the same numbers of eyes on the cars, but the cost would be much less.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

Setting aside business perceptions which have always been tainted against motor sports marketing, retailing efforts are changing. As companies need change along with demographics, so too the need to use motor sports sponsorship ... or not.

Having spent three decades in sports marketing, I can tell you the high loyalty factors are real in racing, but much too often both the corporate world and race teams have not talked the same language.

Home Depot feels their demos are not necessarily the same as stock car racing and I might have to agree with that assessment. However, there are many other corporate entities that should be benefiting from racing's intimate engagement that most sports can't offer.

Activation is huge in motorsports and the more integration the team and company can create, the better the partnership will succeed. Also, let's not forget the large community effect and word-of-mouth that easily supersedes any typical advertising medium.

There are significant advantages to motor sports partnerships but they must be just that—a partnership. Still, sports should only be one phase of a comprehensive marketing campaign.

'pigsrule'

Sponsorships have clearly become less important as a marketing effort, as retailers have come to realize that simply managing their inventories, customer service, and pricing have a larger, and greater impact on their business (and the marketing of their brand and image). The move to increase store presence, brand awareness, customer satisfaction, and eliminate out of stocks, poor performance, and negative impressions, is partly due to the increased communication and immediacy of the Internet.

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Kai Clarke, CEO, American Retail Consultants

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