The extravagant sums that can be spent on special-events sponsorship suggest how highly many companies value direct access to their target markets. To be sure, it takes the resources of a company like PepsiCo to put Michael and the brothers Jackson on the road. But the costs -- and rewards -- of a major sponsorship can be proportionally much higher for a smaller company. Consider the case of Sparkomatic Corp. of Milford, Pa., a fastgrowing manufacturer of car stereos with sales of around $100 million.
Sparkomatic this year sponsored a concert tour by the British rock group Yes to 109 cities in Europe, Canada, and the United States at a cost of $1 million. Add in Sparkomatic's promotions related to the tour, and the total price tag comes to $3 million.
This was Sparkomatic's second goround with a rock group, having sponsored a Supertramp tour in 1983. It likely won't be the last. While sales in the car-stereo industry are growing from 5% to 10% annually, Sparkomatic's revenues climbed more than 30% last year, a jump Edward Anchel, president of the privately held company, attributes in large part to increased visibility among young adults tuned in to rock music. Although he is skeptical that "anyone can really tell you how effective their advertising is," Anchel says that when Sparkomatic adds up the exposure it gets through a rock tour, "it's hard to believe it wouldn't cost you several times as much to do the same thing with regular advertising.
"The fact of the matter is that you can line up a lot of car-stereo merchandise and find very little difference among products," says Anchel. "So it really becomes essential to build strong brand awareness."
Anchel, who consults with his 20-year-old son in selecting a group to sponsor, says Sparkomatic's relatively small size works to its advantage. "The chemistry of making a deal with a rock group can be very interesting," he says. "Each side is somewhat suspect of the other. We're able to overcome some of the apprehensions they may have about corporate involvement, because we're a little less scary to them."
Sparkomatic is selective, too. Anchel says they went with Yes because it was a mature, well-managed group that appeals to a broad spectrum of the youth audience that buys car stereos. It was the group's ability to "play hardball" as Anchel puts it, that resulted in a co-promotion of the summer tour by MTV, cable television's popular music-video channel. Yes negotiated concert telecasts with both MTV and Home Box Office, playing one against the other. Sparkomatic couldn't be more pleased with the outcome. Promotional mentions of Sparkomatic on MTV, Anchel says, were worth as much as $1 million
That came on top of the exposure Sparkomatic got by having its name on tickets, programs, and T-shirts at the Yes concerts. Conversely, Sparkomatic was able to use the group's name in its broadcast and print advertising. Anchel, perhaps the only 45-year-old chief executive in the country to show up at a number of Yes concerts last summer, says that Sparkomatic's hefty rock-and-roll investment has been extremely well spent
"It would be nice to keep the money," he says. "But that doesn't build a company."