Is it always about getting customers? Big Business says no, according to The Economist in "Briefing Business and the Olympics," published July 21, 2012. The article stated, "Big sponsors tend to be firms with brands that are already well-known. Lesser-known firms buy ads to explain to customers who they are. The likes of Coke and IBM back athletes to make consumers feel warmer about their brands. There is evidence that such backing can work, at least on a team-by-team level."
So it has always been with advertising in the bankcard industry. The most money has always been spent by those that are already known and doing well, although everyone advertising hopes to get new business.
Perhaps uniquely in our business, there has always been steady growth in new sales representatives entering our market. This trend continues to strengthen, especially since the start of the current recession. Perhaps this is due to the difficulty in obtaining jobs, or perhaps it is because our industry remains a place to earn a good living. Word has gotten out that our industry has created many millionaires. For those who have started at the bottom and broken out to be megastars, being well known and bold have paid off handsomely.
Creating something unique and getting it to the right audience can build a business from scratch, just as it did for Heartland Payment Systems Inc. and CrossCheck Inc. (as two obvious examples). But there are many other reasons to advertise, as The Economist pointed out in its July 21 article: "Jorg Henseler of Radboud University has found that in the Netherlands sponsoring football teams make brands more valuable. And even if there is no such direct effect from sponsoring the games, there is an indirect benefit: you raise ever further the costs of entering the global market. It is spending like this that makes competing with Coke hard, even when making fizzy drinks is easy."
We hear all the time that it is just too easy to get into this business. Advertising is one of the ways that the cost of entry is increased to new players. Many seasoned professionals believe this is a far better defensive move than spending endless resources to retain existing customers, as opposed to finding new ones.
In addition, if there has ever been an industry in which it is as much about building the sell-ability of your business as it is about building the business itself, it is ours. Following the endless consolidation in our industry from 1983 on, it is clear that building a portfolio that will attract buyers is part of the process - and this has been amplified in the last four years.
Also, it is not just ISOs, Member Service Providers and merchant level salespeople who care about sell-ability. Many banks have sold their portfolios over the years and started all over again. So the idea of building brand value through making everyone in the industry know you are a player is a very real reason to advertise.
According to The Economist, "It is hard to argue the case for Olympic sponsorship from any effect it has on the share prices of advertisers, but the companies must believe they are getting a good deal; otherwise they wouldn't keep doing it, and indeed upping the ante."
Visa Inc. has jumped into the Olympic sphere since it became public. It ran Olympic themed promotions in 45 countries in 2008; this year it has 71 in its sights. It is also passing on the rights to use the Olympic brand to the banks that issue its charge cards; some 950 financial institutions will join its marketing push. Even agents are being added to the push between now and 2016. Obviously, being associated with an organization like the Olympics enables a sponsor to reach an audience in a one-of-a-kind and respected way - just as The Green Sheet has done for its sponsors for nearly three decades.
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