Review & Critical Thinking Questions
ANSWER EACH QUESTION CLEAR AND WELL DEVELOPED.
NO CITES OR PLAGARISM
READ THE OTHER ATTACHMENT TO BE ABLE TO ANSWER CORRECTLY
Minimun of 5 lines each
Sport and marketing language to be used
1. Why would a potential sponsor be interested in an organization's market reach?
2. Why do you think people in general are affected by celebrity endorsements?
3. Discuss three factors a company must consider when attempting to find an endorser for their
4. Name a celebrity who you think would make a good endorser. Why would this person be a good
spokesperson, and for what product(s)?
5. Why might an endorser want to limit the term of an endorsement contract with a company?
6. Why do you think the FTC creates laws governing celebrity endorsements? Whom do these laws
7. Explain why celebrity endorsements are risky agreements for companies.
8. Do you think the fact that Lance Armstrong has raised nearly half a billion dollars for a cancer
foundation makes what he did any less immoral? Should his sponsors have considered this fact
before pulling their contracts with him?
9. Why do you think Nike continued its contract with Tiger Woods but not Lance Armstrong?
10. Do you think the brands that were previously associated with Lance Armstrong will suffer as a
result of their past sponsorship? Should they?
UNIT 7 SPORT
Sponsorships vs. Endorsements: What's the Difference?
It's easy to make the mistake of interchanging the words "sponsorship"
and "endorsement," but in reality they are two very separate elements
of the sports and entertainment marketing world. If you'll recall, we
briefly discussed these terms in the second unit of this course. We'll
review the definitions of each word now before we delve deeper into
their meanings and applications.
A sponsorship is a form of advertising that consists of supporting an
event, entertainer, or sports team in exchange for publicity. This
support can come in the form of monetary donations, or a sponsor may
choose to supply the venue for the event, the uniforms for the athletes,
or other commodities that benefit the team or entertainer. On the other
hand, an endorsement is an individual's public support for a
commodity. Famous athletes and entertainers are often paid for their
statements of support for a particular product because it creates
awareness for the product and may drive fans to purchase the product
or refer it to their friends or family members.
Benefits of Sponsorship
In the best-case scenarios, sponsorships create win-win situations for
the business or corporation acting as the sponsor and the team, athlete,
or entertainer receiving the sponsorship. From the sponsor's
perspective, the sponsorship is a promotional opportunity. The bigger
the event or the more popular the team, athlete, or entertainer, the
more potential there is to build brand awareness and get their logos,
advertisements, and products in the limelight. In essence, sponsors are
piggy-backing on the appeal of the individual, organization, or event
they're sponsoring in order to get in on some of the publicity.
Sponsorships can also distinguish a company from its competitors and
establish them as good citizens in the eyes of the organization's
Companies sponsor competitors and sporting events in order to increase their brand awareness.
The benefits of a sponsorship for athletes, entertainers, or teams are
pretty clear. The sponsor sees value in their popularity and, therefore, is
willing to pay or provide tangible goods and/or services in exchange for
the opportunity to showcase their brand alongside them. This support
often enables an event such as a concert or sporting event to take
place, whereas it would otherwise be impossible to pull off. In other
cases, the sponsorship may help to fund training or materials for future
events or programs. This is the case with college sports, for instance. Of
course, football is by far the most popular sport within the college
landscape, and the bowl games present the biggest opportunities for
corporate sponsors to get their brands in the forefront of the public eye.
Organizations may seek out funding by submitting sponsorship proposals to various corporations.
Athletes, entertainers, teams, and organizations looking for funding to
hold a specific event or in order to accomplish a certain goal will actively
seek out sponsorships. This can often be an intensive, time-consuming
process, but when done correctly can pay off in the form of valuable
corporate sponsorships. Typically, sponsorship proposals will be
written and delivered to those companies identified as being a good
match for the organization. A good match would be a company that has
the necessary funds to be a sponsor and one that shares a similar target
market as the team or organization seeking funding. Once an
organization has identified several potential sponsors, they will need to
create the sponsorship proposal. This document details the needs of the
organization as well as the benefits of sponsorship for the company.
Although sponsorship proposals can be quite diverse depending upon
the organization seeking sponsorship as well as the specific
circumstances, it will typically consist of several key components.
The executive summary is the very first section of the sponsorship
proposal. It should identify the organization seeking sponsorship as well
as its achievements and market reach, or estimated number of
consumers the organization is able to market to. For instance, a college
football team seeking sponsors might detail the number of games they
won during the past season and how many viewers typically tune in to
watch them play. This information will give the company a good idea of
the potential they will have for increasing their brand awareness through
a sponsorship with the organization. The executive summary should also
detail the amount of funding the organization is seeking and summarize
the benefits of sponsorship for the organization. Because many
companies receive numerous sponsorship proposals, the executive
summary gives them a quick overview of the proposal. After reading this
section, the company representative in charge of sponsorships should
have a good idea of whether or not the proposal is worth further
The objectives section of a sponsorship
proposal details the goals the organization
will accomplish with the sponsor's funding.
Obviously, any potential sponsor is going to want to know how their
funds will be put to use. The objectives section of the sponsorship
proposal details exactly what the organization hopes to accomplish
through the sponsorship and precisely how the money will be spent in
an effort to accomplish these goals. For example, a basketball team may
want to invest in new training equipment to help them improve their
game or make improvements to their arena to attract more fans. In the
objectives section, each goal will be listed and aligned with an estimated
dollar amount that it will cost to achieve each goal.
Although many sponsors genuinely want sports and entertainment
organizations to succeed, from a business perspective, their primary
concern is what's in it for them—that is, how will they benefit as a
company as a result of sponsoring the organization? The sponsorship
benefits section of the sponsorship proposal will help the company
answer this all-important question by outlining exactly what they will
receive in exchange for funding the organization's objectives. This can
include any number of promotional opportunities including the right to
use the organization's name on the company's commodities and
marketing materials, media coverage at the organization's events, and
the right to place their company logo on the organization's uniforms and
How beneficial do you think it would be for Pepsi to enter into a
sponsorship agreement with American Idol? Because Coca-Cola is
already a major sponsor of this hit talent show, it wouldn't be
advantageous for Pepsi to partner with them as well. That's why
sponsorship proposals typically include an exclusivity section which lists
all other sponsors who have signed on with the organization. That way,
companies can ensure that they're not sponsoring the same organization
as one of their competitors.
Sponsors often want to have the ability to evaluate the results of a
sponsorship agreement. Thus, a sponsorship proposal often lists some
options as to how the results might be best measured. For example,
consumer surveys distributed after an event could give the company the
opportunity to determine how their brand awareness increases as a
result of sponsoring the event. Evaluation strategies such as these can
help a company determine whether they want to amend the sponsorship
agreement or continue the sponsorship according to the original plans.
Like sponsorships, celebrity endorsements are big business as well.
According to Business Insider, corporations collectively spend about $50
billion a year on these big-name endorsement deals, and apparently,
they pay off a good portion of the time. Harvard Business School studies
conducted in 2010 revealed that celebrity endorsements can increase
sales of some products by up to 20 percent. Companies have a pool of
athletes, musicians, and actors to choose from, so just how do they go
about choosing which one will endorse their commodities? The answer is
a complex one.
WHAT MAKES A GOOD ENDORSER?
Because of their popularity, entertainers, athletes, and even coaches
often make good endorsers for a particular company's product or
services. Endorsements are a risky business, however. They have the
potential to increase brand awareness, sales, and revenue for a
company, but on the other hand, when they seek endorsements,
companies are placing their brand in the hands of the endorser, at least
to some extent. Therefore, the sales of the product being endorsed as
well as the reputation of the brand or company itself are on the line. As
a result, companies must take many factors into careful consideration
when choosing an endorser. Some agencies have pared the decisionmaking process down to an exact science. For instance, Celebrity DBI is
an index which determines a celebrity's ability to influence consumer
purchasing decisions. In 2011, the index ranked the top 10 celebrity
endorsers in terms of influencing potential as follows:
1. Oprah Winfrey
2. Will Smith
3. Bill Gates
4. Morgan Freeman
5. Bill Cosby
6. Betty White
7. Tom Hanks
8. Denzel Washington
9. Robin Williams
Because of her immense popularity, Taylor Swift receives multi-million dollar endorsement deals.
First and foremost, in order to be an effective endorser, the individual
must be popular. The primary purpose of endorsements is to increase
the visibility and appeal of the product or service being endorsed.
Therefore, the more popular the endorser, the more favorable publicity
the commodity will receive. Thus, an actor who appeared in a single
movie 20 years ago who few people remember probably wouldn't get
many endorsement offers. However, celebrities who are current
household names might get paid millions of dollars to endorse a single
product or product line. Taylor Swift, for instance, ranked number one
on Forbes' list of top-paid celebrities under 30, bringing home
approximately $57 million between 2010 and 2011, thanks in part to her
endorsement of CoverGirl's NatureLuxe cosmetic line.
Popularity alone isn't enough for a star entertainer or athlete to attract
big endorsement offers from companies looking to promote their
commodities, however. Another important factor companies consider is
the individual's likeability. Someone who is popular but either lacks
charisma or has been ostracized by a large portion of the company's
target market, for instance, would not make a good endorser for the
company's commodities. Take, for example, the case of Justin Bieber.
Although he has managed to gain immense popularity among pre-teen
girls, he has earned just as much disdain from pre-teen boys (who are
likely just jealous) as well as from music critics who question whether
he truly has the vocal chops to be a deserving chart-topper or if it's
really just innovations in digital music technology that allow him to
sound like he can sing. Thus, while Bieber might make a good endorser
for companies targeting tween girls, he won't likely receive many
endorsement offers from brands outside that narrow market.
Companies must weigh the risks and
benefits to their reputations before
signing on with celebrity endorsers.
The Risk Factor
As we discussed earlier, putting their reputation in the hands of a
celebrity endorser is a big risk for companies. After all, a celebrity's
popularity waxes and wanes by the minute, and a celebrity who is
extremely popular one day might fall from grace the next, taking the
company's product and name down with him. Therefore, companies try
to minimize this risk by choosing celebrity endorsers who are least likely
to experience a drastic drop in fan approval. For instance, when
considering a celebrity, a company may take into account the
individual's past behavior. After all, the past is the best predictor of the
future; if a star has been arrested or sent to rehab multiple times, then
the odds are pretty good that these types of incidents may occur again
in the future. That's why stars like Robert Downey, Jr., who has battled
drug addiction on a very public stage, and Lindsay Lohan, who has gone
to jail multiple times for driving while intoxicated, won't likely be
receiving any endorsement offers any time soon—if ever.
CASE STUDY: LANCE ARMSTRONG
Professional cyclist Lance Armstrong lost all of his endorsement deals in 2012 after admitting to taking
Lance Armstrong is the most recent and possibly one of the most
shocking examples of a celebrity endorsement gone wrong. The famous
cyclist and former seven-time Tour de France winner has been stripped
of all of his titles and endorsements after being accused of taking
performance-enhancing drugs and then covering it up by giving himself
blood transfusions. Just one week after a scathing report by the
International Cycling Unit was released, Armstrong lost all of his major
endorsements including Nike, 24-hr Fitness, and sunglass brand Oakley,
the last to disconnect itself from the fallen athlete. Initial estimates
indicated that Armstrong will lose at least $30 million a year as a result
of these lost endorsements, but he will likely get to keep the earnings
from past endorsements.
RELATIONSHIP WITH THE PRODUCT
Of course, just because a celebrity is über-popular, likeable, and stable
doesn't mean that he or she will make a good endorser for every brand
or commodity. The celebrity's relationship with the brand must also be
taken into consideration. For instance, Taylor Swift makes an excellent
spokesperson for CoverGirl because it's pretty obvious to anyone who is
the least bit observant that the star wears makeup. The celebrity pop
star would probably not make a good spokesperson for Craftsman tools,
however. While it may make for a fun commercial for the rest of us,
Craftsman's target market (i.e., men who need reliable tools) won't
likely be convinced that a dainty 22-year old billionaire has any
knowledge whatsoever of what makes a good skill-saw.
In order to be effective, an endorser must have a believable relationship to the product he or she is
Furthermore, a recent study by Margaret Campbell, professor at the
Leeds School of Business, found that celebrities' negative attributes
were underscored when they attempted to endorse an item they had
little perceived knowledge of. For instance, when asked what they
thought of celebrity Jessica Simpson, respondents had both positive and
negative opinions. On one hand, they thought she was fun, but they
also reported that they found her to be a bit ditsy. When these same
respondents viewed advertisements featuring Jessica Simpson as a
product's endorser, they associated both the positive and negative
associations with products that the star seemed compatible with, but
only the negative associations with products that she seemed
incompatible with. For example, the respondents may have thought a
perfume brand was both fun and ditsy when endorsed by Simpson, but
they perceived a pocketknife brand as only ditsy, not fun.
LAWS REGARDING ENDORSEMENTS
FTC laws prohibit endorsers from
making false claims about a product.
In addition to considering a potential endorser's influence on their
brand, a company must also take into account the laws governing
endorsements and other testimonials. According to the Federal Trade
Commission (FTC), statements made by celebrity endorsers must be
factual and must be based on personal experience with the product or
service. As of 2009, revisions made to the FTC guidelines also state that
both the company and the celebrity may be held liable if advertisements
make false or deceptive claims. Furthermore, any "material connections"
(i.e., money or items exchanged between the company and the
celebrity) must be clearly disclosed. In other words, it must be made
clear to the audience that the celebrity is being paid or otherwise
compensated for endorsing the product or service.
Once a company has agreed to hire a celebrity entertainer or athlete to
endorse one or more of their products and/or services, an endorsement
contract must be drawn up by an attorney for both parties to sign. There
may be a period of negotiation prior to the signing of the contract during
which both parties (i.e., the company and the endorser) discuss what
they hope to gain from the endorsement agreement and decide upon
details such as exactly which commodities the celebrity will endorse and
precisely how much compensation he or she will receive in exchange for
doing so. Although each endorsement contract is unique, in general,
these contracts will contain the following elements and clauses:
Typically, the Due Diligence clause states that the contract will be
reviewed prior to signing to ensure that it is not in violation or
contradiction of the FTC laws, the sport's governing body (when
applicable), or any other contract that the endorser is currently bound
to. The due diligence clause guarantees that the contract is legal and
The term of the endorsement contract refers to the length of time that
the celebrity will endorse the company's specified products and/or
services. There are many considerations that must be made when
determining the proposed term of the agreement. For instance, if the
celebrity is young and there is the potential for him or her to have a
long and successful career, then it would be advantageous for the
company to pursue a long-term agreement and lock in a figure for
annual compensation. However, if the endorser believes that he or she
might have greater endorsement opportunities in the future as a result
of increased fame, then he or she may want to limit the term of the
contract or include a clause that allows for increased compensation
relative to his or success.
Celebrities may be required to make
public appearances to comply with
their endorsement contracts.
The services clause of the endorsement contract clearly states what the
athlete is expected to do to fulfill the terms of the endorsement
agreement. This could include any number of promotional services such
as giving speeches; making public appearances; participating in radio,
television, or print advertisements; wearing the company's logo; or
using the company's products or services.
Name and Likeness
Purchase answer to see full