May 5, 2004- Two recipes for ya, direct from Memphis.

The first is Memphis-style ribs. Mix six racks of pork ribs with 1.5 tablespoons paprika, 1.5 tablespoons freshly ground black pepper, two heaping tablespoons firmly packed brown sugar, and two tablespoons salt. Combine the ingredients, slow roast over an oiled open grill for roughly two hours, and plate it up.

The second is Memphis-style sponsorships. Mix equal parts of local and national events with indirect revenue, sift into a home-grown portfolio framework, and whisk until integrated, actionable, and measurable.

Whereas Memphis ribs have their own identity and differ from babybacks found elsewhere, FedEx’s sponsorship recipe is just as unique. Inside the company’s Memphis headquarters, sponsorships are focused on driving business, not awareness. The portfolio is segmented by objective, not price. Internal teams are divided into two complementary camps, not one. And sponsorships as a tactical discipline are used in no less than five very different ways.

Other brands focus on businesses or consumers, but FedEx has to keep both on the radar screen. Although the primary target is in the b-to-b world, the company must build its umbrella name inside the b-to-c universe to ensure one of the most ubiquitous brands maintains its leadership status. “We are constantly reminding ourselves that we are not merely in the business of sponsoring things,” says managing director of sponsorships Kevin Demsky. “We are in the business of convincing customers to utilize our services. Sponsorships are just a conduit to accomplishing the corporate objective.”

And that conduit plays a pivotal role inside the marketing machine, as evidenced by the business FedEx signs at events, the revenue generated direct from properties, and the strategic way the company uses sponsorships to invade new markets and maintain presence in existing operating regions. FedEx marketers take their homegrown sponsorship recipe much like Memphis residents do their ribs: Seriously.

“Our marketing pie chart is bigger than it once was, with more slices used to create multiple touches against the same customer in a coordinated and consistent fashion,” says vp-marketing Brian Phillips. “Using sponsorships, we’ve penetrated new areas and grown share faster than we could have before. They create an anchor point in the marketing mix.”

We returned from our visit with FedEx’s sponsorship crew carrying an interesting perspective on (1) how b-to-b brands view events, (2) the unique way FedEx manages, executes, and uses sponsorships, and (3) the many uses for paprika. Eight rules for winning the game of sponsorships, straight from FedEx’s plate—to yours.

1. Sponsorships Are Not Created Equal

There are five corporate goals for sponsorships: Drive revenue; provide an opportunity to entertain customers in a unique environment; give sales a platform for developing relationships; create benefits for employees; and drive the brand.

FedEx marketers want to pull every lever, but realize few sponsorships can score five-for-five. “Our objectives for sponsorships may not be very different from what you’d hear from other brands,” says Demsky. “Where we’re different is that we recognize that not all properties can deliver on all goals.”

Different sponsorships deliver on different objectives, and only when marketers acknowledge that can they develop a portfolio in which a series of properties achieve goals together. Instead of betting heavily on specific events, FedEx builds a “collection” of sponsorships that together help move the needle. “We determine what exactly we expect each property to do for us,” says Demsky. “From there we can get a realistic picture of what the entire portfolio can do.”

2. Structure Portfolios by Objective, Not Price

If sponsorships are not created equal and can only achieve some of the five objectives, properties must be segmented into a portfolio that plays to the strengths and challenges of each. “Sponsorships deliver different benefits, so we’ve built a unique framework that allows us to see how our properties contribute,” says Demsky. “Remember, all sponsorships have a natural life. They eventually run their course and must be removed and replaced.”

FedEx’s infamous five-tier portfolio structure categorizes sponsorships by objective, instead of price. Many brands group their deals in monetary order, but FedEx’s foundation is objective-centric. It’s a strategic framework for defining the different pieces of the portfolio in a way that allows the company to analyze and make decisions on performance. The structure: Category 5: Hospitality Events. Sponsorships that create “focused, private, extended” windows in which to invite customers to interact with FedEx. Such events are used to build relationships and learn more about prospects’ businesses.

Category 4: Hometown Events. Through acquisition, FedEx’s home is no longer solely in Memphis. FedEx Ground is based in Pittsburgh, FedEx Custom Critical operates in Akron, OH. Cat 4 sponsorships keep the brand visible in the communities where it impacts economic and social areas.

Category 3: Key Targets. Put in place to impact a specific geographic region or a specific demographic target. “For example, if our local marketing teams decide they need to penetrate Denver, my group will go out and set up a robust sponsorship plan to help drive business in that region,” says Demsky.

Category 2: Revenue & Supply Chain Events. FedEx partners with properties that integrate the company’s services into its own operations. The integration is then used as a compelling case study to share with customers and prospects about how FedEx helps businesses run smoother (for more on this, see pg. 15). Direct revenue is a secondary benefit, as the property will buy FedEx services.

Category 1: Leadership Events. The crown jewels, leveraged across multiple channels and used on a national basis to achieve most of the five corporate goals. “We can do a little bit of everything with these events,” says Demsky. “This is the one category that, because we can do so many things, we invest in a variety of activation vehicles.”

In a system based on objectives, size doesn’t matter. A FedEx Forum sits in Category 4, an NFL in Category 1, and a FedExField (used to invade the critical Washington, DC, market) in Category 3. “The structure allows us to tailor our investments,” says Phillips. “Each property comes with a different set of expectations, and we calibrate our ROI calculation based on the category.”

3. Measure Independently

An organization that treats every sponsorship independently needs an ROI system that measures each property singularly.

The company is getting ready to come out of the closet with an Index Measurement Tool that will calculate specific ratings based on property performance. “If we have a category model that recognizes no two sponsorships are the same, then we need a tool that will give us an accurate barometer to see if events are doing what we expect them to do,” says Demsky.

Details were still being kept hush-hush at presstime, but the tool involves an “objective template” that is laid on top of sponsorships to generate a score that indicates if an event is performing. The different scores are then combined to gauge the performance of the overall portfolio. “We don’t expect a FedEx Field to have the same ROI as a PGA, so the Index Tool will help normalize the differences between properties and help us measure events on equal footing,” says Demsky.

If a property scores low, FedEx will meet with the partner and try to determine how to raise the number. If the score still remains low, it’s an indication the property may be ready for elimination from the portfolio. Ultimately, the ability to measure on the backend will be much more useful on the front-end. Prior to the Index Tool, Demsky admits his team used a rather unscientific approach. “The new system will take parameters that were once subjective and turn them into objective metrics.”

4. Pass on Awareness

If a property primarily represents impressions, FedEx takes a pass—quickly. After all, with recognition near 100 percent, eyeballs are appreciated but not necessary.

“Certainly awareness is something that we are interested in creating, but only if it’s a byproduct of a sponsorship,” says Demsky. “In the hierarchy of benefits that come from sponsorship investments, it’s not high on our list of must-haves.”

More important are elements that push leads, anchor the brand, and provide face time. Impressions end up as icing on the sponsorship cake. “This company is measured by how many packages are shipped, and our sponsorships are measured by their contribution in driving those shipments,” says Demsky. “It’s too easy to get focused on how many eyeballs saw the brand that you lose focus on how many of those eyeballs pulled out their wallets.”

5. Sponsorships ‘Plus-Up’ the Mix

Smart marketers integrate sponsorships throughout the marketing mix, not the other way around. FedEx uses events as content useable in media, promotions, employee incentives, and online. NFL-themed promotions, Orange Bowl-flavored retail incentives, and PGA-related TV spots spread the event juice.

“Certainly advertising, direct-response, and promotions are important on their own, but sponsorships provide a healthy way to plus-up the marketing mix beyond the events,” says David Grant, a principal with longtime FedEx event agency Velocity Sports & Entertainment, Wilton, CT. “Sponsorship is a tool in and of itself, but it’s also a tool to make everything else a little bit better.”

“Ten years ago, we were more focused on one dimension of what sponsorship marketing can do,” adds Demsky. “We’re now using sponsorships as a more strategic tool and recognizing that we can integrate our events throughout the entire mix.”

6. A House with Two Sides

Without a solid internal structure, sponsorships can’t be identified, managed, and serviced. Keep it simple and focused by creating two sides to the sponsorship team: One manages the present, the other focuses on the future.

Fed Ex has a core team of 11 in-house team members in its event department. Under Demsky are two separate teams, each headed up by a manager. One team is focused on activating and leveraging investments already made via marketing programs, promotional components, hospitality efforts, and so on. On the other side of the house is another team responsible for managing the growth of the portfolio. That team identifies new sponsorship opportunities, whether or not the portfolio has the right mix, and oversees all selection, planning, and negotiations.

Each team has staffers attached to specific properties who manage all aspects of the deals. They work with the rights-holders as well as other FedEx business units that may leverage the sponsorships.

7. Make Hospitality a Marketing Extension

Hospitality elements provide a platform for live extensions of branding. Your tagline, images, thematics, and attributes should come alive on-site.

FedEx ties hospitality to different umbrella marketing messages. The Super Bowl annually sports hospitality interactives tied to the Air & Ground offerings. PGA events are used to showcase FedEx’s reliability. At Gillette Stadium, the company brought its new “Relax. It’s FedEx” tagline to life with a Relax Zone boasting soothing music, candles, and massages.

Hospitality must also be immersive. At the St. Jude Classic, for instance, FedEx erects a two-story structure that rivals any golf clubhouse.

It’s less about food and drinks, and more about isolated environments for building relationships. “We’ve learned the average company employee doesn’t have the authority to choose which company their employer uses to ship a package,” says Demsky. “And for those individuals that do have the authority, it’s a complicated decision. So in order to help our salespeople get some time with those customers, we create the quality time in which to have a discussion.”

FedEx also makes the most of hospitality with off-hour events for customers and prospects. The company, for example, last winter created NFL Open Houses in five markets in which as many as 500 customers were brought in on an off day for activities, entertainment, behind-the-scenes tours, and chalk talks with players. All of the FedEx operating units were on-site with a collective “trade show” of services. (The program may expand this fall.)

The hospitality blueprint follows no less than Six Points of Communication with the target: pre-invite, formal “save the date” invitation, a “what to expect” message, itinerary, the on-site event, and a follow-up.

8. Say When

There’s nothing wrong with window shopping, but event marketers should know when the portfolio has had enough. “If you have 20 properties that you need to actively leverage, you have too many properties,” says Grant.

If the return is not meeting objectives, then it may be more of an issue of which property is not delivering than which property needs to be added. “It’s not a question of doing more with less,” says Demsky. “It’s that at the end of the day we want to know that we are able to do what we need to do with what we have.”

Going into Overtime

And what he has seems to be working. Plans are already underway for more integrated use of sponsorships across all channels. “It’s tough to extract the brand from the business,” says Phillips. “We used to be a singularly focused, single-business organization. But the brand has had to stretch over the last 10 years and sponsorships have played a role in that. We now have products that go together, which allows us as a company to be more tangible.”

Sponsorships will help steer the ship, on their own and as a combined driving force. “We want our customers to know that regardless of how they interact with FedEx—whether with our sales reps, online, on the phone or through a courier—the experience needs to be consistent,” says Demsky. “Our sponsorships are used to communicate that the FedEx brand is a promise on an outstanding customer experience and at the same time promote our services.”

Plate it up.

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