Property Sector Overview
Cash-strapped Governments Explore Muni Marketing Opportunities
Sponsors seek access to sales rights, employees and goodwill-building community programs.
9/21/09: While a handful of cities, counties and other types of government bodies have launched municipal marketing programs over the last decade, the struggling economy has prompted renewed interest in public/private partnerships that have the potential to generate revenue to partially offset plummeting tax dollars and help take a bite out of soaring deficits.
“We’re seeing an incredible amount of interest, mostly from city and county governments; right now our staff is working 14 bids,” said Myles Gallagher, president of sponsorship sales agency The Superlative Group, which specializes in municipal marketing.
Cities with established muni marketing programs say they are receiving more calls from other government entities looking for advice on putting together corporate partnership programs.
“I’m getting a call from at least one city a week asking about starting a program; in the past we received one call every other month,” said Jenny Wolff, director of strategic partnerships with The City of San Diego, which launched its corporate partnership program ten years ago.
The City of Indianapolis is one of the more recent players on the municipal marketing scene. In late July, the city hired marketing agency Third Street Partners to identify marketable assets and sell deals. The local agency, which opened its doors in April, was one of 15 firms that responded to the RFP issued by the city that same month.
Other cities exploring partnership opportunities include Chicago, Philadelphia, Pittsburgh, Phoenix and Myrtle Beach, S.C.
In addition to city governments, a growing number of transit agencies are launching sponsorship programs that go beyond ads on buses, trains, shelters and stations.
Case in point: New York City’s Metropolitan Transportation Authority in June announced a 20-year, $200,000-per-year deal with Barclays plc for naming rights to the subway stop at the proposed Barclays Center sports complex in Brooklyn.
“This is the first of what we hope will be similar transactions,” said Aaron Donovan, MTA press secretary. “We’re looking under every rock to identify additional revenue sources to help balance our budget and reduce pressure for fair and toll increases.”
The MTA is developing a sponsorship policy to guide the sale of subway stop naming rights in the future, he added.
The Greater Cleveland Regional Transportation Authority last year signed two local medical systems to cosponsor a new rapid transit vehicle line. The deal calls for The Cleveland Clinic and University Hospitals to pay $6.25 million over 25 years in exchange for branding on the RTA’s HealthLine.
With the struggles of local governments a hot topic, interest in playing a white knight role has risen among marketers seeking ways for their marketing dollars to reap goodwill along with promoting their brands.
KFC Corp. took that interest to a new level this spring, proactively reaching out to five cities and offering to fill potholes in exchange for branding the patches “Refreshed by KFC” in non-permanent chalk. Only its hometown of Louisville participated.
“This program is a perfect example of that rare and optimal occurrence when a company can creatively market itself and help local governments and everyday Americans across the country,” said Javier Benito, the company’s executive vice president of marketing and food innovation, in a statement.
San Diego Program Evolves
Since launching its program in ’99, San Diego has raised more than $16 million in cash and budget-relieving in-kind revenue.
Following the signing of its first deal with Pepsi Bottling Group, Inc., the city added companies in the wireless, automotive, financial services and automated external defibrillator categories. The city has maintained all of those partnerships with the exception of the auto category.
Instead of selling naming rights to city facilities and sponsorship to events, the city focuses on selling access to municipal employees, retirees and their families, as well as to owners of businesses in San Diego.
For example, partner San Diego Metropolitan Credit Union has offered city employees preferred financing on consumer electronics and automobile purchases.
“That’s a great thing about having a financial institution as a partner–you can help city workers get a decent loan for big-ticket items,” Wolff said.
As with any long-running program, San Diego has made some tweaks to its sponsorship program. Below, some of the most noteworthy changes.
Bridge the gap between sponsorship and procurement. Although the city’s corporate partnership group originally initiated sponsorship sales independently of procurement efforts, San Diego has combined those efforts to gain efficiencies.
The move to officially leverage the Purchasing Division to sign deals with companies that sell products and services to the city, or are interested in doing so, came after San Diego leveraged the procurement department to secure deals with Verizon Wireless and Cardiac Science Corp., which markets defibrillators.
The city’s sponsorship staff now works closely with procurement officials to identify potential partners and include marketing opportunities as an add-on in procurement RFPs.
“We were wasting our time putting out requests for sponsorship,” Wolff said. “We felt like our time was best served by being part of a larger RFP when the city is purchasing something.”
The city has launched the new approach with the bidding process for the maintenance repair and operations supplies category, Wolff said, noting that any potential partnership will include separate contracts, one for procurement and the other for sponsorship.
The city will follow the maintenance repair and operation supplies category with RFPs for the auto parts, electronics and office supply categories.
Facilitate business-building opportunities between sponsors. Taking a page out of the sponsorship servicing handbook of sports, association and other marketers, San Diego has put more focus on forging business-building opportunities between sponsors.
For example, Verizon Wireless offers discounts to San Diego Metropolitan Credit Union employees.
In the past, SDMCU leveraged its relationship with the city to offer financing for vehicles purchased from McCune Chrysler/Dodge/Jeep, a former city partner.
Add smaller, community-centric packages. San Diego this month rolled out a new sponsorship level–community partnerships–that allows companies to demonstrate their support for the city through small cash and in-kind deals.
For example, four companies have teamed up to renovate a fire station, providing $40,000 worth of goods and services, including tree trimming, removal and abatement, Wolff said.
“Many companies that used to write checks to the city can’t do that any more. We’re trying to work with them on creative ways to support the community and help us with things that didn’t get into the budget. That’s huge.”
Corporate interest has been high, added Wolff, who is developing similar types of programs with a handful of other companies.
Sources
KFC Corp., Tel: 502/874-8300
City of San Diego, Tel: 619/236-7002
Metropolitan Transportation Authority, Tel: 212/878-7000
The Superlative Group, Tel: 216/592-9400