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A Blue-Ribbon Crop

Indianapolis Business Journal, August 02, 2008

State Fair brings in bounty of corporate sponsorships

Andrea Muirragui Davis -

An economic dry spell may have corporate America praying for rain, but tough times have led to a bountiful year at the Indiana State Fair.

Two weeks before the fair’s Aug. 6 start date, corporate sponsorships were running 22 percent ahead of 2007, surpassing $1.5 million for the first time. And leaders think they can continue to build momentum next year, when the fair expands its 12-day schedule to include a third lucrative weekend.

Ironically enough, experts say the nation’s financial woes may be one reason fair sponsorships are on the rise as companies look for cost-effective ways to reach the masses—especially during the summer, when fewer consumers are likely to be snuggled up in front of the TV. Attendance at last year’s fair topped 750,000.

“The opportunity to get your brand in front of a lot of people is really appealing,” said William Chipps, senior editor of industry newsletter IEG Sponsorship Report. “That’s a major driver of the growth.”

Indeed, Chicago-based IEG estimates that fair and festival sponsorships nationwide will increase nearly 8 percent this year, to $754 million.

Another factor fueling the growth: the popularity of so-called mobile marketing programs, where companies stage road shows of sorts to expose fair-goers to their products without a hard sell.

Burt’s Bees, for example, will have a 900-square-foot area where Indiana State Fair visitors can try its lip balm and other personal care goods. The U.S. Army is bringing its Virtual Army Experience. Sensodyne toothpaste will set up a temporary dental health spa.

Sponsors increasingly want to do more than write a check and get their names on banners, said fair Executive Director Cindy Hoye.

“They want to talk about what else they can bring to the table and how they can make the most of their sponsorship,” she said.

Weather-resistant revenue

The result has been good for the fair. Since 2005, when Hoye moved into the executive director’s post after 18 years in marketing, sponsorship revenue has increased more than 40 percent. It has more than tripled in the last 10 years.

This year, 62 sponsors have contributed $1.5 million to the Indiana State Fair—16 percent of its $9.7 million budget. That might seem like a drop in the bucket, but it can make a big splash nonetheless.

“Sponsorships are critical for fairs and fairgrounds for a couple reasons,” said Bruce Jaffee, an Indiana University business economics professor who has researched the Indiana State Fair.

Once sponsors sign on the dotted line, he said, fair staff can count on the money regardless of weather and other factors that could affect ticket sales and parking—which account for more than a third of budgeted revenue.

“Who knows when we’re going to get 100-degree weather or 100-percent humidity or when it’s going to rain for 10 days straight?” Jaffee asked. “You need to have some guaranteed income.”

Then there’s the momentum that builds along with sponsorships. Once a sponsor program starts gaining speed, it fuels itself, Jaffee said. Corporate heavyweights see other companies supporting the fair and want to get involved. And sponsors think twice about reversing course once they’ve been through a fair season or two.

In fact, the Indiana State Fair boasts a 70-percent renewal rate, something Hoye attributes to a strong partnership between her staff and the hired help from Live Nation, which works year-round to help line up sponsorships and implement related activities. Just during this year’s 12-day fair, sponsors are involved in a total of 140 promotions.

Sponsorship money helps offset program expenses, Hoye said. The livestock events and 4-H activities, for example, don’t generate revenue of their own, but they are an integral part of the annual celebration of the state’s agricultural past, present and future.

Signing on financial supporters who also want to help deliver additional programming—Clarian Health is offering prostate screenings in its Healthy Living Pavilion, for example, and Toyota is providing new four-wheel drives for its Off-Road Adventure ride and drive event in the infield—is just gravy.

“Yes, the revenue is important,” Hoye said. “But the programming is even more important. We try to balance the two.”

So do sponsors

‘A nice marriage’

Indianapolis-based Clarian Health is among the fair’s largest sponsors, contributing $60,500 this year and signing on for a similar level of support in the next two years.

The hospital system started out with a booth in the Expo Hall—known during the fair as the Toyota Expo Hall in recognition of the event’s biggest sponsor—and now offers health screenings in its Clarian Healthy Lifestyles Pavilion. It also sponsors the Dance for Health tent, the Cheri Daniels Heart Walk and Riley Fun Park.

“It’s a great venue to reach a statewide audience,” said Don Deutsch, Clarian’s director of health promotions and community relations. “We’ve had a lot of positive feedback.”

Last year, 20,000 fairgoers visited the Healthy Lifestyles Pavilion, where they can undergo blood-pressure testing, get cholesterol and blood sugar checked, and get a prostate screening.

“Sponsorships, if done right, should enhance the attendee experience,” said IEG Sponsorship Report’s Chipps.

Marla Calico agrees. Director of grants and special education at the Missouri-based International Association of Fairs and Exhibitions, Calico is a former fair director who now helps train her former colleagues.

“Years ago, we looked for philanthropic sponsors who just wanted to do good, help the fair out on whatever level,” she said. “Now, you see more and more marketing sponsorships. Sponsors are looking for a return on their investment, and many are being innovative with programming. It’s a nice marriage.”

Some sponsors—and fairs—are more innovative than others. The Wisconsin State Fair, for example, is in the third year of a deal with Chicago-based U.S. Cellular Corp. In exchange for a $1 million commitment, the 11-day event has been known as the Wisconsin State Fair presented by U.S. Cellular since 2006.

The wireless company has its name on the fair park’s main gate, a store in its exposition center, and naming rights to U.S. Cellular Plaza, where it stages events like mural painting and texting contests to interact with fair-goers.

“It has been nothing but incredibly successful,” said Kathleen O’Leary, that fair’s marketing and sponsorship director. “It has been positive for everyone involved.”

After covering the associated hard costs—things like signage and the plaza construction—the fair invested the proceeds in its product, augmenting programming and beautifying the grounds and facilities, for example.

The Indiana State Fairgrounds’ Pepsi Coliseum was the first venue in Indianapolis to sell naming rights, Hoye said, but she’s not sure about extending that concept to the fair as a whole.

“There is a point where you can sell your soul, so to speak,” she said. “There always has to be a sense of dignity—there’s a lot of tradition and history out here. I might have a hard time, personally … selling [naming] rights to the Indiana State Fair.”

The year of …

Facility improvements are a constant concern, said Calico, the fair association executive, as fairgrounds deal with aging infrastructure and limited funding.

That’s certainly not news to Hoye. The Indiana State Fair has spent $8.9 million on capital projects since 2005, not just updating the WPA-era buildings but also adding some 21st century touches like a fishing pond and amphitheater, a greenhouse and a covered bridge, which debuts this year.

“We’ve got to keep the product fresh,” the executive director said.

Funding for the construction projects has come from a variety of sources: private donors, federal grants, state allocations and, yes, corporate gifts. Such support is tracked separately from fair sponsorships.

Even so, sponsorships help. Last year, the fair reported a profit of about $500,000—money it “tucked away” for ongoing capital needs, Hoye said. The surplus would not have been possible without more than $1 million in corporate support.

“We have to look at things creatively,” she said. “We don’t have an unlimited supply of money.”

Another Indiana State Fair innovation that has boosted sponsorship revenue: annual themes. Last year was declared the Year of Corn, an effort to continue the excitement that surrounded the fair’s 150th birthday in 2006 by highlighting a significant part of Indiana agriculture.

This year, it’s the Year of Trees. And not coincidentally, the Indiana Hardwood Lumberman’s Association is a $35,000 sponsor, getting naming rights to opening day at the fair and a display in the Agriculture/ Horticulture Building.

“It was like a V-8 moment for me,” Hoye said, slapping her forehead in mock exasperation. “Duh. What a perfect platform to further our mission of celebrating agriculture and educating people while they’re here.”

It didn’t hurt that the Hardwood Association, which donated some services for the covered bridge project, also signed on as a sponsor.

Next year’s theme? Although the fair hasn’t made an announcement yet, the answer is on this year’s sponsor list: tomatoes.

Elwood-based tomato producer Red Gold Inc. renewed its $7,700 commitment to sponsor a stage and be the official ketchup of the Pepsi Coliseum—and contributed $25,000 toward a two-year, $75,000 “Year of Tomatoes” package.