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  1. #1
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    ROI on Bike Company Sponsorships

    Perhaps I'm missing something, but I'm not sure how much a bike company (or any company for that matter) profits from sponsoring an athlete. In fact, I can only think of two:

    Lance Armstrong: I'm sure Trek's endorsement of LA and his teams have paid off tenfold for the company.

    Normann Stadler: He took a bike brand that nobody heard of (Kuota) and won Ironman Hawaii twice The brand now enjoys a fairly decent following among triathletes and cyclists.

    Can anyone think of anyone else? If not, I wonder what the benefits are when sponsoring either an individual cyclist or a cycling team.

  2. #2
    mik
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    A few I thought of:
    Miguel Indurain/Pedro Delgado= Pinarello
    Mapei (Ballerini, Museeuw, Bettini, Tafi, Tonkov)=Colnago
    Ariostea (Sorenson,Argentin)=Colnago/DeRosa
    Deutsche Telekom (Zabel, Ulrich,Bolts)= Eddy Merckx/Giant
    Navigators = Lightspeed/Colnago
    7-Eleven = Huffy/Serrotta/Eddy Merckx
    Ti-Raleigh= Raleigh
    Gerolsteiner, Quick Step, Domina Vacanze,Acqua & Sapone= Specialized
    Saeco, Healthnet, Liquigas = Cannondale
    To answer your general question of bike companies sponsoring cycling teams and what they get out of it. Market Share, profit. They aren't doing it on the scale of a pro team for any other reason.

  3. #3
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    I would think of it in the same way as any endorsement (like in the music industry). The athletes get reduced price or free gear out of the deal and the company gets to use their likeness to push more product. Seeing a shot of a Cannondale under someone could pique a customer's interest to research that brand, which could lead to a sale. Even though some of us are more experienced in the sport and buy based on formulated preferences, there are plenty of folks new to the sport out there and seeing Paolo on a Specialized, with that rainbow jersey it probably pretty persuasive to some.

  4. #4
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    Quote Originally Posted by mik
    A few I thought of:
    Miguel Indurain/Pedro Delgado= Pinarello
    Mapei (Ballerini, Museeuw, Bettini, Tafi, Tonkov)=Colnago
    Ariostea (Sorenson,Argentin)=Colnago/DeRosa
    Deutsche Telekom (Zabel, Ulrich,Bolts)= Eddy Merckx/Giant
    Navigators = Lightspeed/Colnago
    7-Eleven = Huffy/Serrotta/Eddy Merckx
    Ti-Raleigh= Raleigh
    Gerolsteiner, Quick Step, Domina Vacanze,Acqua & Sapone= Specialized
    Saeco, Healthnet, Liquigas = Cannondale
    To answer your general question of bike companies sponsoring cycling teams and what they get out of it. Market Share, profit. They aren't doing it on the scale of a pro team for any other reason.
    I see your point. However, I'm still curious if those compnies have seen an upswing in business becasue of their partnership. For instance, how does Liquigas benefit from sponsoring a team? I barely know what Liquigas does! I also don't know what Healthnet does either even though they've sponsored a team for years.

    I know that the 7 Eleven team was pretty popular back in the day, but did the company see a huge Slurpee demand during that time. I love Chipotle as much as the next guy, but I don't eat any more burritoes than I did before.

  5. #5
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    Quote Originally Posted by Tri Slow Poke
    Perhaps I'm missing something, ...
    You mean like real market data? Funny how reliable data (as opposed to a few anecdotes) clears up these questions.

  6. #6
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    Quote Originally Posted by asgelle
    You mean like real market data? Funny how reliable data (as opposed to a few anecdotes) clears up these questions.

    Do you have real market date on a few compnies that you can share?

  7. #7
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    CSC and Cervelo would be a great example, IMO. I bet Cervelo have seen a very large increase in sales since parterning with Riis' team ... I know I see lots of Cervelos on the streets, and sometimes ppl wearing CSC kit while riding them.

  8. #8
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    think

    You have to think, its just like super bowl ads or pretty much any other type of ad. It is all about getting your companys name out there to the listener/watcher. There job is to make you think about their product the next time you walk in a bike store and then maybe you will buy it. All about name recognition.

  9. #9
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    I think you're missing the point in saying that a sponsor has to turn this into sales for it to be worthwhile. Cycling sponsorship is not an effective way to get out a lot of information and make a sales pitch. It is a pretty effective way to get your company or product's name out there and build awareness.

    I remember reading that ONCE, a long time sponsor of the Spanish team, had increased their name awareness from something like 5% of the Spanish population to 95%. As an American watching the Tour, this doesn't really matter to you, since ONCE is a Spanish lottery which benefits the blind, but I'm sure they were happy that so many people in Spain knew who they were.

    As for sponsoring domestic teams, I think a lot of it is done from an altruistic perspective. Maybe the CEO is into cycling and thinks it will be cool. It still has some benefit though. Even if you the cycling fan doesn't know what Health Net does (they're a health insurance co.) they can still talk about their commitment to health through their cycling sponsorship and use it as a sales tactic in brochures or their website.
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  10. #10
    JSR
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    This is a real no-brainer.

    Imagine the TV coverage of a breakaway at the TdF - some guy hammering off the front for four hours. The camera gets a closeup of the rider's face, contorted in pain. The camera tilts slowly down, passing the bike mfr's logo, to get a view of which gear he's in. Rinse and repeat every 10 minutes for the duration of the breakaway.

    Now imagine what the cost of that much TV advertising time would be. That one breakaway probably paid for the cost supplying the bikes to the team. And it's all presented in the context of a top athlete leading a top event. You literally can not buy that kind of exposure.

    JSR

  11. #11
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    I have to imagine Lance + Trek has probably had the biggest payoff for a bike company sponsorship.

    In recent times, the Cervelo sponsorship is also a good one. I had never really thought much about them until CSC started having those great results from about 2004 on.

    From a title sponsor, well I suppose none of the current pro teams target American audiences, so it would be a bit unfair to critique their investment.

    Oh, here's a good example though: How many knew the capital of Kazakhstan 3 years ago? I was certainly educated by that sponsorship.
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  12. #12
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    Who can forget the nightly commercials of the Governator on the slopes telling us all to come to California during the Tour of California. The Tourism Board of California was a big sponsor as a way to promote tourism in their state. Same reason that villages and towns in France pay huge money to ASO to have a stage end in their town.

  13. #13
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    Quote Originally Posted by mik
    A few I thought of:
    Miguel Indurain/Pedro Delgado= Pinarello
    Mapei (Ballerini, Museeuw, Bettini, Tafi, Tonkov)=Colnago
    Ariostea (Sorenson,Argentin)=Colnago/DeRosa
    Deutsche Telekom (Zabel, Ulrich,Bolts)= Eddy Merckx/Giant
    Navigators = Lightspeed/Colnago
    7-Eleven = Huffy/Serrotta/Eddy Merckx
    Ti-Raleigh= Raleigh
    Gerolsteiner, Quick Step, Domina Vacanze,Acqua & Sapone= Specialized
    Saeco, Healthnet, Liquigas = Cannondale
    To answer your general question of bike companies sponsoring cycling teams and what they get out of it. Market Share, profit. They aren't doing it on the scale of a pro team for any other reason.

    Please tell me you are joking

    Colnago was THE name before Mapai, De Rosa was a big name before Ariostea, Raleigh was the largest bike manufacture in the world before they sponsored Ti-Releigh

    I do not disagree with your point, but the examples are not the best. Perhaps BMC or Cervelo, Ridley would be a good example of brands built on smart sponsorship

  14. #14
    Paz
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    I read somewhere that Phonak increased their name recognition by something incredible, like 300%, by sponsoring a team. The down side was that most of those people thought they were a cycling company and not a hearing aid manufacture.

  15. #15
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    If I were starting a bike company the first thing I would do is get in with a Pro Tour team.

    Being aligned with a pro tour team gives your bikes instant street cred at local crits and group rides.

  16. #16
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    3 years or more after their sponsorship, I still remember Berry Floor. There's no other reason other than that they co-sponsored USPS briefly that I would have ever even heard of them.

    Kuota? They have a long way before they're a big presence in pro cycling or even amateur racing, for that matter.
    Lyin' on the floor, I've come udone.

  17. #17
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    Speaking of flooring, I have Quick-Step flooring installed in my house. I don't think they're well known here in the States like Pergo is. I don't think I would've even considered Quick-Step if I wasn't a cycling fan.

  18. #18
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    Quote Originally Posted by shorelocal
    CSC and Cervelo would be a great example, IMO. I bet Cervelo have seen a very large increase in sales since parterning with Riis' team ... I know I see lots of Cervelos on the streets, and sometimes ppl wearing CSC kit while riding them.
    Funny, but I think CSC is one of the last sponsors to gain any real benefit. They serve institutional customers and the government mostly. It's not like I can go to the computer store and find some CSC branded package software to buy. Further, they are an American company yet are sponsoring offshore. I think this might pee off some of the government contract folks.

  19. #19
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    Yep... I had never heard of Rock & Republic jeans before, well you know.

    Now I have. Heard of them.

    Too bad I'm still wearing my beat up old Wranglers.
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    * not actually waterproof.

  20. #20
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    Quote Originally Posted by moabbiker
    Funny, but I think CSC is one of the last sponsors to gain any real benefit. They serve institutional customers and the government mostly. It's not like I can go to the computer store and find some CSC branded package software to buy. Further, they are an American company yet are sponsoring offshore. I think this might pee off some of the government contract folks.
    The team was sponsored by the Danish brand of CSC the first years. When it was clear how the brand recognition increased during those years the international office took over.
    CSC just want to be a name people knows when they submit a bid for a job.
    edited:
    in 2001, essentially no one knew about CSC, now it's around 60%.
    Earlier guy in charge of the sponsorship, as biased as he may be, estimated the 10 million dollar sponsorship to be worth at least 50mill YMMV
    Last edited by den bakker; 03-19-2008 at 05:19 PM.
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  21. #21
    JSR
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    Quote Originally Posted by moabbiker
    Funny, but I think CSC is one of the last sponsors to gain any real benefit. They serve institutional customers and the government mostly. It's not like I can go to the computer store and find some CSC branded package software to buy. Further, they are an American company yet are sponsoring offshore. I think this might pee off some of the government contract folks.
    There was a thread on this specific topic a couple of days ago. CSC had been trying to make a big push to grow their European IT Services presence. It may be argued that their sponsorship was unsuccessful or perhaps that cycling wasn't the appropriate venue for the advertising money, but I can see the connection.

    JSR

  22. #22
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    Quote Originally Posted by krisdrum
    I would think of it in the same way as any endorsement (like in the music industry). The athletes get reduced price or free gear out of the deal and the company gets to use their likeness to push more product. Seeing a shot of a Cannondale under someone could pique a customer's interest to research that brand, which could lead to a sale. Even though some of us are more experienced in the sport and buy based on formulated preferences, there are plenty of folks new to the sport out there and seeing Paolo on a Specialized, with that rainbow jersey it probably pretty persuasive to some.

    The deals are pretty big money for a D1 squad. The bike companies not only provide product but the also pay large sums of money. The going rate is a couple million euros just for the contract alone. I've mentioned it before but apparently CSC was in talks with Orbea at some point and Cervelo came up with just a little more. Liquigas was a second choice for Cannondale, their first choice was Quick-Step. In the end the story I was told by a Belgian close to the team was that when Quick-Step looked through the financials that Cannondale couldn't provide what they needed in bank guarantees. Specialized swooped in, but Liquigas delivered huge wins for Cannondale (like the Giro) so in the end it paid off.

    I had some talks at the end of 2007 with someone shopping to sponsor a D1 team for 2009 and they told me they expected their total outlay to 9-10 million U.S. Dollars. That would include the money to the team, the product, and all of the other costs behind that like the ads etc...

  23. #23
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    Quote Originally Posted by teoteoteo
    The deals are pretty big money for a D1 squad. The bike companies not only provide product but the also pay large sums of money. The going rate is a couple million euros just for the contract alone. I've mentioned it before but apparently CSC was in talks with Orbea at some point and Cervelo came up with just a little more. Liquigas was a second choice for Cannondale, their first choice was Quick-Step. In the end the story I was told by a Belgian close to the team was that when Quick-Step looked through the financials that Cannondale couldn't provide what they needed in bank guarantees. Specialized swooped in, but Liquigas delivered huge wins for Cannondale (like the Giro) so in the end it paid off.

    I had some talks at the end of 2007 with someone shopping to sponsor a D1 team for 2009 and they told me they expected their total outlay to 9-10 million U.S. Dollars. That would include the money to the team, the product, and all of the other costs behind that like the ads etc...
    The number that I always heard around here was 14 million Euros year...which for us is nothing.

    When I first came to the company everything revolved around the team. When we went to international events we would often wear little lapel pins that were a tiny pink jersey. Prizes for a big deal were a bike, or a trip to Mallorca. I remember having a very important meeting in Berlin and there was Zabel's MSR trophy in the room, another meeting in Bonn was Ulrich's jersey from the Vuelta....and of course the tour a bunch of riders would come to the Paris office and I got to know a few of them rather well. The image of the team was everywhere and it really helped us as we expanded into other countries

    Um, things have changed a bit. Anyone want a bunch of pink stuff?

  24. #24
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    Quote Originally Posted by bigpinkt
    The number that I always heard around here was 14 million Euros year...which for us is nothing.

    When I first came to the company everything revolved around the team. When we went to international events we would often wear little lapel pins that were a tiny pink jersey. Prizes for a big deal were a bike, or a trip to Mallorca. I remember having a very important meeting in Berlin and there was Zabel's MSR trophy in the room, another meeting in Bonn was Ulrich's jersey from the Vuelta....and of course the tour a bunch of riders would come to the Paris office and I got to know a few of them rather well. The image of the team was everywhere and it really helped us as we expanded into other countries

    Um, things have changed a bit. Anyone want a bunch of pink stuff?
    I think you are talking total team budget and sponsorship, the cost I am referring to is what it would cost a bike company that decides it wants to pay a D1 Pro Team to ride it's bikes. Several million in cash, then product, then advertising, etc. My talks were with someone negotiating with teams to ride their bikes so the number is smaller than a total team budget.

  25. #25
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    Brand image is a big part of it.

    It's important for some of these companies to be associated with the positive image of healthy athlete's competing and winning in a tough endurance competition. Especially for European companies in in the grocery business, telco business and banking. It helps support how prospective customers perceive the brand relative to competitors who are likely doing similar things with other athletic and public events. They are also appealing to Nationalist pride by sponsoring teams with popular domestic athletes. It's about trying to tilt the playing field towards a particular image of your brand and betting that sponsoring cycling will be a good investment. Gerolstiener, T Mobile, Confidis, Caisse D'Epargne are all examples. That's why the drug press hurts the sponsorship so significantly.

    Sponsors probably don't even have an reliable return-on-investment measure because increasing awareness and building brand image don't have an easily quantifiable short-term sales impact. They justify it internally by comparing the cost of exposure to the cost of equivalent exposure through paid media like TV ads. It's considered part of the marketing mix and allocated a portion of the marketing budget typically in the range of 5 to 20%

    Another benefit is that many of these companies will entertain large corporate clients at events, showcase athletes and publicize the team internally and in various corporate communications. The sponsors become a highly valued part of the team and the team becomes an extension of the company. It helps if there are senior executives that are fans of the sport.
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