By Dr. Matthew Robinson

Matthew Robinson, EdD, is Assistant Professor of Health and Exercise Sciences at the University of Delaware.

If you asked your peers at NCAA Division I athletic programs whether they outsource any of their marketing efforts, approximately half of them would say yes. Many athletic directors have increased their revenues and decreased their headaches through outsourcing. But many others have found that keeping their marketing in-house offers more control and greater profits.

So which path is the right one? Well, it depends on your goals, your philosophy, and your current resources. In this article, we'll discuss how to decide whether to go out-of-house with your marketing efforts, and if you do, how to make the most out of your move.

YES or NO?
The major benefits of hiring a firm to conduct some or all of your marketing include:

• The outsourcers offer a level of expertise in the area of sales and marketing beyond what your staff can provide.

• The outsourcers may guarantee a specific revenue stream, helping to take the guesswork out of future budget projections.

• There are several sport marketing agencies already on the scene who specialize in selling sponsorships, advertising space, and in-arena and stadium signage for athletic departments and conferences.

What are the major drawbacks? You may lose some direct control over the process, and a portion of your profits will go to the outside firm.

To my knowledge, no studies have been done that prove which choice will result in higher profits. Ultimately, the decision comes down to your own financial analysis of the pros and cons. To help simplify the process, consider asking yourself four questions:

Is your institution currently getting the desired results from its marketing efforts?
If marketing is important to your athletic department, and you feel your staff's current work is not bringing in the revenue that is possible, you're a good candidate to try outsourcing. On the flip side, if your staff is continually finding new sponsors, sustaining positive relationships with current prospects, and hitting its revenue goals, you should probably keep all your marketing in-house. Calculate the revenue your marketing staff is bringing in, subtract the cost of their salaries and benefits, and compare this number to the estimate that an outside firm currently guarantees an athletic department similar to yours.

If you've had trouble hiring great marketing and sales people in your athletic department, you are not alone. Often the top professionals in sports marketing would rather work for a firm than a university. National sport marketing firms are exciting places to work, and often have incentives for their staff that universities cannot compete with. In addition, firms have resources immediately on hand that may not be available on your campus such as publication production capabilities, sales training, and human resources support.

Do you like the comfort of guaranteed revenue or would you prefer to take your chances on potential earnings?
When hiring an outside firm, an athletic director has the ability to negotiate a contract with the sport marketing agency where an agreed-upon royalty will be paid for the right to represent the athletic department. While the amount of that royalty will vary from one institution to another, it does provide a guaranteed revenue source. Therefore, a big advantage of this model is that a certain amount of income can be counted on when planning your next budget, instead of relying on estimates of future revenues.

Can your marketing staff create synergistic opportunities?
If an athletic department turns over all of its entire marketing inventory to the sport marketing agency, the agency can bundle the marketing items into comprehensive and synergistic proposals to sponsors and advertisers. In some instances these synergies may go beyond athletics. For example, in the soft drink category a sponsorship may lead to pouring rights at athletic events as well as at campus venues.

Along with the internal synergy there are opportunities for external synergies as well. Many sport marketing agencies have relationships with multiple institutions and can package deals that are more beneficial for both the sponsors and the individual athletic departments. For example, a sport marketing agency may represent an athletic department at a university in Boston and one in Washington, D.C. The account managers for each of the two schools could work together to create a sponsorship that would be more valuable than if each department sold its sponsorship separately.

If your in-house marketing team can do this on their own, then you're golden. If not, this is where outside firms can really help out.

Is your institution comfortable with having an outsider represent its interests with external constituencies?
If the answer is yes, then outsourcing is an option. However, some schools are philosophically opposed to a non-employee representing the institution when calling on potential sponsors or advertisers. If that is the case, then outsourcing is probably not an option. However, steps can be taken that will integrate the agency employee into your athletic department.

SELECTING AN AGENCY
If your answers to the above questions lead you to start interviewing marketing firms, there are several factors in determining which firm should get your contract. Many schools may need to perform a full request-for-purchase process, but beyond the financials, be sure to assess the past history and reputation of the agency, its areas of specialization, location issues, and the potential for a positive relationship.

In assessing the history of the firm, your school should ask the agency to present past results. Successes can be shown in the percentage increase in revenue the agency has created for its past clients, and can be easily measured by comparing recent revenues against the school's marketing revenues prior to working with the agency.

Performance can also be measured by checking with those properties and clients that have worked with the agency in the past. Ask questions about their working relationship with the principals and employees of the agency, the agency's ability to meet the terms of the contract, and the professional ethics demonstrated by the agency.

Next, find out more about what the firm specializes in. Most athletic departments choose a firm that focuses on college athletics. It is advantageous if the firm understands the environment and has established relationships with potential sponsors and advertisers who have a history of being involved with college athletics.

The athletic department should also work with an agency that specializes in selling the products the school has to offer. There are a lot of organizations that call themselves sport marketing firms, but the services provided vary. An athletic director should know his or her department's potential and focus on those agencies that have a track record of capitalizing on those assets (sponsorship, ads, signage, naming rights, etc.). In some cases, it may be better to hire a firm that focuses specifically on the services or inventory items your school wants marketed rather than one with "sports marketing" in its title.

Where the firm is located is important for two reasons: for the firm's ability to communicate with you and its ability to communicate with your potential sponsors. Ideally, the sport marketing agency would be located close to your institution. Modern technology and travel can help overcome distance, but be sure to ask how often the agency's principals will visit and how they plan to communicate with you.

Geography may be more important in terms of the agency's ability to capitalize on its existing partnerships. For example, an agency that has done most of its work on the West Coast will be treading on new terrain if it agrees to represent a university on the East Coast.

The final factor is tough to quantify, but every athletic director has to ask, "Do I feel comfortable working with this agency?" It is important to spend as much time as possible in the negotiating stage to get to know the agency principals and other personnel. If the personal relationship does not work, it could lead to years of frustration and dissatisfaction.

CONTRACT TALKS
There are several types of agreements a school can negotiate with a sport marketing agency. The major differences have to do with how much risk the athletic department wishes to take.

The first model is an agreed-upon royalty. In this case, the sport marketing agency assesses the value of the property and offers a guaranteed amount for a specified amount of time, for example, $1 million annually for five years. The onus is placed on the sport marketing firm to generate a profit beyond the agreed-upon royalty in order to generate a profit for itself.

Another model has the athletic department taking a straight percentage of the gross. If an agency generates $2 million in gross sales, the school would get an agreed upon percentage of that gross. The downside of this model is that there is no guaranteed amount for the athletic department, which accepts a greater risk in the hopes of reaping a greater profit.

A third model, splitting the net profits, allows the agency to generate the revenue, figure out its expenses, and then split the profits at an agreed-upon level. This model takes the most work for both parties, because they need to agree which expenses will be covered in determining the net.

A fourth option is a sliding scale of royalties based on specific amounts of revenue generated. The royalty would increase as the revenues increase. For example, if the agency hits an agreed-upon $500,000 mark in sales, the royalty going to the athletic department would increase for sales over that mark.

A smaller school will have less leverage and fewer options than a school with proven marketing potential. In this case, the institution may have to settle for a smaller guarantee and a larger share of the risk.

Another important part of the contract negotiations is the selection of the account manager. It is important that this individual is someone the athletic director can trust to properly represent the institution and can communicate effectively with all athletic department staff members. Therefore, thorough interviews with potential account managers should be held.

MAKING IT WORK
If you decide to hire an outside firm to conduct your marketing, it's critical that you set up mechanisms to help make your account manager as successful as he or she can be. The first step is giving this person a thorough orientation to the athletic department and the university. It is important that the individual is provided clear direction on how to conduct him- or herself in a manner that is consistent with the missions and principles of your institution.

It is also beneficial to allocate office space for your account manager within the athletic department, and to include him or her in all staff meetings and functions. This allows your manager to be viewed as part of the athletic department by both internal and external constituencies.

Giving your account manager an office also facilitates communication between athletic department personnel and the marketing agency. For example, the account manager may be attending a staff meeting where a need is identified for the athletic department. The account manager may then be able to quickly negotiate a deal for the service and/or product from a company in turn for signage or advertising for the company. Another situation where it may be beneficial to have the account manager on site is if that individual is negotiating a deal on the phone with a potential sponsor, and the sponsor is interested in season tickets to close the deal. In that case, the account manager may only have to walk across the hall to check on the available inventory of season tickets.

In terms of relating to external constituencies, the more your account manager appears to be a member of the athletic department, the better his or her ability will be to bring in sales. In some instances the account manager will take the title of "Director of Marketing" for the school. The issue of who is paying the account manager's salary may not occur to your potential sponsors, and really doesn't need to be raised.

Finally, be sure to lay some ground rules and policy up front. Does the account manager need your okay before he or she contacts a potential client? At what point do you want to be included in any negotiations with a client? Are there any product categories that are off-limits for sponsorships at your particular institution, such as alcoholic beverages?

EVALUATING SUCCESS
The ultimate measure of success is whether or not your financial goals have been met. This can be measured by using benchmarking. Was more revenue generated working with the agency than when your department did its own marketing?
Success can also be measured by the amount of new revenues created. If your department is operating on a percentage of the gross, how much of that gross was accounted for by new clients? You may also wish to assess how much of the business was created with larger or more prestigious sponsors.

Finally, success can be measured based on how well the sport marketing agency is building relationships. Has the account manager represented your athletic department well with external constituencies? Has the account manager worked well with the athletic department staff?

To outsource or not to outsource? The decision is one of the most important an athletic director has to make. And though it won't work for everyone, there can be benefits for the athletic department that commits to outsourcing, does its homework in selecting an agency, chooses an appropriate model, and works well with the agency.

The author would like to thank Vincent Nicastro, Director of Athletics at Villanova University, for his contribution to the article.

Sidebar: OUTSOURCING SCOREBOARD ADS
Outsourcing your advertising doesn't always mean hiring a sales team. Many athletic departments outsource their scoreboard advertising to the company that manufactures the scoreboard, with the advertising revenue paying for the product.
Earlier this school year, the University of North Texas took this type of outsourcing to a new level when it partnered with Daktronics Sports Marketing, a division of Daktronics, Inc., to implement a multi-media platform in its football stadium, as well as purchase scoreboards for aquatics, soccer, softball, and volleyball. The arrangement has allowed UNT to add $2 million worth of state-of-the-art scoreboard and video display equipment without coming up with the hefty price tag up front.

According to Hank Dickenson, Senior Associate Athletic Director, UNT and Daktronics worked as partners throughout the process. First, UNT athletics staff contacted potential sponsors and set up meetings. "Then Daktronics supplied us with a person who came along on sales calls to explain the ins and outs of the equipment," Dickenson says. "They also put together computer generated programs and brochures with potential ads in them so the companies could see what it was all going to look like.

"It was a collaborative effort," he continues. "We kept them supplied with all the information they needed--university facts and figures, demographics--and they put that together, and then we went out and visited potential sponsors as a team. I'd say that that concerted sales effort was very important to making the project successful."
Potential sponsors were impressed with what they saw, largely due to a multi-media advertising opportunity UNT bundled together. "We made it more than just selling signs," Dickenson says. "We looked at our entire inventory and created a year-round marketing package that really appealed to the corporate world."

Sponsors were able to place their ads on the new scoreboards, at the 12 entry points to the football stadium, on scheduling cards, and on posters for men's and women's basketball. They also received radio broadcast spots and links to their own Web sites on the athletic department Web site. And since the UNT football stadium sits on a major highway, the back of the scoreboard and a new double-sided marquee connect sponsors' names with UNT athletics for thousands of passing motorists.

"If they're a major sponsor on this project, their name is pretty much everywhere you go that's connected to UNT athletics," Dickenson says.

UNT signed five- to ten-year contracts with six major advertising sponsors and a portion of the revenue will revert to Daktronics until the equipment is paid for--in about five years, if all goes according to plan. "From that point on, everything we bring in becomes gravy," Dickenson says. "We will have not only paid off the equipment, but set up a revenue stream for the future."

UNT has historically maintained control of its own marketing rights, so they put a lot of thought into the decision to partner with Daktronics. "We had to sit down and really figure out how much of our inventory we were comfortable giving up for this project," Dickenson says. "There is always some loss of control that results from outsourcing. There is always the worry that longstanding sponsors will be stepped on or conflicting sponsors will be brought in."

The key to preventing that from happening, he says, was meeting with Daktronics early-on and establishing a list of sponsors UNT wanted to partner with. "That worked out very well. We brought in some new sponsors but also kept those who have supported us for a long time," he says. "On a project like this, you have the latitude to make decisions like that, which made it a better choice for us than giving up all of our marketing to a firm."

Keeping athletic department staff constantly visible to sponsors was also important. "Our athletic director went on a lot of the sales calls, and if he wasn't there, I was," Dickenson says. "We made sure sponsors knew they were supporting us and not Daktronics.

"Could we have gotten this done on our own?" Dickenson asks. "I think we could have. But there is no way we could have done it as quickly as we did. This arrangement essentially added another marketing wing to our department and allowed us to get the project done in a timeframe that astonished everyone."
- Laura Smith