Michael Goldman chats with Greg Garden - Group Brand Executive of Nedbank

Talks Nedbank sports sponsorship.

MICHAEL GOLDMAN: Welcome to another GIBS and Moneyweb Business of Sport podcast. We’re making things happen again today with Greg Garden, group brand executive of Nedbank. Greg we’ve spoken a few times about Nedbank’s sport sponsorship over the last few years and you’ve mentioned in the past, the role that Nedbank sees sports sponsorship as playing a kind of strategic role for the business, and within marketing. Still a strategic role as we head towards the middle of 2011?

GREG GARDEN: Indeed - a lot of interest in the back end of last year as some significant sponsors withdrew from sponsorship generally in sport in particular. That, needless to say, causes good strategic question of what you're doing, why you're doing it, how you're doing it, and what you're getting for it and we’re no different. But what I’m very pleased to be able to say is that our position is absolutely no different and we’re very committed to the properties that we are invested in.

MICHAEL GOLDMAN: You mention the past - a number of around 20% to 25% of your marketing mix - your marketing spend - focused on sponsorships … Given the tough trading conditions and also Nedbank’s recent results. Are you looking at the same kind of number going into 2011?

GREG GARDEN: Yes, it’s 20% more or less. We’ve not historically exceeded that by very much. Probably in the year that we brought on board the sponsorship with the PSL we might have gone marginally over that 20% threshold, but this year we’re sitting just comfortably underneath it and we do think that it is the right percentage in our overall mix. Let me be a bit provocative - personal view but one that I certainly think does have resonance here at Nedbank - is that sponsorships can so easily be the lazy money in a general marketing portfolio or a marketing spend portfolio. There are so many good examples around the world of brands or marketers leveraging sponsorship very effectively for the growth of their brand and for business acquisitions, business purposes, but unfortunately there are many more examples of it just being lazy awareness and experience impact type marketing without a real connection to the hard metrics of the business or an understanding of how that sponsorship money is going to sweat and give a return on that investment.

MICHAEL GOLDMAN: Yes, and when we spoke before you mentioned some of the metrics that are in place to make sure that the money is fully sweated and fully reported I guess especially to the financial people in the business so that they fully understand it.

GREG GARDEN: Yes and I’m pleased to say - and particularly in a bank - in a financial services environment where we have very smart financial people, very focused on the overall return on shareholders’ funds, return on equity, capital deployed and all those kinds of measures. So not surprisingly, marketing would come under even more intense scrutiny than maybe in some other businesses and I’m very pleased with the progress we’ve made with our financial people by being responsible and trying show the accountability for money and the connection of that money to hard business results. So our general measurement approach which we put in place about three years ago has proven so far to be quite robust and we’re committed to it, and stick with it.

MICHAEL GOLDMAN: You talk about the connection. Typically people look at the marketing expenditure of the main banks in South Africa and your bank crossed the R1billion marketing expenditure last year - so it’s a fair amount of money and some people would say well bank marketing is much the same and what can you really achieve in marketing and building a bank’s brand. How do you respond to some of those naysayers within the business or within the community?

GREG GARDEN: Firstly a billion rand is an awful lot of money - it’s huge, but it’s always relative. As a percentage of general sales we’re still sitting in a very comfortable 3% to 4% margin which probably half of what a fast moving consumer goods manufacturer would be spending, and certainly well within global international benchmarks for services brands or financial services brands. So it directionally would appear to be the right level of investment. Obviously it’s a very broad spectrum marketing approach. We are literally targeting pretty much the full population of South Africa, and within that corporates and investment analysts and unbanked people, first time bankers, youth - young children. Therefore reaching your target markets for a start is an expensive and quite broad spectrum business. But then of course there’s the internal ability to use data, to invest in relationship building, to try and secure client loyalty, share of wallet and those kinds of things and when you segment all of that activity out, it’s not surprising that there’s not a lot of huge investment in any particular element. The banks are in the top 20 above-the-line advertisers and I don’t think last year any of us were in the top five.

MICHAEL GOLDMAN: Sure, and I know some of your competitors in the market are trying to understand a little bit about how sports sponsorships might perform as one of those arrows in the marketing mix relative to some of the other ways that you could spend your money. How does Nedbank think about measuring the effectiveness of sport sponsorship relative perhaps to some of the other above-the-line or below-the-line type options that you have in terms of building your brand.

GREG GARDEN: Yes - we’ve settled on a standard three part scorecard - and when I say that one of the parts needs to have a clear and tangible link to probably the most controversial most debated part of sponsorships - but let me come to that at the end. First of all we try to measure the sponsorships brand impact and you’ve got to then have the appropriate tools and measures in place and ensure that the linkage between specific marketing activities, the sponsorship itself and the way that it is activated and leveraged, is linked to your own brand tracking, brand health, brand measurement scorecards, and we’ve put in place quite sophisticated and quite rigorous ways of doing that through our ongoing brand tracking studies, and then very specific sponsorship tracking studies and arising out of that, we try to show the direct correlation between the way in which the sponsorship is reinforcing our brand story, building the overall brand positioning, brand message and is aligning to an understanding of what the brand stands for. I think that there are too many sponsorships, particularly sports sponsorships in South Africa that create great experience - lots of awareness, lots of hype but that the story that the sponsorship is effectively projecting is not aligned or reinforcing the total brand story that is behind it. We’re very focused on trying to ensure that that is the case and if you take the Nedbank Cup by way of example, it’s all about making things happen. It’s about the fact that it’s the only competition that allows amateur clubs, underdogs to compete on the same field as the big guns, and maybe once in a while a Goliath gets slain by a David and the proof is what happened there, make it happen and we’ve certainly been able to show our own Exco and our marketing people very direct correlation - clear salience behind the messaging that is coming out of the Nedbank Cup Competition. Why would Nedbank support that type of soccer competition - what does it say about the type of brand we are - so brand sponsorship impact. The second one very obviously is the general level of media coverage - the awareness, the weight, the impact, the relevance and the salience of coverage that you're getting - relative to going out and buying that media - having total control of the message that you put into it. Here, you don’t have total control but you can manage it in a number of ways. What is the value of the overall media impact - track that through all the normal measures, come up with a scorecard for that. Then finally the whole experience - that would be - the Nedbank Golf Challenge would be a very good example of high quality VIP hospitality engagement, entertainment - a relatively small on-course public presence - I say that relatively - we’ve got 60,000 people over the course… but not big numbers compared to a single soccer match. But high quality, long hours and we literally go to the trouble of surveying the experience, the relevance of the experience, and the appropriateness of the experience for the brand that is bringing that experience to people. Then finally there is this interesting question of - can you actually sell product through a sport sponsorship. Here you're probably talking to a not very representative example - fast moving consume goods - personal goods, high volume repeat purchase goods, soft drinks, beers, ice creams - those sorts of things are a lot easier than a bank or a financial services brand. But having said that, we are not prepared to accept that a sponsorship is not able to at least create the environment for a sale to be effected, even if it is at a later point in time. So our activations are all about putting specific tangible offers in front of consumers - not getting in the way with the experience - you come to watch a football match, not to buy a savings account or a credit card but you should be able to see a linkage between the kind of experience that you’ve had and possibly the kind of experience you then have with the product and know how to go about getting that at a later stage with some kind of an incentive put against it. Over the last couple of seasons we’ve put together a promotional package of products that are branded Keona, the one, the Nedbank Cup that are researched in terms of market needs and the opportunity in those markets at those events, to maybe get some degree of penetration. And we’re learning - we’re learning all the way but I can share with you that the targets that we’ve set for the first three years, were internally regarded as rather challenging and caused quite a bit of nervousness - but each of the three years so far have been exceeded. So we’re learning all the time and we are selling products against sports sponsorship.

MICHAEL GOLDMAN: That’s brilliant. You mentioned earlier about lazy money and I guess you were suggesting that some of that you’ve learned through this process is a little bit of how to do it differently and how to make that sponsorship money to really work for the business. I guess it’s linked to some of the measures you’ve just mentioned, but what would be the two or three things that you would say Nedbank does differently in using the sponsorship to make it less lazy?

GREG GARDEN: It’s a great question and it’s not a formula or a very simple answer to give. This one again might be of interest to people and certainly I’m not going to suggest it’s not controversial, but there’s these rule of thumb statistics or empirics that get banded around how much you should spend on leveraging once you’ve got the rights to the sponsorship and in our experience, they are inflated and lead to a degree of laziness. One of the problems of investment in sport sponsorship recently has been that the sponsorships themselves have tended to out price themselves out of the market so some of the withdrawals are simply people saying this is too expensive. So the start is to negotiate the sponsorship package as comprehensively as possible and ensure that as much of the leverage and the activation is actually build into the sponsorship itself. We’ve successfully leveraged the Nedbank Golf Challenge over a 25 - 30 year period at a ratio of below one-on-one, but that’s because so much of the value is in the package itself. If you compared it with many others, you’d strip that out, call it leverage rather than package and then we’d be back closer to the empirics. Or you can build it in, or bake it in as I like to say. The more it’s already an integrated part of what is there. The second is then to recognise that free media publicity PR hangs around the quality of the event and the media event in it. The more you can do that well and generate media interest in the event, the less you have to spend on conventional advertising or other forms of marketing and leverages - so that helps get those costs down as well. The sports media are, I think, more open than any other media sector to getting behind things that the public are interested in - they’ve got a readership that wants their passion to come to life. So if you understand that and are able to create those connections, create the stories about the youngsters that have been discovered in the Nedbank Cup out of nowhere - like Andile Jali who played his first match for Bafana-Bafana at the World Cup having been discovered in an amateur side during a Nedbank Cup match. There’s a story that reinforces the Nedbank brand story that is of interest to soccer lovers - and Bafana-Bafana and the national story that has got attraction for the media to project it and tell it to their readers. There you find that connection, creating the synergies that give you the multiplier effect, and that leads to a stronger return on investment.

MICHAEL GOLDMAN: I guess one of those interesting stories that we’ve seen recently is Charl Schwartzel and the most amazing performance recently at the US Masters which I guess opens up lots of questions about the Nedbank Golf Challenge later this year. Any little titbits that you can share with us about things we can look forward to in December?

GREG GARDEN: Its early days - we’ve got a workshop coming up this following weekend. The golf calendar is ever more cluttered and the players are in ever greater demand. We’ve been back-to-back with the Tiger Woods Tournament for the last few years, and we are once again back-to-back with it. But this year we’re a lot more confident that many of the players that have stayed in America at the end of the year, will be available to us by virtue of first of all the cycle of tournaments in the East just before ours, which means from a travel point of view, they’ll be heading back via South Africa and could easily stop over. Secondly the Road to Dubai which takes place the week after the Nedbank Golf Challenge so many players may have a view to sojourning in South Africa before going up to Dubai. So it’s very early days - the field will only be announced in August this year but we’re more confident this year than we have been for the last three - that it maybe will have a few more Americans than usual and that the overall quality of the field will be very good.

MICHAEL GOLDMAN: And that adds to huge excitement I guess for the Nedbank brand heading into the end of the year.

GREG GARDEN: Exactly and to your point about Charl Schwartzel - it’s another one of those wonderful things when you take a youngster like him, see him coming through the ranks - and you know that we have one spot in the Nedbank Golf Challenge for the local Order of Merit winner and Charl Schwartzel played his first Nedbank Golf Challenge four years ago at the age of 22, being the South African champion, and it was the biggest tournament he’d ever played in, according to him. Trevor Immelman was exactly the same story before he went on and won the US Masters so the Nedbank Golf Challenge does also have that little element of blooding the local talent to go on to show what they can do on the world stage.

MICHAEL GOLDMAN: Best of luck for the rest of the year…