City budget and Advertising and Elected Officials and City Government and Greg Ballard and Indy Parks and Marketing and Local Government and Government & Economic Development and Government and Naming rights/sponsorships and Communications and Media & Marketing

City's plan to raise money with sponsorships takes wing with KFC

January 9, 2010

Mayor Greg Ballard this month rolled out the first of what he hopes will be 10 to 15 city sponsorship and advertising deals this year, with the aim of saving taxpayers hundreds of thousands of dollars annually.

The $5,000 deal with Louisville-based KFC Corp. that was announced Jan. 6 is a sign the city’s new program is set to take flight, said Michael Huber, Ballard’s director of enterprise development.

Huber thinks the money raised annually by such deals could escalate into the low-seven-figure realm.

The deal with KFC includes putting an image of the fast-food restaurant’s iconic Colonel Harland Sanders and a company logo on fire extinguishers at city recreation centers and doing a photo shoot with the Indianapolis Fire Department and Mayor Ballard to help launch its fiery grilled wings. In exchange, the city gets money for smoke detectors and fire extinguishers.

Ballard in April announced his plans to seek companies interested in sponsoring city programs and services and possibly even buying naming rights to city buildings.

In July, city officials hired Indianapolis-based marketing firm Third Street to deploy the municipal marketing and ad sales plan. City officials, Huber said, are busy compiling an inventory of everything with potential for a sponsorship or advertising that could net the city money.

Indianapolis Mayor Greg Ballard and Indianapolis Fire Department officials posed with an actor representing Colonel Harland Sanders as part of a publicity campaign. (IBJ Photo/Robin Jerstad)

City officials have been talking with KFC since late summer, and sources close to Ballard said at least two other deals—one for a company to become the city’s official wireless provider and another for an official tire provider for the city’s auto fleet, including police cars—are in the late stages of negotiations.

City officials say they are being careful with the initial deals.

“We want to get these first deals right,” Huber said. “We want the benefit these deals provide to be obvious to the citizens. We don’t want to defile public space.”

Larry DeGaris, a University of Indianapolis marketing professor who led a municipal sponsorship study for Houston in 2001, said the types of plans launched by Ballard are “potential political land mines.”

“Sponsorships in general, and in particular when they are done in conjunction with a government entity, convey the notion that corporations are coming in and taking over,” DeGaris said. “The hostility and opposition to such programs can be very severe. Taxpayers think since they pay for many of these programs, services and buildings, they should have a say in what name goes on them, and rightfully so.”

The negative reaction to the proposed plan in Houston was extreme, DeGaris said.

“The one thing we found out with the focus groups and other studies we did is that sponsors have to make it very clear why they are there, and the community service element of the deals has to be very evident,” DeGaris said.

Ballard and his staff have not been dissuaded from following the likes of San Diego and Chicago, the highest-profile cities among the handful that have made such programs work.

City officials have assembled a citizen advisory group, including officials from the highest-profile neighborhood associations, to advise on which sponsorship and ad deals are appropriate. Some deals, such as those with tobacco and alcohol companies, have already been deemed off-limits.

“These programs can be successful if they’re implemented correctly,” said William Chipps, senior editor of IEG Sponsorship Report, a Chicago-based trade publication following the sponsorship industry. “But you have to be careful about the appearance of over-commercialization. If it looks like you’re just trying to sell out, and stick a sign on City Hall, the public outcry will be considerable.” 

Chipps pointed out that San Diego, which launched its municipal marketing program in 1999, has been highly successful with such programs, signing sponsorship deals over the last decade that now yield more than $2 million annually. San Diego has sponsorship deals with the likes of Sprint, Pepsi and San Diego Credit Union.

KFC, Chipps said, is no stranger to the municipal marketing game. It has shelled out big bucks to pay for pothole patching in certain markets, including Louisville, in exchange for permission to put its logos on the asphalt patches.

The Indiana town of Brazil also is part of the chicken-wing campaign. Brazil will get $2,500 to repair or replace fire hydrants in exchange for putting the KFC logo on at least three of them.

KFC approached Chicago about stamping its logo on asphalt road patches in the Windy City. But when Chicago officials asked for $25 million, the company backed away.

“[KFC] appears to be a good first partner,” DeGaris said. “They are actively looking for these deals, which they clearly see a value in.”

But DeGaris scoffs at the idea of stamping sponsor logos on asphalt patches.

“People will look at that logo as visual pollution,” he said. “People have to know these programs are about more than just slapping corporate logos all over the place.”

There’s potential to expand the KFC deal, Indianapolis officials said, including having KFC feed Indianapolis firefighters during extended fire and other emergency runs.

For now, KFC will provide $2,500 to the local fire department to buy 1,000 smoke detectors that will be handed out to the public. KFC also will pay $2,500 for about 33 fire extinguishers for 17 Indy Parks recreation centers. Each fire extinguisher will feature a 4-inch KFC logo.

“This is a pilot program for both sides to see how this is received,” said Jen Pittman, Ballard’s spokeswoman. “So far, we like what we’ve seen.”•

 

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