Tim and the Economics

Advertising campaigns in Victoria have been a key tool for the Brumby government, and spending will continue to grow in the future. The State Government and its Department of Premier and Cabinet are spending hundreds of millions of dollars each year on advertising campaigns both for financial and community backing.

Recent figures have shown record amounts of government funds spent on advertising, which total more than $1.3 billion over the past eight years. While the Brumby government believe the large amount to be a necessary cost, opposition, in particular Shadow Minister for Scrutiny of Government David Davis, believe that government funds could have been spent in ways more beneficial to the taxpayer.

The 2008/09 figures for advertising expenditure came to $195 million and has been projected to reach $214 million in 2010.   There has been a steady increase every year in spending since the Brumby Government’s inception in 2002.

Timeline of Brumby Government Advertising Costs:

2002/03- Total expenditure $123 million

2003/04- $147.1 million

2004/05- $161.3 million

2008/09- $195 million

2009/10- Projected figure $214 million

Media buying has become an enormous industry and the government has partnered with several high profile agencies to project its image and new policy.

The following advertisements are examples of the Victorian government’s image and policy projection.

http://www.youtube.com/watch?v=fqv3tGSQigk

http://www.youtube.com/watch?v=QU4KtZ3J4Bw&feature=related

Well known agencies such as Mitchell’s, MediaCom, Zenneth Opti Media and several others are the major beneficiary of the government’s advertising structure.

The following figure is a breakdown of total expenditure on advertising from the 15 most prominent media buying agencies that the government held contracts with in the 2004/05 period.

Dr Anwar Ahmed, an economics proffessor from Monash University, believes that advertising in the economy and particularly the government’s use of advertising will keep growing as technology continues to progress.

“Economic conditions at the moment are calling on firms to increase spending on things such as advertising so they can keep up with the technological age”, says Dr Ahmed, “so it’s no surprise that governemnt  is doing the same.”

Dr Ahmed believes the downside of increased spending on advertising to be on local budget constraints, as it is taking up more government funds that perhaps could be used in more practical areas such as infrastructure and welfare.

Tigers Keep Sponsors on the Prowl

By Tim O’Rourke

The playing field of corporate sport sponsorship continues to grow and become more lucrative in Australia, and the Richmond Football Club is no exception to the fact.

The RFC, or the Tigers as they are more affectionately known, is one of the Australian Football League’s proudest teams that like almost all other proffessional sporting clubs, rely on sponsorship to strengthen both the balance sheet and promotion of the club’s image.

In the past, the real value of corporate ties with sport have been questioned, but according to Simon Derrick, Richmond’s Senior Marketing Manager, the reasons for sponsoring  AFL clubs stretches far beyond the narrow view of the final profit line.

“Our sponsors come on board with us for all sorts of different reasons and motivations,” said Mr Derrick.

“We’ve identified four key areas that we think categorise why our sponsors are involved in the club, them being branding, advertising and promotion, community and finally hospitality and business-to-business opportunities.”

The RFC’s major sponsor, Dick Smith, is largely concerned with promoting their brand and increasing exposure in the public eye.  The AFL provides companies such as Dick Smith the opportunity to promote a new image, according to Mr Derrick.

The following link is a survey of people’s willingness to support their team’s sponsors: http://www.surveymonkey.com/MySurvey_Responses.aspx?sm=N%2fqHYbgOCsL%2fBWm5k0XFDMAB4P5HxkIz%2f82rO9%2bdc5M%3d

“Dick Smith have recently gone through a major company change by creating a new and improved logo that’s on the front of  our playing jumper.  It gives them a great opportunity to showcase the slick, much more stylish brand logo they have created to a large public audience,” said Mr Derrick.

Note: New Dick Smith Logo on the right hand side of the jumper

Exposure within the AFL is ever growing with the massive media coverage of the sport in Australia providing companies a platform for advertising and promotion.

The RFC alone attract a television audience of over 650,000 people, and Mr Derrick beleives that the club’s members are given more of an opportunity to know who their sponsors are and throw their support behind them.

Mr Derrick aslo beleives that from a corporate perspective, companies aligning  themselves with an AFL team or any sporting organisation for that matter, has become a credible practise and greatly enhances community image.

“The values we stand by as a club are a strong foundation that very often coincide with the values of our sponsors,” explains Mr Derrick, “and this can translate into a really good, healthy public image for both parties.”

An instance when a sponsors image was compromised was back in 2005 when the Transport Accident Commission were forced to terminate a long standing association with the Tigers.  A current player at the time, Jay Schulz, was caught drink-driving and speeding in  his car.

Luckily for the Tigers, no such compromises have occurred since and the club sees itself prospering off the field, contrary to their performance on it.

The club is currently in the middle of construction on a new $20 million training facilty and Indigenous Community Centre at it’s Punt Road home.

This in itself poses a new sponsorship dilemma as the naming rights for the venue has not yet been settled and would prove a lucrative advertising opportunity.

However not all sponsors are concerned with exposure on a public level, as many privately owned companies use their association with the club for different reasons.

John O’Rourke, Managing Director of Infrastructure and Developement company Plenary Group, has different motives for his business’ sponsorship of the Tigers.

“As far as my company goes, I’m part of a small sponsorship group called ‘Tigers in Property’, which looks to have a network that can attend Richmond functions, events and games throughout the year,” said Mr O’Rourke.

The nature of Plenary Group’s sponsorship is for business-to-business opportunities which Mr O’Rourke beleive are beneficial not only for his own company, but also helps the RFC meet its goals of attendance to games and football budgets.

“As a private firm we target only a narrow amount of customers and its nice to entertain them in a an AFL setting given the sport’s popularity,” said Mr O’Rourke.

A recent profitable deal for Mr O’Rourke’s company Plenary Group will be the testimonial of past player Matthew Richardson, which will be held at the company’s venue, Plenary Hall, which has been advertised for members and supporters of the Tigers.

The following is the full audio interview with Mr O’Rourkehttp://soundcloud.com/tim12/sports-sponsorship-interview

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