Red Frog, Inc.

by Stuart Elliott

The trend to advertise in places that had until recently been advertising-free is accelerating, with two major marketers clambering aboard the booming brand wagon.

One is Toyota Motor Sales USA, which is sponsoring the new Toyota Center in Houston, home of the Rockets and Comets basketball teams. The stadium includes elements like a Lexus Lounge, Toyota cars and trucks parked throughout the arena and even a desk staffed by representatives of local dealerships who can answer questions about the Toyota and Lexus lineups, if not inquiries about Yao Ming's teammates.

The other marketer is Nextel Communications, which will announce today that it is becoming a principal sponsor of a monorail system that is scheduled to start serving Las Vegas in January, underwriting the branding of the Convention Center stop as well as one of nine four-car trains with the Nextel name, logo and colors.

The two sponsorships, estimated to total $150 million, are indicative of the increasing use of so-called place-based marketing by advertisers eager to find new ways to woo distracted, cynical consumers beyond traditional methods like television commercials and print advertisements. There is a considerable risk, however, in seeking to emblazon brand and product trademarks on places that have historically been ad-free: advertisers may alienate the very consumers they are so desperate to reach.

"Marketers will have to show enormous restraint," said John R. Coleman, chief executive of the Via Group in Portland, Me., an agency that seeks to create "brand experiences" for customers of its clients.

"You can't expect pounding someone over the head to work," Mr. Coleman said, "especially the consumer who hates to be marketed to and is smart as hell."

Executives at companies engaging in place-based marketing say they are trying to carefully navigate the fine line between consumer interest and annoyance.

"It's not meant to be intrusive; it's meant to be real soft and informative," Toby Hynes, president of Gulf States Toyota in Houston, part of the Friedkin Companies, said of the Toyota Center sponsorship. The deal, estimated to be worth $100 million over 20 years, was arranged among Gulf States, which distributes Toyota and Lexus products to 144 dealers in five states; the 20 Houston-area dealerships; the Toyota Motor Sales USA division of Toyota Motor; and the Rockets and Comets.

"We have not had a single negative reaction" to the promotional elements since the Toyota Center opened last month, Mr. Hynes said. In addition to the Lexus-branded lounge, vehicles on display and staffed showroom, the arena has a parking garage and suite named after Tundra, a line of trucks that Toyota plans to begin building in Texas in 2006, at an $800 million plant under construction in San Antonio.

The commercialization of the arena "is not as controversial as you might think," said George Postolos, president and chief executive of the Rockets and Comets.

It is true there have been failures, Mr. Postolos said, like the sale of naming rights for the Houston Astros baseball stadium to Enron. But after Enron collapsed, the Astros "were able to convince one of the world's most sophisticated marketers to step in and pay even more," he added, referring to the team's sale of the rights after buying them back to the Coca-Cola Company, for the Minute Maid line of beverages.

Coca-Cola is also negotiating with the Las Vegas Monorail Company to become a sponsor there, along with companies that include Discovery Communications and General Motors. Bacardi and Motorola have signed letters of intent to become sponsors, while Nextel is one of two companies to sign sponsorship agreements, along with the Hansen Natural Corporation, for the Monster Energy drink.

The Nextel deal is estimated at 12 years and $50 million for the train and the Convention Center station, the system's largest, while the Hansen deal, for a train, is estimated at 10 years and $10 million.

"There's an element of a leap of faith" in making place-based sponsorship deals, said Mark Schweitzer, senior vice president for marketing at Nextel in Reston, Va., but the opportunity to offer some of the 35 million to 45 million people who visit Las Vegas each year "an immersive brand experience" brought to them by Nextel was tempting. That includes features planned for the station like interactive video displays, a Nextel store, and a "Nexpert Bar" with Nextel employees to demonstrate, explain and promote the company's products and services.

"I'm sensitive to the issue" of overcommercialization, Mr. Schweitzer said, which is why the Nextel sponsorship does not include "a 90-foot glowing cellphone dotting the horizon" or other garish elements.

That is also why Nextel is getting into place-based marketing in Las Vegas, he added, which - along with Nascar racing, which the company will start sponsoring next year - offers what Mr. Schweitzer called "the ultimate promotion-friendly environment."

"It's not like you're breaking some pristine rule" against assertive advertising, Mr. Schweitzer said. "This is part of what makes Nascar tick and part of what makes Las Vegas tick."

Such thinking is like a one-armed bandit jackpot to Patrick Pharris, president and chief executive of Promethean Partners in Las Vegas, which is selling the sponsorships for the monorail system.

"The biggest brands in the world are saying, 'We understand consumers are perhaps numbed to traditional advertising, and we have to engage them in our experience,' " Mr. Pharris said. "Then the consumers are more likely to become brand proponents and tell their friends about it."

"If you can convert transportation to 'transpertainment,' " he added, referring to the monorail, "it becomes a better experience for the consumer and the advertiser."

Hmmm. Perhaps the MGM Grand in Las Vegas can play host to a show called "That's Transpertainment."

Stuart Elliott, Marketing in Places That Were Once Free of Messages.
The New York Times. November 18, 2003
Copyright © 2003 The New York Times Company . All rights reserved.