Inside Coca-Cola’s Evolving Approach to Global Partnerships
Brad and podcast host Jim Andrews take a deep dive into the sponsorship leader’s strategy, execution and measurement of its worldwide partnerships, including sponsorship’s role in a complex organization, the impact of technology and negotiating flexibility into long-term deals. Below are edited highlights of the conversation.
Jim: Let’s start with the 30,000-foot view of Coca-Cola’s approach to sports and entertainment partnerships—the “why” behind them if you will—before we zoom in on some specific areas. Clearly those of us in sports marketing are familiar with the many landmark partnerships that Coke has, some of them going back decades, but can you update us on the company has evolved its approach to ensure your partnerships are relevant today and continue to deliver value?
Brad: To start, we have to answer the “why.” Why do we go into partnerships? Why do we build relationships with key rightsholders? It’s a simple answer: It’s about being consumer-centric. We want to make sure that the marketing that we put out there resonates with our consumers.
We realize that to do this, we need to connect with our consumers, our fans, and our audiences through things that they care about, whether that is somebody who is into music, or gaming, or sports, or fashion, or follows a specific influencer. We see sponsorships and partnerships as a critical bridge to connecting with our consumers through things they care about and making sure the brand is salient and prominent in those moments.
You mentioned evolution. There are some fundamentals at the end of the day. One is resonating through the things people care the most about, so we will continue to do that. But the landscape has changed. And technology has changed. We have had to evolve with that. So while we still have some traditional approaches to things, we have also evolved our thinking.
As a company, we are moving away from exposure to experiences. We want to continue to tap into experiences that matter to people. We believe our sponsorships and partnerships portfolio helps us do that.
Technology has opened up a whole new area of opportunity for us to look at things in a different light. From what was traditionally quite an analog approach to one that can be both analog and digital.
Jim: In terms of identifying consumer passions, I imagine that process is quite challenging for a company like Coca-Cola—with such a broad consumer base, both demographically and geographically.
Brad: With multiple brands in multiple countries, we look at it through a portfolio lens. That does add complexity in terms of what’s the right angle, the right niche for a specific brand to connect with a specific consumer, but we do that through segmentation—which we have done for a long time—so we understand the consumer audience we are talking to with a specific brand.
Coke is more ubiquitous than many of the other brands in our portfolio. We have niche brands that focus on a specific tribe. We look really carefully at the brand, the brand objective, its value proposition and the salient product features it is bringing to the mix (If we are talking about smartwater or POWERADE, it’s a very different positioning and perspective versus Fanta or Coke.) We have to take into account the fact that not all brands are equal in terms of who they are talking to and their reach.
We also look carefully at the tribe the brand is speaking to. Based on that, we look at the passion points that resonate the most with that cohort. And, like brands, not all passion points are equal in terms of who they connect with and where they connect.
Jim: Can you describe the ecosystem that your partnerships operate in, because we’re talking about a complex, global organization with multiple brands, bottlers, external partners, etc. I imagine if you created a graphic with every Coca-Cola entity that touches or is impacted by a global partnership, it would be this massive matrix of elements. It’s an impossible question to ask you to detail all of that, but can you give us a general sense of the structure that surrounds partnerships?
Brad: We operate first as a relationship company. Relationships with key partners, key customers, key bottlers. That’s fundamental. It’s in our DNA. That’s how we started the company 137 years ago; that’s how we currently operate the company.
So relationships are key. Our structure is a matrix. We operate in over 200 countries around the world with multiple brands and multiple SKUs, as well as some local nuances and geographical components to take into account.
At a global level, I’m very fortunate to have a team that is best in class at what they do. Whether it’s our music team, our gaming team, our football/soccer team, our broader sports team, all of them have come from the industry and understand how our system operates. They bring the best of both worlds to the equation.
We work very closely with our operating units. As a company, we have nine operating units around the world. We try to mirror what we do globally to what goes on in the operating units. We have teams in each of our operating units either identifying, executing and building the deals, or bringing the deals to life that we have signed at a global level.
For us, scale is important. We’re in the business of trying to do fewer things, but do them bigger and better. In our new networked organization that we have built as a company to drive the growth of the company forward, we have looked at optimizing our portfolio of assets. We have looked to make sure that what we are doing is resonating and is relevant in the geographies we are in. In addition, we are very open to the new trends and new areas that are starting to grow and what we need to do.
There is no way we can do it all from the center. That’s why working with our markets and operating units is critical. Just as much as we have a world-class team sitting in the center, we have equally world-class teams sitting in the markets. We have some amazing people who are best in class in what they do and how they do it, and that’s where the matrix, or the networked organization as well call it, comes to life absolutely beautifully.
Last week, I was speaking with someone about the role of AI and he referenced the concept of NI, networked intelligence. That is our competitive advantage. When we come together as a network, when we leverage our scale and apply best practice learnings that many folks have had for many years, that’s where we really start to shift the needle and see value.
Jim: I’m sure you struck fear in the hearts of rights holders when you talked about doing fewer things, but doing them bigger and better. But that is a trend among sponsors, and one that can ultimately benefit properties in that they will have partners who full activate and “go deep.”
Brad: You’re right; it goes both ways. It means putting more money behind the activation of a specific asset or sponsorship, which benefits the rights holder just as much as it does us. If you have a long tail of assets that you are not putting money behind to activate, and you are only putting money into rights fees, you are parking a sports car in the garage without driving it.
On the other hand, when you are all in—which is what we want to do when we strike up a partnership—when we put our muscle and our scale behind that partnership and we do it right, it’s a win-win. It doesn’t always work like that; I’m not going to sit here and say we get it right every time, but that is really the north star.
Jim: When many of us think about Coca-Cola global partnerships, we naturally gravitate toward the Olympics or FIFA World Cup, but there are also esports and music and influencers, and we spoke earlier, you mentioned the “collisions” that you are seeing between those from a consumer-facing perspective. Can you tell us a little more about that and how it impacts your approach to partnerships and activations?
Brad: When we look at the landscape and go back to the consumer-centric approach, with the role that technology plays today, with the ability to connect across so many passion points, we are seeing that consumers are not solely a music listener, or solely a gamer, or solely a sports fan. More often than not they are all three.
That’s where the concept of collisions is starting to play out, where you see certain ecosystems that are growing exponentially. We think about the gaming industry and one of our partners—Riot Games—who are far more than a gaming company. They are an entertainment company. Start with League of Legends, to multiple gaming titles, to the advent of Arcane, an exceptional series on Netflix, to the music component, and you start to see the ecosystem unfold.
We are learning from our partners where we are seeing things in a different light. We have to make sure we continue to stay ahead of the pack. If you try to do that in isolation, you’re not going to get there.
Just this week the IOC announced the inaugural era of esports under the auspices of the IOC. While not part of the Olympics yet, they are starting an esports series. The IOC has been our longest standing partner. LA28 will mark 100 years of our partnership with the IOC. To see a rightsholder with that pedigree and that lineage moving into a space to connect with today’s consumer through a passion point that they care about is inspiring.
It’s inspiring to see a rights holder moving in that direction. And they are not the only one. As a partner, when we look to do a deal, we’re looking for more than just what are the traditional rights that you are putting on the table. How do we make sure we engage the consumer throughout their full lifecycle and through all the areas of passion versus just buying these rights and that’s it.
Jim: When you talk about staying a step ahead, that leads me to ask about the metaverse and the next iteration of our online activities and lives. Is that something you are exploring?
Brad: Of course. If you’re not there then you are not following the consumer and you are not understanding where they are operating. Many of our rights holder partners are actively starting to look into this space. There is not a one-size-fits all approach. There is a lot of risk that comes from operating in the metaverse that you have to be prepared for. You have to make decisions as a company about what you are willing to do, how far you are willing to go and how much you want to test and learn.
We are taking an iterative approach. We are starting small, trying to learn fast and we will continue to grow from there. The are areas where we’ve dipped our toe in and it didn’t feel like the right space and others where it feels like the right thing for a specific brand or a specific partnership, so we’ll push further in.
It would be naïve not to be investigating, or at least considering the role you and your brands could play in this space. At the same time, your risk appetite has to be there. That will determine how quickly you move into the space and the approach you take. For us, it is something we are actively pursuing, putting toes in the water and figuring it out as we go. We don’t have the answers, and I don’t know anyone who really does!
Jim: How does Coca-Cola determine how its partnerships are performing? Can you share some of the metrics or a bit about the evaluation models you use to determine the ROI on a sponsorship?
Brad: Measurement and metrics are critical. If you don’t know what you’re measuring or you’re not sure how to measure it, then you don’t know if what you are doing is successful or not. Measurement is foundational.
The challenge in our space is that there are so many measurement systems, or ways to approach this—even the ratios you are looking at. In the past—without that network intelligence—we found that the way we were measuring a certain partnership in a certain part of the world was different than the way we were measuring in another part of the world.
What we have tried to do is build an evaluation framework that is consistent. Is it perfect? Is it 100 percent accurate? I don’t know, but it’s as close to it as possible right now. What it does do for us, is it allows us to compare apples to apples. Within our portfolio, we are able to see what partnership X and partnership Y each drove based on metrics or objectives that we set out. So we are able to get a tangible, comparable data set that shows you what each did.
The objectives are important. In some cases we are looking at building a partnership that is going to come to life to really drive weekly plus (week over week comparable sales), the immediate consumption of our products. That’s one objective. How that comes to life might be different from a partnership that we can leverage for our customer partners, or one that we can use for stakeholder engagement/company reputation.
Each of those have a slightly different outlook in terms of what the methodology could be. We are happy that we have landed on a set of methods that don’t only look in isolation at the partnership but look to see how it drives the business. It’s integrated into our broader business measurement and metric system, so we are able to see that this partnership, this asset, this sponsorship drove XYZ for our business. We’re not coming as the sponsorship asset team, or the sports and entertainment team and saying, “Look what we did.” Integrating it into business results drives more credibility for our space, it drives more credibility for showcasing the results and the value this area brings, and it shows more integration into really leveraging the power of partnerships and sponsorships to drive the business forward versus something on the fringe.
Jim: For a long time, we have done ourselves a disservice in sponsorship by creating measurement tools that weren’t aligned with the way things were done in other parts of the business. That has impacted the ability of sponsorship to claim its seat at the table.
Brad: We have a disservice to ourselves, to the industry and to our partners by not integrating this into broader business metrics and growth strategies. Going back to what I said about focusing on our consumers and what they care most about: Surely these passion points should be more integral to the business plan rather than being secondary or standalone.
You are starting to see in the work we are doing, what other companies are doing and what our partners are doing, that passion points are becoming the center of a lot of campaigns that are being developed. Not as ancillary or complementary but embedded in the work. Take Coke Studio, our new global music platform. That in itself is the campaign. It is embedded in the broader brand strategy versus an adjacency.
That ties into the measurement conversation. You want to be sure that what you are doing is driving tangible results, not just vanity metrics.
Jim: What do you see as the biggest challenges for brands with significant partnership portfolios? Or put another way, what would you like to see happen in the next year or so that could help extract more value from sponsorships and partnerships?
Brad: The landscape has changed. As new industries emerge, it brings challenges and opportunities. You have different players in the partnership ecosystem, some adding a lot of value to it and some not. That can position the role of a partnership differently across what the intended objectives are.
That plays a role when you have long-term partnerships in place. Those long-term contracts give you good perspective from a relationship point of view and help you drive better value in terms of the long-term negotiation and the construct behind that. At the same time, you have to ask yourselves, is it flexible enough to allow for changes that come up? That’s the paradox you have to deal with. What is the ideal lifespan of a partnership or a contract?
The traditional school of thought is the longer the better. You negotiate a long-term deal, you get a better price, better rights, you don’t have to go through contract negotiations every year, etc. All of those points are valid.
But fast forward two years in, and a new industry player emerges—or your own business strategies change—how do you adjust? So what I would like to see from our rightsholders is the ability to meet us halfway and be as flexible as possible when either we start to change course or the industry starts to course correct. How do we maintain our long-term partnership and relationship but move away from the letter of the contract to find a win-win in this new space.
Some partners get that and are very open to it. Some are fantastic in terms of saying, “We understand the landscape is changing. We need to adjust ourselves. Let’s figure this out. You had XYZ. Now we are going to give you ABC.” You have that conversation and you figure it out together.
Some are a bit more jaded in their thinking. You just have to deal with that, help educate them and bring them along.
The flip side would be getting into one-year deals. That might not help you in the long term. Can you build a sustainable long-term partnership and relationship that way?
So what is that perfect lifespan? I don’t know if I have the answer, but it’s more about the intent and the relationship that you build. That is critical today. You will be governed by the contract. That’s table stakes. It’s the relationship and how you map it out that is important.
That’s where having an account team on the partner side that understands your business, that knows what your objectives are, that’s not just trying to push a sales approach but wants to help you, is where the partnership is one plus one equals three. At the same time, there is a burden on the company. We have to do our very best to make sure our partners know what our focus is, what we are trying to achieve, and how we need their help to unlock the value that we know can be there.
It’s a bit of a dance. But that is the beauty of the space we operate in. If we borrow equity from a partner that knows how to connect with its tribe in a way that is authentic and real, how can we support that, be part of that and learn and listen to them. Hubris aside, arrogance aside, we need to listen to and learn from our partners because some of them know our consumers better than we do. That’s the role that partnerships play for us in certain cases.