Brand building advertising strategies put money into creating a positive association with a (potential) customer. Such advertising can create a stock of goodwill that typically starts high when the advertising is run and declines over time if it isn’t replenished.
Doug Chung uses this idea to look at the impact of collegiate athletic success. Rather than see goodwill being generated by advertising investments he sees goodwill being created by the college team’s performance on the field. This goodwill toward the school declines if the team’s performance isn’t maintained.
Chung wanted to uncover the impact that successful college teams have on the level of applications to attend the college. The idea that successful teams stimulate college applications is known as the “Flutie effect”. The effect is named after Doug Flutie, a Boston College quarterback from the 1980s whose Heisman trophy a winning achievements are informally credited with creating a 30% increase in applications to the college.
The task of parsing out the impact of other aspects of the university’s achievements and characteristics from application numbers is not trivial. Furthermore, the lack of data on individual applicants meant that Chung had to infer applicant quality. Despite the novel econometrics the most interesting piece of Chung’s research to most people is his ability to demonstrate how on-field success drives college applications.
To account for differences in applicant behaviour the impact of sporting achievements on higher and lower academic quality applicants are considered separately. Chung finds that, “athletic success has a significant impact on the quantity and quality of applicants that a school receives. However, I find that students with lower-than-average SAT [standardized test] scores have a greater preference for athletic success” (Chung, 2013, page 681).
The sheer scale of the effect is notable. “..when a school goes from being mediocre to performing well on the football field applications increase by 17.7%, with the vast proportion of the increase coming from low-ability students. However, there is also an increase in applications from students at the highest ability level” (Chung, 2013, page 681).
Gaining sporting success may be as effective as a significant increase in faculty quality (5.1% pay rise) or a major cut in tuition rates (down 3.8%).
Sport matters for US schools and not just for the ticket revenues and merchandise sales.
Read: Doug Chung (2013) The Dynamic Advertising Effect of Collegiate Athletics, Marketing Science, 32, 5, pages 679-698.