This Is Why You Don’t Hand Over Too Much Branding Power to a Sponsor

Citi Bike's problems are, in part, due to the fact that it's so closely tied to CitiBank.

citi bikeCiti Bike is in trouble. The bike-sharing program that has quickly become a part of the New York City landscape needs “tens of millions of dollars” to stay afloat.

Citi Bike began on shaky footing with tons of technical problems, but has since attracted nearly 100,000 annual members. One major problem is finding people willing to rent a bike on a shorter term. Those technical glitches are part of the issue. And just getting the bikes to the neighborhoods where they’re most desired has proved to be a costly hurdle. In addition, New York magazine says the weather has been a problem, not just for the bikes and the docking stations, but for potential customers. No one wants to ride a bike in the snow.

Finally, a big problem with Citi Bike is the “Citi” part. The program, the Wall Street Journal notes, operates with funds provided largely by advertisers and sponsors (alongside those membership and other rental fees). It doesn’t use public funds. The main sponsor is CitiBank. And finding other sponsors has proven daunting.

“Finding additional sponsors has proved challenging because the program has become so closely associated with its eponymous supporter, according to a person familiar with the matter,” the Journal says.

In this case, it seems organizers were so determined not to use public funds that they’ve dug themselves into a hole that will be difficult to get out of. But this is a cautionary tale for others too.

When you turn over your brand to a partner — whether it’s a celebrity spokesperson or a corporate sponsor — you run the risk of losing control of the whole campaign. “Citi Bike” could’ve just as easily been “Big Apple Bike Share.” Instead, the entire program was handed over to Citi, from the program’s name to the color of the bicycles to the logo. Now, rightfully so, it’s difficult finding another organization that wants to pay money to play second fiddle.

Your first instinct, when a company says it wants to pay for a major stake in a campaign, is to listen to the terms with the word “yes” on the tip of your tongue. If a major celebrity says they’re looking to endorse your client’s brand, a quick check on TMZ and IMDB to make sure you didn’t miss anything could seem like the only research that needs to be done. But these relationships should be considered with the long-term in mind. If there’s a falling out, are you left with enough control of the brand to recover quickly? Is the door still open to take the brand in different directions when it’s time for a touch up or more money is needed? Citi Bike is a special case because of the ties to city government, but these lessons apply regardless.