The Business Of Bonnaroo 2012: Why Big Firms Are Flocking To Music Festivals

The Bonnaroo Music and Arts Festival in Manchester, Tenn., is known for an eclectic group of performers, more than 80,000 enthusiastic concertgoers and a hippie-style camping environment reminiscent of Woodstock.

The relaxed, fun environment draws in hordes of college-aged fans from around the country to the rural town about an hour outside of Nashville.

Those hordes of young adults are bringing big businesses flocking to Bonnaroo's neck of the woods to become sponsors and tap into that coveted young demographic at the festival.

The 2012 Bonnaroo Festival, which runs from Thursday through Sunday, has 24 official sponsors, including such ubiquitous brands as Ford, Dell, Miller Lite and State Farm.

At first glance it might seem peculiar that an insurance company like State Farm would want to be associated with an event with no shortage of reputed drug use, but the attractiveness of the festival's young demographics has made it favorite of a diverse group of companies.

We want to be a brand that is considered by the younger audience, said Ed Gold, State Farm's advertising director. We are a brand that has been around for 90 years and we want to make sure that State Farm is as relevant to these young adults as we've been for their parents and for their grandparents.

At the festival, State Farm will have a lounge offering escape from the brutal Tennessee summer heat, as well as places to lock up their goods. In addition to the lounge, State Farm representatives will be around offering car assistance -- such as helping people jumpstart their vehicles if their batteries die.

Gold says that at Bonnaroo, State Farm is trying to live up to its tagline, Like a good neighbor, State Farm is there. Fans of bands like Radiohead and Phish might wonder why it's there, but Gold hopes the services provided by State Farm will help build a new customer base.

We look at this as part of the purchase funnel, he said. If we get the consumer to think well of the State Farm brand from a consideration standpoint, maybe they Google auto insurance, see State Farm and say, 'I should definitely get a quote from them because I had a great experience with them at Bonnaroo.'

Gold believes it is important for insurance companies to appeal to the young because they might be buying insurance for the first time. Since customers don't change their insurance providers as they might with their cereal choices, securing them when young is vital.

It's why State Farm has been active in the music festival market. In addition to its partnership with Bonnaroo, the insurance provider also sponsored a live stream of the Coachella festival to great success.

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Technology company Dell (Nasdaq: DELL), along with partner YouTube, has the honor of sponsoring the live stream of the Bonnaroo festival. Fara Howard, Dell's executive director of North America consumer marketing, said the company began discussing a partnership with YouTube about live streaming festivals more than a year ago. The company realized that music was a passion for many of its customers, so Dell decided to bring the music of popular festivals to fans who cannot attend the actual events.

The No. 3 PC maker has partnered with Google-owned YouTube to produce the live streams for New Orleans' JazzFest, Bonnaroo and Lollapalooza. Howard believes it is a natural fit for Dell because the computer company has the technology to produce the event rather than simply sponsor it. Further, she believes the growing role of technology in music makes it important for Dell to be in that arena.

Technology is playing a huge role in music today, she said. As you think about the relationships we have -- we have a relationship with Open Labs, a music software system, that enables customers to build music very quickly -- you think about the very authentic role Dell can play in that realm with our technology.

It's a very authentic place for us to have a dialogue.

Dell believes it is especially important to be seen at festivals like Bonnaroo and Lollapalooza because summer leads to back-to-school shopping. It wants to be at the forefront of customers' minds when it comes time to buy a new computer.

It also is banking on its live streams driving traffic to its social media platforms. It is part of a strategy that many companies are using: the emphasis on a strong digital presence.

Dell sees value in maintaining a continuing conversation with potential customers through Facebook, Twitter, and other social media platforms. The idea is that it's a natural transition from watching the live stream on YouTube to liking the company's Facebook page, which is very valuable for a company looking to survive in the fiercely competitive computer technology market.

Having a true fan -- a fan actively consuming content that we produce and talking about that content with other people -- the lifetime value of (that) is far higher than a customer that only engages with us at the point of transaction and never again, Howard said.

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The concept of appealing to a true fan -- or creating one -- is one of the reasons that StubHub, a digital ticket seller, decided to partner with Bonnaroo. StubHub has seen considerable growth in its concert ticket sales, according to Joellen Ferrer, the company's U.S. director of communications, which made it logical to be actively present where many people are already -- or could be -- interested in what the company has to offer.

We are better known for being a sports brand, but concerts are a huge focus for us, Ferrer said. The reason why we are doing (Bonnaroo) is to engage more fans to experience the brand. We want to be there for fans to understand the brand and hopefully look to us in the future.

Like Dell and State Farm, StubHub hopes to keep you cool with its air-conditioned lounge at Bonnaroo. The lounge will be a hybrid between a sports and music lounge where fans can watch the NBA playoffs, but also be able to sample music from Super Fly artists, a partner of StubHub.

The company feels it is important to appeal directly to fans at events like Bonnaroo rather than just be a partner in name.

We saw it was a much more effective to actually talk to fans, Ferrer said. It makes it that much more impactful and gives them a better sense of what the brand really is and how we operate. That's why we want to continue to have an on-site relationship.

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Each company has a different strategy for its presence at Bonnaroo, but all have similarities in their approaches. For each, an association with a musical festival such as Bonnaroo is an opportunity to appeal directly to a valuable demographic and tie those connections back to the company's digital presence.

From the outside Bonnaroo just looks like a chance to listen to everyone from Skrillrex to Kenny Rogers while not showering for a week, but to businesses it represents a huge opportunity to create a customer for a lifetime.