SBHD: TV and commercial radio sponsorship has witnessed huge growth and the future looks bright, but unrealised opportunities abound. Michael Barrett reports
The UK television programme market is worth about Ãº40m, according to Carlton Television head of sponsorship David Prosser. It is growing at about 20 per cent a year, comparing well with spot advertising – a rather flat market in recent years.
But there is still room for growth. In the UK, programme sponsorship represents only 1.5 per cent of total commercial TV revenue. In most European countries the proportion is much higher – reaching double figures in several countries.
Surprisingly, UK commercial radio attracts more sponsorship money than TV – Ãº45m a year, with about another Ãº15m spent on associated promotions. Not bad for the “two per cent medium”, as it is frequently described.
Many UK commercial radio stations get as much as 30 per cent of their revenue from sponsorship and sponsored promotions.
In the early days of Classic FM half its income developed this way. And sponsorship will be just as vital for up-and-coming stations.
In the TV sector the incidence of sponsorship varies widely. Satellite and cable broadcasters tend to think it is much more important than do terrestrial stations. Channel 4 director of sales and marketing Stewart Butterfield says it only accounts for about one per cent of the channel’s advertising turnover. It is clearly not a major consideration for the station.
NBC Superchannel’s Peter Bullard says it is worth at least five per cent to the channel; BSkyB says it’s seven to eight per cent; and MTV vice president of advertising sales Louise Angus says it represents ten per cent of its ad income.
Sponsorship is much more important to the non-terrestrials; they are not automatic choices on spot ad schedules. Many of their clients, especially those new to TV, favour sponsorship because the production cost of credits is much less than commercials. It’s a much smaller proportion of the total investment.
United Artists Programming vice president of ad sales Richard Burdett says satellite and cable stations have much to offer: low entry costs, very focused audiences and direct marketing to the station’s subscriber base.
BSkyB head of sponsorship Mark Wood agrees subscription channels can add a lot of value. They know a lot about their audiences and often exploit the sponsorship association off-screen better than terrestrial rivals. The Sky package includes a TV Guide (reaching 3 million homes), mailings to subscribers and close monitoring of viewer response through the company’s subscriber management service.
Many new TV channels and radio stations have been launched recently, with more to come. The increasing number of new outlets helps the sponsorship market. Among other benefits, they widen the choice of programming. Leo Burnett head of programming Sue Watson welcomes this growth but says their small size is a problem. “They offer good opportunities, but it’s still a difficult sell because many clients are used to volume ratings,” she says.
The cost of sponsorship varies enormously. Many ITV Network programme sponsorships cost more than Ãº500,000, while some small regional deals are done for as little as Ãº5,000. Even stations like Yorkshire accept fees as low as Ãº15,000. Leo Burnett says the prices paid by their clients range from Ãº40,000 to Ãº500,000.
Satellite channels are particularly anxious to drive up values by selling packages of sponsorship and spots. BSkyB and NBC Superchannel both say that the minimum cost of packages should be about Ãº100,000. But is it? The most bullish of all must be MTV. It aims for a small number of long-term deals, such as that for its flagship show The European Top 20, now sponsored by Coca-Cola. The asking price for such packages is understood to be Ãº1m.
Whatever the price paid, the question must be, does it work? There’s been a big public debate – and not everyone’s convinced.
A lot of programme sponsorship research has been carried out, and most of it is shrouded in secrecy and still unpublished. This is despite the fact that industry gossip confirms the medium works, and works well.
The number of sponsors continues to grow and contracts are getting longer (especially on satellite channels).
Recent analysis of six ITV Network sponsorships by Billett Consultancy’s Patrick Morrison claims to demonstrate a real result for each of them. One example is Tetley Tea’s support for the Darling Buds of May. Morrison claims that after stripping out the effect of Tetley advertising and that of its competitors Nielsen sales data shows that the Ãº1m sponsorship produced Ãº3.2m extra revenue in the period reviewed.
But firms still need more data. Help may be at hand. ITV Network Centre chief executive Andrew Quinn has announced that ITV will invest Ãº200,000 in monitoring future sponsorships. It sounds good, though it remains to be seen whether this is an adequate investment.
Viewers are not complaining but, of course, sponsorship is still something of a novelty. As promotional clutter increases, sponsorship messages may become less welcome. This is certainly the experience abroad.
Meanwhile, comparative costs are difficult to assess. Programme sponsorship and spot advertising work in different ways; sponsorship can be more like public relations than advertising. And sometimes extra elements such as discounted spot ads, free research, trailers and so on are thrown into the sponsorship pot, confusing calculations.
So far, the ITV network has mostly sold sponsorship opportunities at a discount to spot ad rates. Other broadcasters, particularly in other parts of Europe, often achieve big premiums – as much as 50 per cent.
UK-based satellite stations also claim to get good prices, albeit as a result of added value packages and the benefit of slightly more liberal regulations.
But “spot ad equivalency” is not really the issue. The value of a particular programme sponsorship will vary according to the suitability of the sponsor. The closer the fit, the more its worth. Clearly, sponsoring coverage of horse racing, for example, would benefit Ladbrokes more than Pedigree Chum. Prosser believes that further education will help ITV achieve better prices.
Allied Domecq group media director Patrick Burton senses that ITV prices are already hardening because of favourable research evidence. He should know – he’s been involved in several of the biggest deals, such as Carling’s sponsorship of FA Cup football on Sky and Italian football on Channel 4.
For his part, Prosser has been one of the fiercest critics of the way programme sponsorship is handled in the UK. More imaginative uses of sponsorship have been seen recently. A larger amount of money and effort is being put into sponsor credits. The “tombstone” credits used by PowerGen in the early years of its sponsorship of the national weather forecast on ITV are long gone. They are now more integrated with programme titles – and altogether less irritating. The ITC’s recent relaxation of rules governing straplines and logos (when part of registered trade marks) may further speed the development of credits.
Sponsors are using the medium in new and much more effective ways. The interactive game card element based on shows sponsored by The Sun and The Mirror, such as Play Your Cards Right, was a major breakthrough. Such cross-media promotions put off-air exploitation on a different plane. The Sun claimed it gained an extra 250,000 readers as a direct result of Play Your Cards Right. The newspaper renewed its support for 1995 – once again through “sponsorvision”.
But the most imaginative and creative use of sponsorship must be Tango’s support for The Word. Advertising agency HHCL & Partners devised no less than 102 different sponsorship idents and won the newly-established sponsorship category at the Television Advertising Awards. But typical of the agency’s approach was its use of innovative research techniques. HHCL account director Dominic Field says the agency showed its sponsors’ credits on the Internet, invited users’ comments and received an enormous response – 10,000 replies, most of which were favourable. The agency swears that this is true, but it could it be another Tango hoax.
Programme sponsorship is moving ahead, yet there’s little doubt that there are many unrealised opportunities and it has a long way to go. Media owners, clients, ad agencies and sponsorship specialists all seem to agree that the present style of “billboard” sponsorship is merely the beginning. Very soon, advertiser investment in TV programming will be commonplace. Advertiser-funded programming is prevalent in the US and emerging in Europe. Given broadcasters’ hunger for programmes and a widespread shortage of cash this could be the Holy Grail.
Michael Barrett is a TV sponsorship and programming consultant and editorial director of Antenna Publications.