Volatile sponsorship sector must find a measure of effectiveness

The large sums involved in sponsorship mean events must stress opportunities beyond simple corporate hospitality and good PR, says Nick Higham. Nick Higham is BBC TV’s media correspondent.

Who’d be a sponsor? Last weekend it was reported that the magazine publishers Northern & Shell had pulled out of a 450,000 deal to sponsor the Royal Variety Show after Buckingham Palace decided it wouldn’t be right for the Queen to shake hands with N&S’s publisher, Richard Desmond.

The reason? Perhaps it was the fact that N&S publishes not just the celebrity title OK!, in whose name the deal had been struck, but top-shelf magazines as well. Or perhaps it was simply well-bred royal distaste at the prospect of giving OK! the kind of prominence which a 250,000 contribution to the evening would normally buy (the other 200,000 was apparently for sponsoring the TV programme, rather than the show itself).

Whatever the facts behind this particular hiccup in the often rocky relationship between sponsors and sponsored, it’s a reminder that in certain areas (notably arts and sports) the whole business can sometimes seem like more trouble than it’s worth – at least to the sponsor.

TV and radio sponsorship are less of a problem. It helps that there are rules here about what can and cannot be done – rules which assist in spelling out just what both sides get from the arrangement. It helps too that there are ways of assessing the effectiveness and value for money of a sponsor’s investment: the ratings provide a currency for valuing spot ads, which can be extended, with minor adjustments, to sponsors’ credits.

But the problem with much arts and sports sponsorship is that quantifying its benefit to a company’s bottom line can be a great deal more difficult. In the old days, when the sums involved were trivial and the sponsorship budget famously at the whim of the chairman (or the chairman’s wife) that probably mattered rather less.

Nowadays, the global totals are too big. Arts sponsorship last year totalled 80m in the UK. Sports sponsorship runs into hundreds of millions of pounds – and is part of a global industry. Formula One’s worldwide sponsorship income is estimated at 250m – 100m from tobacco companies alone.

Yet sponsorship often brings the sponsor grief – and not just when the Queen won’t shake the boss’s hand. F1 sponsorship has become highly-politicised, partly because so much of the sport’s income is derived from the tobacco companies.

But even before the uproar over Bernie Ecclestone’s 1m donation to the Labour Party, his controversial attempt to float his company, F1 Holdings, had become embroiled in a row with sponsors in general, which thought they should have been consulted on his plans. As one put it: “Our support is fundamental to the future of the sport. We could change our minds about whether it was still the right one to sponsor.”

Conventional advertisers rarely exhibit that kind of sensitivity about the media they use. But then they aren’t operating in a field in which brand association and tone are so important. Midland Bank’s recent decision to end its sponsorship of the Royal Opera was taken, we’re told, because opera and ballet are élitist, or at least “a bit niche”. The Midland, which has been supporting the Royal Opera financially since 1971, is putting its money into a rock music festival instead, because that will get its name across to a younger market.

The decision is a body blow to the Opera House – as it would be to any arts organisation. The serious arts, which once relied on state subsidy to survive, have become heavily dependent on sponsorship – more so as government support has shrunk in real terms. Partly as a result (and partly because so many projects funded by the National Lottery have the begging bowl out for “matching funds” from, among other places, the corporate sector) arts sponsorship has hit record levels.

Yet the deal between sponsor and sponsored rests on a fragile foundation. The Association for Business Sponsorship of the Arts has a new chairman, Robin Wight, of the advertising agency WCRS. He is energetic, personable, with plenty of commercial nous – not to mention a flamboyance which must lead some in the arts to see a kindred spirit (if you sent out to Central Casting for an adman, Robin Wight would be what they’d come up with, complete with huge floppy bow-tie and lime green corduroy suit).

He is keen to find new ways for companies to help the arts – perhaps by offering training in professional management techniques to arts organisations which suddenly find themselves with more money than they’ve ever dreamt of, thanks to the Lottery.

But he might do well to concentrate on finding better ways to measure sponsorship’s effectiveness. As sponsorship grows ever greater – and more and more vital to the organisations which are sponsored – it becomes less and less satisfactory to point simply to the opportunities it presents for corporate hospitality or public relations.

Sponsorship budgets need a serious marketing justification. And too often they don’t seem to have one.

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