Sponsorship has been around for much of the 20th century, but only in the last 25 years has the industry really taken off as a serious business.
Satellite and cable television has raised the quality of TV sports coverage across the board over the past five years and has contributed to a further upswing in the financial clout of sponsorship. This has increased the status and wealth of many sports – football in particular. Its highly-paid, glamorous players have huge media exposure beyond their performance on the pitch and have become a popular means of advertising goods ranging from breakfast cereal to pizza.
According to the European Sponsorship Consultants’ Association (ESCA), the sponsorship market is growing more rapidly than any other marketing sector, with £353m spent on sports sponsorship last year. It is widely accepted that if brand owners are to fully exploit the rising cost of securing sponsorship rights in the first place, they must dedicate sufficient time and money to a comprehensive through-the-line campaign to make that initial investment worthwhile.
Guinness is sponsoring this year’s Rugby World Cup. Senior brand manager Wendy Darlington says the company began thinking about the tournament three years ago.
First Guinness had to research whether the competition was an appropriate event for its brand, providing a springboard for “relevant and motivating messages” to consumers about the beer. Having decided that the Rugby World Cup provided the right fit with the product, Guinness had to decide how much money should be spent on the sponsorship.
Darlington says: “You have to put a substantial amount of money into purchasing the rights, but you need the money to be able to leverage that and make the deal effective.”
Guinness has invested £16m worldwide into its association with the tournament. UK marketing activity includes promotions in pubs offering three pints for the price of two before home nations matches; a doordrop to 2.5 million households to draw people into pubs to drink Guinness; instant-win promotions in participating pubs; point-of-sale material; a sponsored supplement in The Times and Sunday Times, and a major sampling campaign on match days.
This is backed with PR, an advertising campaign in print, radio and posters and a special Guinness Rugby World Cup Website.
But one of the most important elements of the whole marketing programme is Guinness’ broadcast sponsorship of the tournament on ITV, which features a competition linked to a game card sold with cans of Guinness.
The brewer’s ad agency, Abbott Mead Vickers. BBDO, has created 45 different break-bumpers to accompany the tournament coverage.
Tim Brady, managing director of TSMS Connector, the division of ITV sales house TSMS that deals with sponsorship, says that broadcast sponsorship allows a company to stand head and shoulders above the rest of an event’s sponsors.
He says: “With most events the brand owner is sharing the rights with eight to ten other companies. What we sell and offer is exclusivity.”
He cites the example of the 1991 Rugby World Cup, when Sony – which was not an event sponsor – sponsored the event on ITV. Research showed that the majority of viewers assumed Sony had paid for the rights to the whole event.
Brady says there has been a “serious build” in income from broadcast sponsorship of sports events, with prices paid for the football World Cup up 400 per cent between 1990 and 1998.
He says: “Brands attach themselves to the importance of the event and the atmosphere of these occasions.”
Televised sport attracts a desirable audience for many advertisers – it is one of the few things that upmarket men who don’t usually watch much TV will sit down and enjoy. It attracts viewers in large numbers – Brady says that even with the launch of more channels, these major sporting events continue to have the power to unite a significant proportion of the viewing public.
According to ESCA, there was a perceived wisdom in the past that the amount of money spent on support activity should be on a ratio of about one to one with the amount spent on the initial rights fee.
ESCA director Nigel Currie says: “Realistically, there is no correct ratio. Sponsors such as Coca-Cola, McDonald’s and Carlsberg regularly set aside a support budget of between five and ten times the level of their spend on the initial rights fee.”
Players in a crowded market
He points out that with a sport such as football, sponsors have to be prepared to spend large amounts of money to achieve any stand-out in what is a cluttered market. “Smaller sports might become more attractive because you can make a bigger impact within that arena,” he says.
The sports sponsorship industry today is dominated by one player – Mark McCormack’s International Management Group (IMG). It has specialised in player management, particularly golf and tennis stars, and has been able to set up and control its own events using these groups of players. Rather than being at the mercy of other rights-owners and broadcasters, IMG manages the event, the players and the sponsorships, and sells the rights to TV coverage.
Swiss group ISL, part of the privately-owned International Sports Media & Marketing Group (ISMM), has lucrative football contracts, including the rights to handle sponsorship negotiations for the World Cup on behalf of FIFA.
The other major player is Interpublic-owned Octagon, formed from US sports marketing firm Advantage International and UK company API.
Earlier this month it emerged that Octagon is conducting negotiations to buy Brands Hatch Leisure, the motor racing circuits group, on behalf of Interpublic.
Variety of functions
Gavin Bisdee, senior manager of SRi Prime Consulting, which is part of the ISL-owned SRi Group of research and consultancy services, points out that sports sponsorship has a wide variety of uses. He says: “Many companies use sports marketing to raise brand awareness, for example Cornhill Insurance’s Test cricket sponsorship or more recently Axa’s sponsorship of the FA Cup.
“However, it is important to recognise that this is by no means sponsorship’s sole function. Coke doesn’t need to raise brand awareness, but it does use sponsorship to position the product in a lifestyle environment that the consumer can relate to.”
A company such as McDonald’s – which like Coke has no need to encourage recognition of its brand – uses sponsorship to drive traffic through its restaurants. It runs promotions and competitions associated with the sporting event – such as a scratchcard given away with a burger, offering prizes ranging from free food to holidays – and supports this with heavy TV advertising and in-store branding.
Bisdee also explains that some companies – often in the technology field – use sponsorships to target key business-to-business decision makers. The hospitality rights offered by a sports sponsorship can also play an important role for brand owners, who may want the opportunity to entertain important retailers and distributors.
Bisdee says: “Marketing directors are becoming more accountable for their sponsorship expenditure and increasingly seek direct links to drive sales. If one looks at the motor industry, unless the manufacturer is launching a new model that requires brand awareness, sponsorships are increasingly used as a platform to encourage consumers to apply for test drives.”
Marketing directors are investing more time and effort into measuring how effective their sponsorship is.
Paul Narraway, managing director of sponsorship and event consultancy Marketing Dynamic International, says: “If I could answer the effectiveness question to the satisfaction of clients, I would be a multimillionaire. It’s impossible to measure perfectly. The pound that is spent on sponsorship is vying with the pound spent on advertising or sales promotion. There is more pressure to make marketing spend work, and thus more analysis of results.
“Sponsorship has been a victim of its own growing sophistication. The kind of audience measurement being used nowadays is as good as anything in the advertising industry, but sponsors and agencies alike often forget that audience is only one way of measuring the value of the medium.”
Adrian Hitchen, executive director of SRi, says that brand owners want qualitative research on the effect of a sponsorship – for example, how many people became aware of the brand and what their impressions were – data which comes from in-depth discussions with people in focus groups.
He says that simple brand awareness questionnaires, in which well-known brands such as McDonald’s and Carlsberg always do better than consumer durables such as car manufacturers, tell only half the story.
“You have to look behind the awareness figures. Companies such as McDonald’s, which have a high level of consumer marketing anyway, will be top of mind,” says Hitchen.
Awareness of the target market
He says the sponsor must judge whether the activity has changed the awareness and levels of purchase within the group they are targeting – which may be a niche, specialist audience such as corporate buyers rather than the general public.
As sponsorship prices continue to rise, clients may have some difficult decisions to make about whether they will achieve the best return on their investment.
But what is certain is that for it to achieve its maximum potential, sports sponsorship must be part of a bigger marketing picture involving other tools such as PR, promotions, broadcast sponsorship and advertising. Securing a sports sponsorship is just the beginning of the hard work, not an end in itself.