The sight of the world’s largest catamaran limping back into harbour last week after its maiden voyage must have triggered that sinking feeling in the Philips marketing department.
But it is evidence of the stormy waters surrounding sports sponsorship as soaring costs – and market saturation – force major brand owners to look to alternative sectors and uncharted waters to reach their target markets.
The consumer electronics giant has spent millions of pounds – and sent almost hourly press releases – on the Team Philips programme which it has sponsored. Yet it must be ruing the day it ever agreed to have its strapline “Let’s make things better” emblazoned on the side of the vessel. Last week’s fiasco turned the project into one of the most highly publicised flops in history.
The rocketing costs – and dangers – of sports sponsorship are enough to put many brands off. Collapsing catamarans, poorly performing national teams and wayward, unpredictable sports stars have forced many companies to look at alternative forms of sponsorship.
Sport’s global appeal is unrivalled, but some believe music and “corporate citizenship” – such as Tesco’s Computers for schools” scheme, where companies are seen to be supporting the community – are likely to become increasingly important to the sponsorship sector. And they say arts is a major growth area. After all, how many opera buffs go out for an all-night drinking session following an evening performance?
Corporate investment in arts sponsorship grew by 23 per cent last year to &£141m, according to the charity Arts & Business. Sports is worth significantly more at &£377m, but it grew by just over five per cent in the same period (Ipsos-RSL).
Octagon Worldwide, which has built its business through sport, is planning aggressive moves into other sectors. The company, which was the brain-child of advertising giant and sports fanatic Frank Lowe, is owned by IPG. It recently acquired events specialist Davies Day (MW November 4 1999), which runs fashion awards and public sector hospitality programmes, to strengthen the group’s event-led marketing.
Octagon’s plans include moves into the music industry, cause-related marketing, and tapping the potential of arts.
But arts does have its drawbacks. As one observer says: “Sports sponsorship is all about money if you’ve got enough cash you can get exactly what you want. Arts sponsorship is very different, you need to build your credibility over years.”
Yet more and more brand owners – from brewers to mobile phone companies such as Orange, which is sponsoring the Bafta film and TV awards – are moving into the sector.
Scottish & Newcastle (S&N) brand Beck’s has supported the arts for more than 15 years as has Absolut Vodka, although S&N’s recent initiative, the Beck’s Futures Exhibition at the Institute of Contemporary Arts, has arguably received the most coverage. S&N is also sponsoring Al Murray’s West End show “…And a glass of white wine for the lady” with its John Smith’s brand. Rival Whitbread has sponsored the Whitbread literary prize for many years.
Anthony Fawcett, a former art critic of The Face magazine, was hired by S&N in 1985 to devise an arts-based strategy for Beck’s. When we started this programme it was unusual for a beer brand to get involved in the arts. But we made the decision to target young opinion formers when most arts sponsorship was very corporate – based on an evening at the opera or ballet with the chairman. And we have reaped the benefits.
“Beck’s has now become associated with the best of young British art,” Fawcett claims.
Some argue that the Beck’s programme is a one-off and art sponsorship is still the domain of accountancy and legal firms, which use it as a means of corporate entertainment. But they confirm that last year’s Monet exhibition at the Royal Academy was one of the most successful sponsorships – in any sector – of recent years.
It was backed by chartered accountants Ernst & Young, which used the event as an excuse for major hospitality it invited more than 8,000 clients and potential clients. As one observer explains: “It would probably take only one new client to sign up to make the investment pay for itself.”
Art is specialised sector
However, art may not be suitable for everyone. Kevin Johnson, senior vice-president of business development at Octagon’s consultancy division, warns: “Arts sponsorship has rarely been used to build brands. It’s very good for business-to-business activities such as client hospitality but it is a specialised sector.”
The music industry is another area tipped for growth. Barrie Gill, chairman of CSS Stella which ran the Millennium concert sponsored by British Gas, believes the sector offers huge potential for brand owners to create their own events.
“T” in the Park, now in its seventh year, is a classic example of how Bass Brewers has exploited the youth market, through its Tennent’s lager. And last year’s V99 music festival is often cited as another good example.
Red Mandarin chief executive Sally Hancock explains: “The biggest trend is experiential marketing, where companies try to create events that tie into people’s lifestyles.”
But in the search for something new, there is no substitute for a good idea. And although many would argue that supporting new events can be a high-risk strategy, they do have the potential to draw in corporate backers.
The UK-led mission to Mars, Beagle 2, for example, recently launched a search to secure up to &£10m in sponsorship and merchandising deals to help cover the cost of its &£30m programme.
Organisers of the project, which is backed by the European Space Agency, hired M&C Saatchi Sponsorship to develop the marketing strategy. Commercial opportunities include branding on the spacecraft itself, promotional activities and merchandising and licensing initiatives.
M&C Sponsorship chief executive Matthew Patten claims he has been inundated with enquiries from companies wanting to take part. He adds: “It is no longer good enough just to be efficient in sponsorship. You must have something that stands out from the crowd.”
There is always an element of risk involved in supporting these untested events, however, and they do have the potential to go disastrously wrong, as Philips has discovered. But is this search for new and improved” opportunities really worth the risk?
Not everyone is convinced that sport has reached saturation point. Alastair Macdonald, a director of Connexus, points to niche and extreme youth sports, such as snow boarding and skateboarding, as examples of sectors which have yet to be claimed for “ownership”. He says there is still plenty of scope in the sector.
Gill agrees: “The sports industry has been very clever in opening up the market to sponsorship opportunities. If you can’t get your brand into the actual event there are many other ways to get involved.
“There are now associate deals; stadia naming rights; player sponsorships; the Internet and TV sponsorship can often reach a much larger audience, such as Texaco in Formula One and Guinness in the Rugby World Cup.”
Hancock adds: “If you are looking for universal appeal – nothing has the same power as sport.”
But, ultimately, as most people in the business acknowledge, it should be your target audience that determines which events – and sectors – you support.
One observer sums it up: “It’s simply horses for courses. It would be a complete waste of money for a brand such as Tetley’s Bitter to sponsor an art prize, because it doesn’t fit with the brand’s image. Conversely, what would an accountancy firm gain from sponsoring boxing?”
Message for Sponsors, from Bud McLinktok
In the past 20 years, sponsorship has moved from bit-part player to one of the starring roles in the communications mix. If advertising is what you say, sponsorship is what you do.
In the new permission-marketing era, when what a company stands for is as important as what it sells, sponsorship is no longer an optional activity, but core to brand and business building owing to its unique alchemy of imagery, emotions, events and media.
Today there isn’t a major national or multinational company which doesn’t have a sponsorship programme, and today’s sponsors are, by and large, very much more sophisticated animals than their forerunners of 20 or even ten years ago.
Those which make it work, such as Coca-Cola and Carling, activate their sponsorship rights through-the-line to create involving, participatory and active relationships with consumers which deliver meaningful brand and business value.
Inevitably the major sports, led by football with its unrivalled ability to grip mass audiences, have captured the biggest share of the sponsorship market. Bundled, category-exclusive rights fees for international events such as Euro 2000 and the Uefa Champions League have increased by more than 250 per cent recently, to above &£10m. At club level, leagues and clubs carve up their rights and virtually everything that can be sold is sold to all-comers in innumerable tiers of “sponsorship”.
For brand owners this is slippery territory. At the top end, none but the biggest players are prepared to contemplate the entry and exploitation costs involved. At club level, clutter is a real issue and the majority of sponsors’ involvement exists literally on the sidelines and is apparently driven by the “me too” motive.
Surely a reassessment is long overdue.
Bud McLintock is head of arts at Karen Earl