It is arguably time to say that the sponsorship industry has matured. Rights fees to major sports events often exceed £20m, European spend is worth more than £5bn, and a sophisticated service industry has grown up to support sponsorship programmes. The industry has been analysed in a new report, Driving Business Through Sport 2007, published by International Marketing Reports, which features more than 2,000 of Europe’s leading sports sponsorship deals.
The key findings show that spend on rights fees has increased by 37% since 2000. The report focuses on sport, which accounts for 86% of sponsorship spend, ahead of arts on 7% and broadcast on 5% with others, such as charitable events, on 2%.
Interest in sponsorship tends to focus on who is being sponsored and for how much. But, the key findings of this report concern the change in the industry sectors using sponsorship as marketing activity.
Traditionally the big exponents have been tobacco, alcohol and the motor industry. Sponsorship by tobacco companies has disappeared following the Europe-wide ban in 2006, but most significant is the lead that financial services has, accounting for 13% of all deal value, ahead of motor on 12% and telecoms on 10%. In the UK, the figures are even more marked with financial services representing 22% of deal value, 13% ahead of alcohol and IT, each on 9%.
The findings are significant because the motor industry’s continuing high levels of investment are the result of its huge spending on Formula One, where car manufacturers spend upwards of £60m on sponsoring the major teams. If this was stripped from the equation, there is very little motor sponsorship in Europe overall, and a very small proportion in the UK.
When the survey was undertaken in 2000, there were four motor-related sponsors in the Premier League, there are now none. The financial services sector, on the other hand, has such major deals as Barclays’ title rights to the Premiership and AIG with Manchester United. Norwich Union spends £10m a year on UK athletics sponsorship, Royal Bank of Scotland has the primary rights to Six Nations rugby and a major deal with Williams F1, and LloydsTSB signed an £80m deal for national rights to the London 2012 Olympics. In virtually every major sport, at least one financial services company has major rights.
The reason for financial services’ heavy spend is partly down to increasing competition in the industry, but also because sponsorship offers good opportunities for companies. Sponsorship is much more than an awareness builder.
Nationwide is a good example with its sponsorship of football in the UK. It has developed its brand through a careful choice of properties such as national teams and, until recently, the Football League. The sponsorship has been inclusive and has even featured individual fans’ names on perimeter boards at England matches.
The fastest-growing users of sponsorship are also ploughing money into sport for brand development reasons. The combined investment from energy, gambling and airline sectors now accounts for 9% of spend in the UK, up from 1% in 2000. Energy companies Eon (FA Cup) and EDF Energy (several rugby events and London 2012) have both recently invested very large sums in sponsoring UK sport.
Given that price and service are seen as similar in the eyes of consumers, these two companies realise there is very little point of difference for the consumer when choosing an energy supplier. It is therefore important to enhance how the brand is perceived. If consumers can identify with a supplier because of the relationship it has with a sport, it is a very powerful motivating medium and a platform for marketing activity.
Gambling has grown because of the explosion in internet betting with new companies seeking to increase their profile, but also keen for a presence on rights-holders’ websites. The growth in sponsorship by airlines is mostly down to Emirates’ enormous expenditure, which includes Arsenal, the FIFA World Cup and Rugby Sevens.
The report shows that the bulk of sponsorship spend goes on football (39% in the UK) and motor sport (26%), with little change since 2000. One major football or motor sport deal can be equal to almost the entire annual spend in a smaller sport.
Sport offers multiple media platforms for brands at a time when it is becoming difficult to reach and interact with consumers. But significantly, rights holders are increasingly understanding the needs of sponsors and creating packages, which go beyond offering basic branding. Sponsorship is now a business platform that also offers potential for internal communications, business-to-business programmes and corporate social responsibility (CSR) opportunities.
Simon Rines, publisher of International Marketing Reports, contributed to this week’s Trends Insight
The continuing growth of sports sponsorship and shifts between industry sectors and changing dominance of industries over the past few years show the importance and flexibility of sports sponsorship as a marketing tool. The research is a top-line indication of the status quo and shows the effect social issues, such as gambling legislation, have had. But we should focus on the future. Another shift between industry sectors would be natural, but a withdrawal of companies could be fatal for some sports. The outlook reveals topics, such as doping and corporate social responsibility, that are moving into sponsors’ focus.
Sport still offers a wide range of engagement possibilities, however companies have to spot them and be open-minded and flexible enough to exploit them.