The sponsorship market is in rude health, and brands can gain a significant return on investment if tie-ups are used to deliver carefully thought-out commercial objectives.
Despite some high-profile casualties, the idea that sponsorship is in decline appears to be something of a myth. Total global expenditure in sponsorship for 2009 is predicted to be £26.96bn – revised down by 0.8% but still showing 3.1% growth, according to data from IEG’s sponsorship report 2008.
Sponsorship is holding its own against other marketing disciplines too. GroupM research out this month predicts a fall of 5.5% in global advertising spend in 2009 to £253bn (and a 1.5% decline in 2010) and a 3.7% decrease in marketing services expenditure. Conversely, the data suggests that sponsorship will see a year-on-year increase of 2% – the only discipline to see growth.
Although there may be challenges in the sponsorship market, it is clear that it remains an area where marketing opportunities exist. The Game Change report from MEC Access sets out how the market has changed over the past few years and where brands can find the best vehicles to help them ride out the recession.
Sport continues to dominate the practice in terms of the number of deals and investment by brands, according to the report, but the recession has seen its share decrease 5% between 2007 and 2008. Simultaneously, there has been growth in sponsorship expenditure in entertainment and cause-related marketing as brands seek new ways to engage customers and differentiate themselves.
Jeremy Clark, MEC Access managing director EMEA, says: “The broad entertainment sphere is becoming increasingly important. Film, theatre, music, the arts and fashion are all growth areas.”
Clark adds that these properties can provide brands with useful content such as videos of performances, music or artworks, which the businesses can wield control over. This content can then be used on websites, in adverts or even to create special customer-only products or services.
Clark explains that one barrier preventing brands getting involved in sports marketing is the complicated approvals and legal processes related to content that make it prohibitive to “achieve what you want to achieve in the time you want to achieve it”.
Clark adds: “The other major area of growth is that every brand today needs to be seen to be doing good, so cause-related sponsorship alongside CSR is a really important growth area.”
Whereas a brand might have partnered with a megastar footballer in years gone by, now they might do better to sign up and support the Homeless World Cup. Retailer The Co-operative is one brand trying to combine content and CSR with a recent tie-up with children’s charity The Variety Club.
Brands hoping to get into sponsorship for the first time may be in luck. The number of sponsorship opportunities available is on the rise. The financial sector, at number one in terms of sponsorship activity in 2007, dropped to number four in 2008 with high-profile exits including Royal Bank of Scotland axing its Formula 1 partnership with AT&T Williams and aiming to cut its spend in half by next year.
ING also pulled out of F1, AIG failed to renew its deal with Manchester United and Barclays revised all its sponsorship commitments.
The diminishing involvement of financial services – especially banking – in sponsorship will provide opportunities for other sectors to take advantage of what is a relative buyers market. Clark predicts: “I imagine we will see growth in the consumer goods area. There could also be future growth in information technology companies and some of the telecoms areas, particularly the operators.”
When any brand gets involved with sponsorship, however, it is likely to have a specific set of goals and objectives, whether this is increasing brand loyalty, creating awareness, changing or reinforcing the brand image, driving retailer traffic, stimulating sales, trial or use.
Data from IEG’s Performance Research Decision Makers Survey 2008 suggests that while increasing brand loyalty and creating awareness are still key objectives, driving sales and trial is becoming increasingly important.
In this time of stringent accountability and scrutiny, marketers are under pressure to justify every penny spent and establish the potential return on investment. Clark says: “In the past, the weakness of sponsorship was its perceived link with corporate hospitality; of course, it is much more than that. It’s a growth area and it has to be delivering where marketing spend has to be measured.”
Yet according to data from IEG, 35% of businesses that became sponsors spent nothing on external or independent research to analyse the appropriateness of the sponsorship. A further 37% spent less than $5,000 on research despite the huge sums involved in these deals. Clark explains: “When opportunities come up you often have to move very quickly, which is why there is less research than one would hope.”
To help counter this issue of a lack of research, MEC Access has proposed “10 principles” in its report that are aimed at guiding marketers through this complex landscape – despite the need for speedy decisions.
Whether brands sign up for a sponsorship to gain the use of valuable content, push a good message or simply entertain clients, it is clear that the discipline will continue to evolve at a rapid rate over the next few years. With so much potential, however, it seems likely that brands will be hoping that keeping the right company pays off long term.
The ‘Game Change’ 10 sponsorship principles:
1.Understand the brand and business challenges
A partnership should be selected based on a thorough understanding of the brand’s current status and strategy. This acts as a base on which to build the business case for any partnership as part of the marketing mix.
2. Involve the business
For a partnership to be optimised, all business stakeholders should be engaged early on and throughout the process.
3. Research is the foundation of powerful insights
Research and insight should be deployed across the partnership lifecycle.
4. Think three-dimensionally
Don’t just consider an off-the-shelf product from rights holders. Think about different types of content and how they can be leveraged across multiple channels.
5. Invest well
Select your property based on solid data and insights. Ensure a realistic budget is available to bring the partnership to life.
6. Negotiate and plan together
You need to know what you want and how you are going to use it when you go into negotiation.
7. Contractual balance
Planning ensures there is the right balance between the brand and rights holder.
Develop activation that creates stand-out and an “ownable” space for the brand.
9. Integrate, integrate, integrate
Real value from partnership assets will only truly be realised if they are fully integrated through corporate work streams and channels.
10. Look for a winning return
A partnership is only a winning one if it delivers a tangible return on your investment. Set clear and measurable performance indicators against the communications and business objectives.
Marketing director of Danone Waters, owner of Evian.
It’s becoming increasingly difficult via traditional advertising to engage with mass audiences in the iconic way we need to as a more premium FMCG brand.
Evian in the UK doesn’t have a heritage in sponsorship, but with over three-quarters of the population tuning into Wimbledon – coupled with the event’s global prestige as an iconic social and sporting occasion – we were able to build a robust business and brand case for a five-year partnership with the All England Club in 2007.
Having the likes of Sharapova, Federer and Nadal drinking your product on global TV has a terrific amount of value but it was crucial a strict measurement and evaluation of the sponsorship was put in place from the start.
Like so many others, we’re in a world of justifying every penny of marketing spend and being able to show positive tangible business and sales figures alongside the softer brand and media exposure results is a very powerful internal persuasion tool.
As they see the results and feedback from our trade partners, our colleagues – in the UK and globally – become increasingly supportive.
Director of marketing, The Co-operative Group
The Co-operative has just announced a partnership with the Variety Club of Great Britain, which will make a huge difference to the lives of sick, disabled and disadvantaged children and young people.
The Variety Club’s commitment to community causes is a great fit with our own brand values, and supports our “Good For Everyone” vision. This encompasses everything from fair trade projects to sharing our profits with our members.
The partnership is not only the perfect opportunity to support our brand vision, but also to add to the £200m raised and millions of children helped by the Variety Club over the last six decades.
We invest millions of pounds every year from our profits and members’ contributions into supporting good causes across the UK.
As a business, The Co-op is committed to leading the way in community investment, which we will communicate by fully integrating the Variety Club partnership within our family of businesses and membership channels.