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What is sponsorship?. Sponsorship is a powerful marketing tool.
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What is sponsorship? • Sponsorship is a powerful marketing tool. • Not only can it increase brand visibility and develop brand associations but it can potentially cut through the clutter and provide a unique opportunity to build a relationship with customers by creating an emotional bond with them. • Sponsorship is highly flexible and can be tailored to meet a wide range of marketing and business objectives. • OpenField defines sponsorship as aligning a brand with a marketing asset in order to exploit the associative and commercial potential created by the alignment thereby helping to meet specific objectives that positively impact on brand image and / or sales.
The Power of Sponsorship A successful sponsorship can: • Heighten visibility • Reinforce or shape brand image and build brand equity • Demonstrate brand / product attributes and company values • Reach consumers in an environment of their choice - permission marketing • Shape consumer attitudes through association • Differentiate a brand from its competitors • Generate “free” media exposure • Drive sales
The Power of Sponsorship A successful sponsorship can: • Incentivise staff internally and the trade externally • Create corporate hospitality opportunities • Create differentiated brand experiences for customers - experiential sponsorships • Offer merchandise opportunities • Combat larger ad budgets of competitors • Fulfil social responsibilities to community development • Provide a platform for an integrated communications campaign
BMI Agency Research 1999 The following table lists the key objectives as to why companies sponsor sport in South Africa Why UK Companies Sponsor The most common sponsorship objectives are : - Supporting advertising & PR i.e. brand building (78%) - Driving Sales (52%) - Corporate Hospitality (46%) Sports Marketing, Jan 2000
Global Sponsorship Spend • Worldwide sponsorship spend has increased by a massive 81% in the last decade but this growth is slowing down as seen in the year on year growth having reduced to 7% during 2000 from 1999’s 14%. • Total global spend in 2000 reached US$24.8 billion with America’s share of global spend being the greatest at 42%, followed by Europe with 31%. • On average, sport accounts for approximately 70% of total sponsorship spend. • The global average for arts sponsorship spend is around 15%, but is a sector in which spend is increasing globally, indicating a diversification in the properties with which companies are associating their brands. • The most successful and popular sport worldwide is soccer with annual sponsorship investment of around US$920 million. Tennis, formula 1 and basketball currently rank second, third and fourth respectively.
South African Sponsorship Spend • Sponsorship spend in Africa makes up 1.3% of the global spend. • Total sport sponsorship spend in South Africa amounted to R2.3 billion in 2001. • An estimated additional R2 billion is spent annually on conservation, welfare, arts and education projects but this is largely social development spend and such investments are often not leveraged as per traditional sponsorship platforms. • Since 1986 sponsorship spend in South Africa has experienced an annual compound growth rate of about 21% making sponsorship the fastest growing element of the marketing and communications mix. • In 1999 BMI research indicated that 47% of local companies said their sponsorship spend is increasing faster than their advertising spend with a further 25% saying that both were increasing at an equal pace.
South African Sponsorship Spend • 71% of the total sponsorship spend is allocated to sport, a further 7% each to the arts and broadcast sponsorships, leaving roughly 15% to other sectors such as the environment, welfare and charity type sponsorships. • Looking specifically at sport, more than 80 South African sports codes receive sponsorship funding, but the top 5 sports, in terms of funding, namely soccer, rugby, motor racing, cricket and golf receive around 61% of the revenue. • The country’s most popular sports, taking into account both participants and spectators, are soccer, boxing, cricket, athletics, rugby, and tennis with basketball, volleyball and cycling showing the greatest growth.
The Benefits of Sponsorship over Traditional Media • Sponsorship’s growth relative to that of traditional media can be attributed to the following: • decreasing efficiency of other media (fragmentation) • changing social priorities • increasing need for two-way communication with customers • Sponsorship provides a platform for bringing a brand to life,creating a physical manifestation of the brand and its key attributes. • Sponsorship communicates with people in an environment where they are more emotionally receptive. • Consumers have become less receptive to traditional, more intrusive media platforms and, as a result, sponsorship’s role as a permission marketing tool is gaining relevance over other more intrusive mediums and is therefore making up a larger portion of the overall marketing budget.
Sponsorship is changing • While sponsorship is growing in stature as a marketing medium, the environment in which it operates is also changing and is characterised by the following: • An increasingly competitive environment • Diversification of sponsorship platforms • Discerning sponsors approaching things from a more commercial perspective • Engaging consumers at many different levels including the use of new media technology • Increased focus on accountability and measurement
An Increasingly competitive environment • Sponsorship’s growth has resulted in the environment becoming increasingly cluttered and competitive with a wider choice of potential platforms now available to sponsors and the costs of rights fees for major properties spiraling. • 67% of local sponsors believe sponsorship costs are becoming too expensive resulting in more pressure for sponsorships to deliver real, measurable benefits. 2,889,556 the number of people worldwide who attended one of our events in the past year.
Diversification of Sponsorship platforms • Sport Business highlights the “growing feeling that (consumers) are beginning to rebel against major brands and the messages they convey through sport …” resulting in a number of other platforms opening up to sponsorship such as entertainment, the arts, causes etc. • In addition, Sport Business also highlights the “growing consumer demand for social responsibility” and hence increased investment in cause related sponsorships. • More sponsors are using brand-created events where the sponsorship is a visible expression of the brand and its attributes. • Media based sponsorships that provide a platform to differentiate the brand from competitors and sponsorships that provide exclusive access to content are becoming increasingly sought after by sponsors keen to break through the clutter.
Sponsorships changing needs • Sponsors are becoming more discerning in their choice of sponsorship properties and approaching sponsorship from a far more commercial perspective. • Sponsors are focusing on fewer, more targeted sponsorship platforms and then maximising leverage extensions feeding off the chosen platform. • Sponsors are starting to own their own events thus creating new revenue streams in order to limit their own overall investment. • Sponsors are looking for sustainable and relevant sponsorship programmes that deliver real benefits for their brand and enhance a brand’s relationship with its customers in a measurable way. • IEG predicts that deals will increasingly be structured on a fee / profit sharing basis without traditional rights fees and sponsors will start to insist that their sponsorship fees fund activation and add value to the fan experience
Consumer reaction to Sponsorship • In addition to their indifference to traditional media, consumers have also become more aware of the commercialisation and badging of many events through sponsorship. • Multi-faceted sponsorship programmes that engage at many different and more subtle levels are proving to be an effective means of combating this consumer distaste and indifference.
Engaging consumers on a Personal Level • Sponsorships should be a physical manifestation of the brand and therefore provide an excellent opportunity for the brand to touch and interact with consumers on a personal, rather than a mass exposure level. • The focus is therefore shifting towards driving customer participation and involvement at events - engaging the customer at many different levels thereby providing them with memorable brand experiences. • Providing consumers with memorable experiences is key - Consumers are emotionally and rationally driven. “Don’t treat customers just as rational decision makers. Customers want to be entertained, stimulated, emotionally affected and creatively challenged.” - Bernd H. Schmitt “Experiential Marketing”
Using new Media to engage consumers • Technological innovation has resulted in a transformation of the media and has provided and continues to provide new opportunities to reach consumers. • Broadband and the Internet are already allowing wider distribution and almost unlimited access to sports and entertainment events and information worldwide. • Today’s digital platforms are able to make sports entertainment and news content immediate, personalized, location-sensitive and mobile. Consumers are no longer at the mercy of network programming schedules but can choose a number of content options.
Embracing the new media Opportunities • “Harnessing the potential of new media represents the most significant opportunity and the biggest challenge facing sport” - Sport Business Jan 2000 • In terms of effective communication, sponsorships need to be target focused and interact with consumers on a number of different levels using both traditional and new media opportunities such as the internet. • In the UK and USA, sponsors now insist that their sponsorships have an internet component, however in South Africa, sponsors and rights owners must bear in mind that the internet community in South Africa is small (2.4 million as per Business Day, Sept 2001) and only available to selected demographics therefore if used as part of an integrated communications campaign it must be strong, well promoted and interactive, with mechanics that provide points of difference, hooks and benefits for the browser.
Donor/Patron Investor/Marketer Manager/Owner Experience Provider Mass audiences available via media Funding enables exploitation of rights purchased Sponsor controls & manages activities Funding enables cleaner sponsorship environment & tighter targeting Personal interaction with customers Create a physical manifestation of the brand. Evaluation of Sponsorship The Sponsor’s Changing Role Little commercial realism Funding enables attendance & participation
Accountability and Measurement • Sponsorship’s heightened prominence in the marketing mix and the multi-media strategies being adopted by brands has increased the attention given to sponsorship evaluation and measurement techniques to enable sponsors to accurately assess the effectiveness their sponsorship programme. • It is important to bear in mind that as sponsorship gets more experiential, so must sponsorship measurement. In addition to output focused measures such as media coverage and brand awareness,“companies need to measure customer delight to gauge a sponsorship’s ability to impact attitude toward their brand and the competition’s. Companies should also measure performance against the objective of creating a transformative experience
