Sport sponsorship

1. Sport sponsorship Sport Marketing University of San Francisco Sport Management Cohort 07S

2. Intro • $11.4 billion market in north America & $28 billion worldwide (IEG, 2004) • 10% of sponsoring companies receive 1,300 proposals/year (Seaver, 2004) • Top spending corporations (IEG, 2004): • $250-255 million PepsiCo • $240-245 million Anheuser-Busch • $185-190 million GM • $180-185 million Coca-Cola • $ 160-165 million Nike • Investment breakdown by industry • Sports (69%) $7.69 billion • Entertainment (10%) $10.06 billion • Festivals/Fairs (7%) $792 million • Cause marketing (9%) $991 million • Arts (5%) $608 million

3. Sponsorship • “a cash and/or in-kind fee paid to a property in return for access to the exploitable commercial potential associated with that property (Ukman, 2004) • “Sport sponsorship, in its essence, is based on a mutual exchange between a sport entity and a corporation (Copeland et al. 1996).”

4. Theoretical framework • Social Exchange Theory (Emerson & Cook, 1978) • “Based on central premise that the exchange of social and material goods is a fundamental form of human interactions. Focused on how interaction patterns are shaped by power relationships between individuals and the resulting efforts to achieve balance in exchange relations – a symbiotic relationship • Theory of inequity (Adams, 1963) • “Whenever two individuals exchange anything, there is the possibility that one or both of them will that the exchange was inequitable. Therefore, inequity for a person in the relationship occurs whenever he or she perceives that the ratio of his or her outcomes to inputs are unequal.” • 3. Reciprocal Theory • “Customers will seek a reciprocal relationship with a select group of sellers from whom they will purchase products and services. Customers expect to pay for value, but customer loyalty can only occur when the two parties perceive that the value exchange between them is equal.”

5. Growth impetus • “the ability to reach consumers in a less cluttered environment than traditional advertising (Cordiner, 2002).” • Advertising – exposed to over 5,000 messages per day. • Sport may also be over-saturated! • “Cluttered with title sponsors, presenting sponsors, supporting sponsors, cam sponsors, official product sponsors, pouring rights, licensing rights, naming rights…Clutter and dilution are in direct opposition to what sponsors want.” • Many sponsors are now seeking alternatives… action or extreme sports, fantasy sports, or “Fewer, better, bigger” or “Less is more” approach to reduce clutter.

6. Background • Used to serve interests of corporate CEO’s (“Let’s sponsor golf, because I like it.”) • “Strategic philanthropy”: A company’s long-term investment in an appropriate cause that does measurable good in society while enhancing the company’s reputation with key audiences.  Evolved to Causal (Cause-related) Marketing. • Heavy dependence on sponsorship – from high school to pros • Creating “win-win” partnership

7. Stotlar Evaluation model Please see handout

8. Sponsorship process • PROSPECTING FOR SPONSORS & UNDERSTANDING SPONSOR NEEDS BRAINSTORMING & PLANNING FOR SPECIFIC ACTIVATION (PROPOSAL) EXECUTION OF ACTIVATED COMPONENTS POST SPONSORSHIP EVALUATION

9. Prospecting for sponsors • (1) RESEARCH! (WSJ, trade publications, Yellow Pages, local Chamber of Com.) • Business trends • Industry health (ex. Airline vs. gasoline) • Past sponsors & new kids on the block • (2) GENERATE A LIST OF COMPANIES & RANK THE POTENTIAL • (3) INVESTIGATE POTENTIAL SPONSORS (Websites, Annual Report) • Company profiles • Ownership status • Brand literature – positioning, features & benefits, messages or stories…etc. • New product roll-out’s • (4) ESTABLISH THE CORRECT POINT OF ACCESS • Start with local, then corporate HQ. • Both local and HQ must endorse and support the prospect of sponsorship

10. Identifying sponsor needs • (1) KEY CONCEPT • “Is there a fit between what I can offer and what the sponsor needs? Finding that perfect FIT is essential!” • (2) NEED FOR SPONSOR CRITERIA FOR EVALUATION OF SPONSORSHIP PROPOSAL? • Increasingly stringent ROI accountability!! • (ex. Coke: $1 = how many cases?, A-B: “Does it sell beer?”) • (3) IDENTIFY & UNDERSTAND WHAT YOU HAVE! • Crystallize your demographic profile (age, gender, income, location…etc) • Understand psychographics of your fan base (attitudes, perceptions, beliefs, values, purchase behaviors…etc.) – utilize past data • The clearer these info, the clearer your “PLAN OF ATTACK”

11. Identifying sponsor needs • (4) LEARN ABOUT SPONSOR NEEDS (= “objectives”) • a.“We NEED to let consumers know about our new product / brand.”  AWARENESS OBJECTIVES (ex. Nike vs. LG) • b. “We NEED to upgrade the impressions held by consumers about our company.”  IMAGE OBJECTIVES (ex. Wal-Mart apparel ad in Vogue & K-Mart & PGA) • c. “We NEED to boost our revenues (sales volume).” – SALES OBJECTIVES • Drive traffic at retail (ex. QSR’s & car dealers) • Product sampling (ex. Food & beverage brands) • New consumer data base (ex. service industry) • Incremental volume (ex. vending programs at schools or event merchandise sales) • BOTTOMLINE! Sales-driven objectives are No.1 NEEDS for sponsors!

12. Identifying sponsor needs • d. “We NEED to entertain potential and current clients in order to open new businesses and retain current accounts. NEED to something to enhance business relationships with them.” – HOSPITALITY OBJECTIVES (ex. Corporate suites and tents or pro-am’s)  mostly sales-driven as well. • e. “We NEED to minimize the impact of recent lay-offs and/or reward the model employees.” – EMPLOYEE MORALE OBJECTIVES (ex. POSCO & 2002 World Cup, PGA Shell Houston Open) • (5) IDENTIFY THE FIT AND ATTACK POTENTIAL SPONSORS! • Convince “how and why” the fit is there. • If your sponsorship can satisfy multiple objectives (the more the merrier), your pitch has a better chance. However, focus on 1-2 KEY sponsor needs and address them fully.

13. Execution • Activation: Stotlar’s model • Cross promotion: • “Among the most powerful and popular activation methods, as they can grant marketers access to new distribution channels and spread out proportional costs across multiple partners.” • (Ex. NBA + Sprite + 7-Eleven prior to the All Star Game) • Cause-related marketing: • 83% of consumers developed a more positive impression of companies engaged in CRM (Ex. “Coaches vs. Cancer” – for Jimmy V. Foundation) • Grassroots programs: • Brings marketing to a local or regional community

14. Post-sponsorship evaluation • INCREASED EMPHASIS ON R-O-I (ACCOUNTABILITY) • Easier to retain current sponsors than to start from scratch again. • Honest and accurate assessment of the exchange theory can lead to long-term partnerships. • Can also be used as a recruiting tool for future sponsors.

15. Post-sponsorship evaluation • Stotlar’s Evaluation Protocol (2004) • QUANTITATIE APPROACH • Event demographics • Recall (unaided) / Recognition (aided) Surveys • Top of Mind (TOP) Research (pre, during, post event) • Market Share Measures (pre, during, post event) • Incremental customers (pre & post) • Promotional measures (ex. Coupons, liquidation, downloads, sales incentives, new DB…etc.) • Employee Morale Survey • Qualitative Evaluation Protocol (Choi & Stotlar 2006) • A NEW PERSPECTIVE • LG Action Sports Championship • On-site COMPARISON of “activated components” vs. “consumer findings” • Photo Journaling method

16. Developing a proposal • See sample USA Taekwondo Sponsorship Proposal in your Reader for more info and strucutre.