Sponsorship has become a game of chance: too many campaigns fail to hit the mark and few hit the jackpot. Even though brands have evolved their marketing communications due to the shift in social and digital interconnectivity, they still secure, measure and value sponsorship rights using the same old sponsorship models adopted in the 80s—effectively rolling the dice with every partnership they enter into. The result is that the sponsorship industry, laden with high sponsor churn, is seen as a risk. But it doesn’t have to be like that.
Up until 2008, the sponsorship industry grew between 11 to 14 per cent year on year (PwC, 2011). More recently, new tools and industry maturity have helped to professionalise activities supporting a more lucrative industry. At the same time, brands are dropping out of platforms at rapid pace (Barclays and the Boris Bike, Vodafone launching Firsts, etc).
The reason for a lack of confidence in the marketplace is caused by distinct separation of roles between the key parties involved in managing a sponsorship deal. This creates misaligned objectives—ironically, the opposite of true collaboration. Sales teams, both internal staff and outsourced agencies, focus on securing the highest cash investment, while activation agencies are tasked to use significant ATL advertising to bolster profit margins on creative development and advertising space.
Even with these challenges, the industry has reaped significant success with sponsorship campaigns. However the measure of success has always been identified as going beyond expectations. If sponsorship is meant to provide brands with an effective marketing tool, it will lose market share to more analytically measured mediums by continuing to follow this antiquated process.
In order to make sponsorship more consistently successful, the industry’s mindset needs to change. At present, it continues to play by old parameters of success in which a logo and badging delivered results for brands through effective brand recall. In today’s increasingly interconnected world, logos fail to resonate with purchase behaviour due to the shift in communication, yet logos still remain the key value driver in a sponsorship deal.
The recession: not all bad
The recent economic recession further impacted the sponsorship industry, but also had a surprisingly positive twist. Having previously enjoyed strong growth, sponsorship spending fell by 3.2 per cent (PwC, 2011). Less expected was the increased value other organisations started to place on understanding how to integrate sponsorship in order to maintain their profit margins. Sponsorship became part of the discussion around commercialising businesses, which was also evidenced by the growth of non-sport sponsorships during this period (IEG, 2013).
With new platforms and new buyers, the recession pushed sponsorship to board level, thereby extending its value and relevance beyond the sports pitch.
Towards more worthwhile partnerships
Campaigns that blur the lines between the sponsor and rights holder are ideal partnerships that illustrate a true collaboration being built at the outset, with mutual benefits and shared objectives.
Jay Zs partnership with Bing to launch his autobiography Decoded (2009) drove incredible results, outlining how an innovative approach using basic sponsorship principles can deliver significant ROI for brands.
In order to create successful and sustainable sponsorships in today’s landscape, brands need to start playing by new rules:
1. Think boardroom, not eyeballs: Objectives of both the sponsor and the rights holder need to be discussed and agreed at the outset. In order to ensure the partnership is relevant to the overall direction of both organisations, sponsorship should be created and developed at board or management level, rather than just within the marketing department.
2. Stop selling logos: Integrate assets outside of logos, tickets and hospitality benefits. Understanding the true value of the benefits rights holders have is crucial to unlocking hidden value for both parties. By thinking of assets beyond the logo, you are exploiting opportunities that exist within a partnership, rather than relying on easy deliverables that add very little bottom line value.
3. Create authentic engagement with the consumer: Engagement is critical. This is key for both the rights holder as well as brand. The only way to add value to the experience is to truly engage with the audience. In order to capitalise on engagement, significant creative insight is required against the audience, the sponsor and the rights holder.
4. Be inspired to do better: The process of both selling and buying needs to take into consideration this shifting landscape. The only way to create truly engaging sponsorship is to radically change the approach by both parties, which inevitably means more resources are required before the deal is completed. Inspiration is the only way to unlock this potential.
The economy has never been so primed for brands to reap the benefits of sponsorship, but getting it right is crucial. Truly understanding the benefits of collaboration will make or break a successful deal. Sponsorship can bankroll or bankrupt your brand. So stop rolling the dice.
Jackie Fast will speak at the Revolution of Sponsorship conference in Singapore between 30 November and 1 December.