SPONSORSHIP: Fear of the unknown - James Curtis examines why sponsorship is in danger of losing its place in the marketing mix

What is it about sponsorship that makes marketing directors so

nervous?

On the one hand, it is an exciting, fun opportunity to develop a

relationship with consumers via an event, a sport, a stunt, TV or the

arts. It can make you look caring, daring, sexy or hip and can transform

a brand’s image.

The flipside of this is that it is one of the least scientific

constituents of the marketing mix. It is hard to measure and the

decision to sponsor is often emotionally, rather than rationally,

driven. In a climate in which marketing directors are held to account

for the way they spend their budgets, sponsorship is, for some, too much

of an unknown quantity.

Exclusive research for Marketing appears to back this up. Two separate

surveys asking marketers for their views on sponsorship revealed a

widespread client uncertainty about the value of sponsorship.

The first, at the Marketing Forum aboard the Oriana last September,

asked client delegates how they had divided their marketing budgets

between the main disciplines since 1994. This showed that sponsorship’s

share of the cake had slipped from nearly 8% to 3% within three years.

Over the same period, direct marketing’s share has increased from 13% to

15%.

Asked whether they planned to spend more or less on sponsorship over the

coming year, 77% of delegates said their spend would decrease or stay

the same. Twenty-three per cent said they would spend more - the second

lowest score of all the disciplines. Only hospitality scored less, with

just 12% planning an increase. Direct marketing was again the area

inspiring most confidence, at 67%.

This lack of confidence in sponsorship was confirmed by our Salary

Survey of 1000 marketers (Marketing, January 9 and 16). Asked to rank

the six main marketing disciplines in order of priority, sponsorship

again fared poorly, with 63% of respondents saying it was the least or

second least important in terms of allocating budget. Again, direct

marketing came top in terms of budget priority.

Clearly, the fact that direct marketing can be measured and targeted is

a big attraction. It may not be as much fun, but it is easier to explain

to the finance director.

Sponsorship consultants say confusion among clients can be attributed to

a lack of understanding about how sponsorship works and how it should be

measured. Mike Bloxham, managing director of the Bloxham Group, says:

’Evaluation and exploitation are part of the sponsorship lexicon, but

are not always part of the process. As a result, there are a lot of

people asking what they are getting out of it, and not many are getting

robust answers.’

Despite this there are mechanisms by which to measure the effectiveness

of sponsorship. The problem, as Bloxham says, is that too few clients

are willing to pay for it once they have already shelled out on the

sponsorship deal itself. ’There is still a lot of resistance to

measuring sponsorship, mainly because people think they can’t,’ says

Bloxham.

The industry points to some well-thumbed case studies of sponsorship

pay-backs to prove that it works. Rick Jones, European managing director

of Advantage International, the agency which helped to persuade IBM to

become a sponsor of the Atlanta Olympics, says: ’That deal cost IBM

dollars 40m (pounds 26m) over four years in 190 countries and it sold

dollars 540m (pounds 346m) worth of product on the back of it. I’d call

that a very efficient purchase.’

Jones points to the fact that IBM and MasterCard both plan to sponsor

the Sydney Olympics as proof that last summer’s spend paid

dividends.

In addition, MasterCard is ploughing dollars 20m (pounds 12.8m) into a

sponsorship package that will link it to a clutch of football events

including the 1998 World Cup in France.

Carling’s pounds 37m backing of the Premier League is championed as one

of the most successful sponsorship deals, increasing market share and

regional distribution as well as radically repositioning the brand. Coke

has also found a happy hunting ground in football; its backing of Euro

’96 has spawned a whole new football-related marketing strategy built

around its ’For the Fans’ ethos. Its latest plan is to build

relationships with Coke drinkers interested in football via a database

of people which responded to its football promotions.

Linking sponsorship to relationship marketing is being seen as a way to

make the deal work harder. It is also a safer bet for those who need the

comfort blanket of being able to account for their spend.

MasterCard’s sponsorship deal with the Lola Formula 1 Grand Prix team is

an example. The card company is funding the sponsorship through a newly

created club membership scheme. Cardholders interested in motor racing

pay an extra fee to join the club, through which they can receive racing

team merchandise, clothing and access to the team and drivers. The club

dues make the sponsorship entirely self-financing and help keep the Lola

team on the track, which costs dollars 35m (pounds 22.4m) a year. An

additional benefit is for MasterCard’s global network of financial

institutions, which will distribute membership offerings to

customers.

All or nothing

Deals like this make you wonder why people worry about sponsorship. But,

as Richard Busby, chief executive of BDS Sponsorship, says: ’There is a

big knowledge gap between those who make sponsorship work and those who

don’t. Sophisticated marketers understand it and make it work well, but

there are plenty of people who just dip their toe in the water and don’t

follow it through.’

If sponsorship is used as a stand-alone investment then the chances of

seeing a payback are slimmer. Integrating it into the marketing mix

makes it easier to leverage the brand and generate a return. Jones says:

’There’s a lot of confusion about what sponsorship is. You can’t compare

it to other disciplines because it is a platform on which they are all

based.’

Carlsberg-Tetley ensured that its sponsorship of the England Cricket

team was integral to the relaunch of Tetley’s in January. Although it

announced in November that it was calling time on its pounds 2m-per-year

backing of the team, cricket played an important role in the relaunch,

which, with great timing, occurred at the end of England’s disastrous

Zimbabwe tour.

Richard Moore, director of Tetley’s sponsorship agency, Capitalize,

says: ’It required a great deal of careful planning to ensure that

Tetley’s was not snared up in the negative press coverage surrounding

the team.’ A staged photo of Dominic Cork with a new-design Tetley’s can

was taken in time for it to appear in the UK papers on the morning of

the launch and a competition was run in the regional press.

Ironically, it was the Test and County Cricket Board’s (TCCB) reluctance

to help the brewer leverage its sponsorship in this way that contributed

to the decision to withdraw its support. The fact that Tetley’s could

only sell its beer at one Test ground, and the award of a mobile sales

licence to Guinness, obviously made Tetley’s feel it was not getting

value for money.

While accepting that rival brewer sponsorship of grounds made pouring

rights a difficult issue, Busby is not surprised that Tetley’s pulled

out: ’The TCCB is complacent about sponsorship and thinks it’s more

about nice corporate hospitality than driving sales.’

If sponsorship is going to work and clients are to feel more secure

about their investment, it is imperative that the objectives of the deal

are clear from the outset. ’People like it for the wrong reasons,’ says

Bloxham.

’They think it is ’fun marketing’, but they need to be colder. Ask ’what

are our objectives and how will sponsorship help us achieve them?’ If

you can’t think of any quantifiable benefit, you shouldn’t do it.’

Change in expenditure

                Sponsorship   Direct marketing

Increase                23%                67%

Stay the same           62%                28%

Decrease                15%                 5%

Source: Marketing Forum 1996. Base: 100

respondents

Ranking by priority

Direct marketing        57%

Advertising             52.5%

Public relations        40%

Sales promotion         38%

Sponsorship             10.8%

Source: Marketing Salary Survey. Base: 1000

respondents

This article was first published on Marketing