By David Atkinson, Managing Partner at Space Sport & Entertainment
I’m going to start by betraying my own rule: never begin an article with a negative. So here goes; sponsorship is the very first budget line to be cut in a recession. There – it’s out now.
But that’s an oversimplification of the lie of the land, because for many, this could be just the time to make a mark. This ‘How to’ guide explores how to shine when the lights of others might be flickering.
There’s not much you can do about the big deal when you’re bang in the middle of a five-year sponsorship. So it’s all about effective management and execution of activity leveraging the sponsorship.
The old adage used to be that brands should spend double the cost of a sponsorship in activating it, which if you’re in charge of Samsung’s football budget, you should be earmarking a phenomenal 12-figure five year marketing investment. Clearly, this is not feasible.
There’s no simple rule of thumb to apply when comparing sponsorship investment with the cost of activating the sponsorship, for the simple reason that brands get into sponsorship for wildly different reasons and with wildly different objectives.
Take AIG and Manchester United for example; AIG was an unknown brand in the UK and in most markets other than America and chose to sponsor United to create brand awareness and recognition and to build a commercial face of the business to a number of key audiences.
So once the sponsorship investment was made, it wasn’t so critical to double it off the field. With Coca Cola and the Football World Cup, however, brand recognition is in the 90%s, and therefore this four-yearly event is a platform to elevate the brand above competitors in terms of sales and value.
In difficult economic times, brands who have already invested can only cut back in the activation budget. However, this is not the time to pull back from activity altogether. Brands use sponsorship as a way to connect with a very specific type of audience who are passionate about their team, band, movie, artist, etc.
And therefore when a brand opts out of its support and commitment, it can often have a damaging effect with just the audience it’s been aiming to engage. So a reduction in budget and a more clever set of tactics would be the most sensible way to approach this scenario.
Such tactics include making optimal use of the assets that you can’t do anything about. Contractual obligations should be exploited; for example, if an annual contract offers the brand hospitality occasions and signed merchandise, you would ensure that potential new business opportunities (e.g. distribution, partnerships, etc) are entertained in hospitality, and press promotions can be made to leverage merchandise / personal appearances and assets in a creative and cost effective way.
Furthermore, it’s possible to look at turning standard sponsorship offerings into money can’t buy experiences. For example, rather than inviting shareholders, investors and staff to a meet and greet event, why not offer consumers the chance to meet or play against a legend.
When Carling gave away their entire ticket allocation to the Carling Cup Final a couple of years ago, the value to the brand was so much more than being able to give away x thousand tickets; it essentially demonstrated that Carling was a brand of the people and not in debt to a load of suit-wearing fat cats.
Not every sponsorship requires massive budgets. If we ignore the ‘guerrilla’ or ‘ambush tactics deployed by non-sponsors or anti-sponsors who aim to get association with particular events through slight of hand, but often clever, “round the outside” activity, there are still plenty of ways to spend cleverly and come out winning.
In sport, if we take out the biggest three investments (Olympics, Football World Cup and European Championships), all other markets have taken a battering in the past 12 months. Whilst you could argue that Samsung’s renewal of the Chelsea sponsorship and Aon’s investment in Manchester United wouldn’t exactly hint at world recession, most other football clubs have struggled to match previous deals, and many are still hunting for a buyer.
We’re reaching a stage where the revolving door shirt sponsor strategy means that consumers / fans don’t even bother to associate with the sponsor, because there’ll be another one next year, or Brand X will even swap teams when it suits them.
This, ultimately, means that there’s a huge opportunity for brands that have done their homework and know that they can get into something for the long term. The stand out, is where a brand can occupy a critical and credible role for decades rather than months, like Carlsberg and Liverpool FC.
I will never advocate, no matter what the reason, brands jumping into a short term pattern of buying whatever they can afford at the time. Any sponsorship spend needs to form part of a longer term strategy, even if it is an association with music, film or the arts.
There are plenty of lower cost investments – for example, sports such as tennis, rowing, cycling, swimming, golf, skiing, and even now F1 has got used to cutting its cloth in attractive ways for sponsors - that can make sponsorship work for investors.
Similarly, if a brand can determine that association with music is the right path to follow, then it’s a lot simpler for brands to become involved in festivals, downloads, live music and artist sponsorship than ever before.
So whilst it’s becoming increasingly challenging to justify big budgets in sponsorship, it’s the same for rights holders to command higher spend. At least many have become far more nimble and flexible than ever before in trying to attract a different kind of sponsor and to tailor packages to associates, no matter how deep the pockets.
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