BDS Sponsorship, Sponsorship Information

Measuring Successful Sponsorship Executive Summary

Sponsorship originally was, and sometimes still is, perceived as a highly cost effective method by which to significantly increase levels of brand or corporate awareness. The market, however, has matured significantly over the last 25 years, so that the main reason for a company to undertake a sponsorship programme, particularly in Europe, has become to positively influence customers perceptions of its image; both its strengths and weaknesses.

Now the market has altered yet again, due in main to the advent of digital television and the growth of the internet. Many television channels record such low audience figures as to be immeasurable (less than 1.0% of the UK population). Therefore the massive reach advantage that advertising held over sponsorship no longer applies. Media agencies are now forced by brand owners to consider ‘properties’ that deliver ‘niche’ rather than ‘mass markets’.

Mainstream marketing has also started to adopt lessons practiced for the last decade by the leading sponsorship practitioners. For instance in order to succeed in sponsorship brand owners have had to provide meaningful added value experiences. Through sponsorship, and also successful customer relationship programmes, this approach has been adopted by most major brands as a cornerstone of their overall marketing strategy. Such an ‘Experiential Marketing’ approach seeks, as with a successful sponsorship, to dazzle the customer’s heart, stimulate their mind and touch their senses. In short, by harnessing the power of the emotions and senses a brand cuts through the noise in a cluttered marketplace.

The first three chapters of this report examine the growth of sponsorship, assess the objectives that sponsorship can achieve and give an overview of the theory and practice of sponsorship measurement.

Successful sponsorship succeeds in identifying qualities and values in the television programme, community, event or venue being sponsored and transfers and adds those values to the sponsor’s own brands or company. To give an example, the UK television series, Kavanagh QC, was marketed as providing the following perceptions for a sponsor to link into: ‘confidence, being established, the human sensitive side, quality, intelligence and knowledge.’

In North America there is a further major objective for sponsors, which is to directly stimulate product and service sales through fully integrated sales promotion techniques such as couponing. While this objective would be equally valid in Europe and the UK, such techniques, are less widely used to leverage sponsorship outside the US.

Sponsorship, in simple terms, is the acquisition of the rights of association. In order to achieve success, the purchase of the rights will not in itself deliver marketing success – the rights need to be leveraged. For example, UK newspapers in the past have successfully used scratchcard promotions thematically integrated with their TV programme sponsorships to gain substantial increases in circulation.

Such exploitation techniques have not, surprisingly, been used by the television sector, for example. However simple promotional mechanics are often ignored or forgotten. For example, television programme sponsorship should be supported through on-pack promotions trade competitions, seminars, roadshows and on-line activity.

The event marketing area (see Chapter 4) is also undergoing great change. For example, retailers and the media in the US are far advanced compared to those in Europe. In the US, retailers buy sponsorships and then sell them on, in the same way that in Europe, inclusion in a retailer’s advertising campaign is sold on by them to their suppliers. Media owners have gone even further by acquiring rights, sometimes with cash and sometimes through barter of advertising pages, and then bundling them up with further pages of advertising or radio spots and selling on the enhanced package. Sports Illustrated, as early as 1992, financed its Olympic sponsorship through this technique, which has now ‘trickled down’ to even relatively small regional newspaper owners. Multimedia giants, such as AOL Time Warner, have also extended their appeal to sponsors by tying in other companies they own (such as theme parks) to offer further sponsor benefits.

The crucial lesson which is still being learnt all around the world is, ‘do not measure only what is easy (visibility) but rather what is critical (impact).’ Thus, the higher the regard for the brand, the more likely it is to be purchased and therefore the higher the return on investment (ROI) is likely to be.

Potentially appropriate techniques started to be developed in the early mid-nineties. For example helping a sponsor measure perceived quality (Total Research), return on investment (Coca-Cola, 1994, Sprint, 1994), incremental profits (Colgate Palmolive, 1993) and maximising and quantifying sponsorship value (Gillette, 1995).

Notably in 1996, Coca-Cola developed a new way of measuring sponsorship ‘impact’ in a new and radical way. After its sponsored Olympic Torch Run across North America Coca-Cola asked spectators not just who sponsored the run, but also ‘who were you standing next to?’ and ‘what did the torch-bearer look like?’ in order to elicit a deeper understanding of the emotional impact that the event evoked. This was also a very early example of a measurement technique, which today is highly relevant to those brands seeking to measure their strategy as regards ‘experiential marketing’.

In Europe, in particular, sponsors regularly fail to exploit their sponsorship with sufficient financial support. Chapter 4 illustrates this difference by considering the typical level of financial support (leverage) which U.S. companies in various industries put behind their sponsorships. U.S. soft drink companies, for example, spend six times their sponsorship fee on leverage (source: IEG).

Venue sponsorship has become the fastest growth area in sponsorship as those venues that attract millions of visitors each year compete on reach with all but the biggest T.V. channels. Whilst venue naming rights deals have received most of the media headlines to date, this is but the tip of the iceberg. Shopping centres work major sponsorships just like the Olympics with 8 or 10 category exclusive sponsors, all of whom provide extra value experiences and thus add significantly to the consumers ‘day out’. The ‘Land Rover Experience’ at the Bluewater Shopping Mall, Kent, England is an example of such a trend and moreover the customer pays £10 to Land Rover to be driven in an off-road experience!

Sponsors also often fail to comprehend that building a bond with their prospective customers requires more than banners, P.R. mentions and V.I.P. hospitality from which they are excluded. This need to emotionally engage with consumers in order to be successful is demonstrated by research conducted by the Phoenix Open golf tournament. This event attracts millions of pounds in sponsorship every year. Yet research conducted after one event revealed, amongst attendees, that the best performing sponsor using both qualitative and quantitative data was South West Airlines who only spent $500 on its sponsorship. The airline was so successful because it realised that with temperatures in the 80’s and 90’s Fahrenheit spectators would be very grateful for water coolers at each tee.

Chapters 5 to 8 examine issues by analysing sponsorship in areas such as cause related marketing, arts, community and education. To succeed, event, community and cause-related sponsorship must transmit ‘emotional values’. The Prudential’s Theory of Social Responsibility endorses this point by stating that, when selecting from seemingly identical products the consumer will choose to buy from the company to which it can most closely relate. The rapid rise in social and ethical auditing is occurring because, Sir Iain Vallance, former chairman of BT stated: ‘It gives a competitive ethical edge. It makes sound business sense.’

Similarly, Carling’s sponsorship of Premier League Soccer was undertaken to create a relationship with football fans and therefore increase sales to younger beer drinkers by contemporising its brand image. The success of this approach can be assessed by Carling’s £37m four-year extension of it’s Premier League sponsorship, an increase of more than 300% over it’s previous investment, and by it’s desire to continue its involvement until 2001 despite competing as a UK only brand with global brands such as Budweiser, Coca-Cola, Pepsi, and Siemens. Moreover, at the time of the first renewal, BT and Ford were said to have offered even more for the contract. Barclaycard (and then Barclays), who replaced Carling, committed £48 million for it’s first four year contract These offers by very astute and commercially sophisticated marketers only occurred because they all believed such a sponsorship as the Premier League would offer a better commercial return than spending the same sum in other ways, such as conventional above-the-line advertising. With the advent of digital broadcasting, mass appeal sports such as soccer now reach more of the population than many of the hundreds of new TV channels combined.

Global brands, such as Coca-Cola, obviously do not undertake sponsorship to boost awareness. It commits a sum, which in an Olympic year with support costs must approach $400-$500m, to achieve more sophisticated objectives, which have been established by ongoing market research. In Coca-Cola’s case, spend on market research is 8% of it’s total sponsorship budget.

Sponsorship has also started to attract funding from budgets outside ofmarketing and community budgets. In particular, science and engineering companies have recognised that they have major image problems with young people. Therefore they are increasingly using sponsorship in order to overcome such negative perceptions on order to obtain both qualitative and quantitative improvements in recruitment. Human resources and marketing requirements are starting to coalesce.

New media (including the Internet, social media, computer games and digital TV) is still the centre of many sponsorship experiments. This is not surprising, as new media entertainment has captivated an entire generation and is now very much at the centre of many consumers’ lives.

Marketers have seized on new media platforms as an ideal vehicle for building interactive relationships with prospects and customers. Howeveronly a few to date have really cracked how to maximise the potential of these mediums. Major Internet marketing agencies have attempted to create more impactful and memorable adverts that are not just standard ‘banners’. However, new media is still generally treated as a media buy rather than a campaign’s linchpin. As a result new media will perform a better role in activating offline sponsorships than it will as a sponsorship in its own right.

The advancement of sponsorship into new areas such as education will continue to grow as the public begins to accept the abdication of responsibilities, which previously it saw as the sole remit of the government. As major sports events are attracting larger and larger sponsorship commitments, UK and European companies are increasingly accepting the North American model of corporate social responsibility. Social auditing, however, shifts the funding emphasis from charitable giving to the delivery of an ethical marketing edge, which is particularly applicable to the ever-increasing number of service and utility companies.

For example, the most important developments in measuring sponsorship over the past few years have to follow the lead of Coca-Cola, whereby significantly more emphasis is placed on qualitative rather than just quantitative methodologies.

Case Study: Rugby World Cup

An independent study conducted by Performance Research at the 1999 IRB Rugby World Cup found that the sponsors failed to fully convert positive feelings into sponsorship recall.

On-site sponsorship activity at Rugby World Cup was low, inconsistent, and unimaginative, with over-reliance on stadium signage to generate sponsorship awareness.

Guinness was the only sponsor who managed to take advantage of their official sponsorship position with more than half of the fans reporting them to be involved with the Rugby World Cup. This left other sponsors, including Coca-cola (26%) and BT (21%) in their wake.

Similarly, when asked to identify sponsors from a list almost all fans were able to report Guinness (94%), which again was head and shoulders above other official sponsors including Coca-cola, BT and South African Airways who were all identified by less than 7 out of 10 fans.

When so many fans struggled to recall the current sponsors, it is hardly surprising that the majority (53%) of fans were unable to remember any sponsors involved with previous Rugby World Cup tournaments. Coca-cola (sponsors of the 1995 tournament) was the most frequently mentioned previous sponsor but was recalled by less than 1 out of 10 fans.

With so little advertising present on-site, it is no surprise that nearly three quarters of the fans reported the level of commercialism at this tournament to be acceptable.

The good news for sponsors is that the vast majority of Rugby World Cup attendees agreed that sponsorship benefits rugby (92%) and was appropriate at the (84%) World Cup. Moreover, the majority of fans felt more positive towards sponsors (63%), believed they were more innovative than non-sponsoring companies (62%) and appreciated them more because of the involvement (62%).

Currently sponsors are not fully benefiting from the positive feelings of the rugby fans. According to Mark Knight, project manager, Performance Research Europe: “Until a sponsor develops a relationship with the fans that effectively communicates the benefits of the sponsorship to both the individual and their sport, the opportunity to develop brand-loyal consumers through sponsorship will be missed.”