Introduction
The subject of sponsorship is now reported more extensively in the business pages than perhaps it was a decade ago, largely as a result of the eye-catching multimil-lion deals that happen with regular occurrence around the world. Of course, the Olympic Games, the English Premier League and the FIFA World Cup tend to grab their fair share of global media coverage and news headlines when a sponsor is signed. But, as we shall discuss in Chapter 2, there are now so many different sponsorship properties, options and formats that the sponsorship industry has never been busier, despite the current uncertainty of the global economy as it staggers between stagnation, inflation and deflation in 2015 and beyond.
It is fair to say sponsorship has tended to weather these cyclical storms particularly well compared with other types of marketing expenditure such as advertising and sales promotion, which tend to be cost-cutting casualties when companies have to tighten their belts.
Sponsorship has become much more cost-effective, largely as a result of innovation within the industry that allows a prospective sponsor to get closer to its desired audiences, customers, clients, supporters, partners, fans and employees without having to empty its bank account in the process.
It also reflects a growing confidence in the use of sponsorship as a sales and marketing tool as well as the relatively long-term nature of a sponsorship agreement compared with, say, an eight-week advertising burst. And, as will be discussed in detail in Chapter 10, measurement and evaluation of sponsorship has become a science in its own right.
Talk to any switched-on brand owners in Europe, the USA, the Far East or Austral-asia and they will have a sponsorship programme that is a key platform for engaging with desired audience and customer segments and integrates with other online and offline channels in order to deliver higher returns for their marketing investment.
Some of those brand managers appear in this book demonstrating current best practice and it is clear from reading the numerous case studies that these marketers are now much better-equipped to improve the performance of sponsorship in ways that were unachievable in the past. In the digital era, the ability to engage with desired audience and customer segments in a precise way is absolutely critical.
The narrative about any sponsorship relationship now needs to be capable of being sustained under its own momentum; where the relationship between the parties must be transparent and natural rather than contrived. The sponsorship programme needs to be much more than just a badging exercise for the benefit of the brand owner and should also reflect a genuine partnership with the rights holder.
Ethics in sponsorship has never been more important and is often the subject of intense media scrutiny. What this means in practice is that the bad behaviour of individual athletes, stars, teams and governing bodies strikes at the heart of the reputation of the sponsorship ecosystem.
Given that sport accounts for over 80% of all sponsorship globally, the issue of drug abuse, cheating, match fixing and voting irregularities is never far from the surface, as evidenced by a series of recent scandals that have engulfed the International Olympic Committee and FIFA and almost destroyed the International Cycling Union in the wake of the Lance Armstrong doping scandal.
Sponsors â quite rightly â expect rights holders, athletes and governing bodies to act in accordance with the highest ethical and professional standards required of them and, of course, the same applies to the sponsors themselves. For example, in November 2014, Championship League side Wigan Athletic appointed as its new manager Malky Mackay, who was also being investigated by the FA for allegedly sending racist, sexist, homophobic and anti-Semitic messages during his time as manager of Cardiff City FC, his former club.
In a statement issued to the media on his appointment, shirt sponsor Premier Range said the appointment of Malky Mackay put it in a position that it found untenable:
Mr Mackay is currently under investigation by the FA for sending text messages that are at odds with the general ethos here at Premier Range â and, it would seem, Cardiff and QPR feel the same as us. The texts Mr Mackay has admitted to sending are wholly unacceptable â and the thoughts expressed within them are a shocking reminder of a past we thought football had left behind. A team that would employ a man who expresses views such these is not the kind of team Premier Range wish to deal with.
Increasingly, there is an expectation that sponsors of major events such as the Olympic Games should also speak out should they see something that is in conflict with their own values in the same way as Premier Range did.
Staying silent or simply ducking an issue is not the answer, as Coca-Cola found out to its cost when it stayed silent over the issue of draconian laws affecting the rights of the homosexual community that were passed ahead of the Sochi 2014 Winter Olympic Games, at which it was one of the main sponsors. The lesson learned is plain enough: a sponsor should be prepared to stand up and confront discrimination and bigotry, however uncomfortable this may be from a media relations perspective, because it is what customers and even its own employees would expect it to do.
Expectations in terms of the performance of sponsorship have also dramatically changed over the last decade; largely as a result of behavioural economics and âbig dataâ, which means that results from major sponsorship campaigns can be tracked and measured with a higher degree of accuracy. âAdvertising value equivalenciesâ, or AVEs, belong in a different era and focus groups are fast heading in the same direction.
Today, sponsors and rights holders make decisions based on real-time data and sponsorship programmes need to be capable of changing direction and âfollowing the audienceâ in terms of interests and motivations rather than expecting it to be the other way around.
Sponsorship is much less about being in âtransmit modeâ and much more about deepening the level of engagement that it can achieve with desired audience, customer segments, supporters and fans â even on a one-to-one basis. This is best illustrated by the changes that have occurred in the media consumption habits of millennials.
In the UK, 24-year-old fashion and beauty vlogger Zoella (real name Zoe Elizabeth Sugg) now speaks for a new generation of TV viewers. The mainstay of Zoellaâs channel on YouTube is about friendship, body image, boys and whether to go to university or not, sprinkled between fashion and beauty tips that include hairstyles and âshopping haulâ trips.
Zoella earns a reported ÂŁ300,000 a year endorsing products as well as having her own branded merchandise in Superdrug. She is attractive to what is known as the âlost generationâ â audiences in their teens and twenties who neither consume conventional media nor watch much TV.
Since 2010 the amount of TV watched by 16â34-year-olds has fallen by 15%, so it is no surprise that brand owners of online games, clothing and beverages are among those seeking to tap into this pop culture via YouTube. Pepsi has put most of its sponsorship activation on digital media such as Facebook and YouTube, rather than relying on more traditional media channels and TV advertising. What is now emerging is a much more sophisticated approach as to how to activate a sponsorship programme, as will be discussed in detail in Chapter 5.
The case against sponsorship
There are a large number of cynics in the business world who believe that sponsorship is nothing more than advertising masquerading under a different label. And they remain unconvinced that the sums involved are justified by returns that are, at best, difficult to measure and evaluate. Well, that may be a narrow or inaccurate view, but it is widely shared and it would be wrong to reject the substance of the charge against sponsorship without first attempting to understand the reasons that lie behind this.
With English Premier League football clubs such as Manchester United FC able to draw significant sponsorship fees from the pockets of major global companies, it would be easy to get carried away with the excitement of trying to adorn the teamâs strip with a shiny new brand logo. But this is exactly what happened in 2014 â the clubâs commercial pull was so strong that even senior executives got caught up in the excitement of the chase to be associated with it. Sadly, this resulted in a dire consequence for Joel Ewanick, the global head of marketing for General Motors, who found himself out of a job just 48 hours after he had agreed a ÂŁ175 million shirt sponsorship deal with the club. Presumably Joel Ewanick thought he was acting within his express, usual and implied authority to close such a deal with Manchester United FC, but clearly the board of GM thought otherwise.
The new board of directors at Barclays is also starting to take a different view of its English Premier League investment in sharp contrast to those who have been in charge of driving it forward so successfully since 2001. Senior executives at the bank have not hidden their view from the Football Association that they believe the ÂŁ40m a year sponsorship has âzero valueâ in the UK and have effectively served notice that the bank will not renew the current deal after it expires at the end of 2015â16 Season. The ÂŁ120m package was 50% higher than the previous deal, which cost ÂŁ82m at that time, and Barclays is clearly concerned that the battle between BT and BSkyB for broadcast rights is driving up costs all round and this will have a knock-on effect on the price of Premier League sponsorship when it comes to renewal.
It would be easy to dismiss both these examples as a case of attempting to cut costs from marketing budget, but it could also be symptomatic that the rights holder has developed insufficient evidence to demonstrate a significant return on investment for the sponsor. In the case of the English Premier League, the rights holder could have sown the seeds of its own destruction a long time ago, according to British sports journalist and business commentator, Mihir Bose:
The Premier League would do well to remind itself that the moment of triumph is also the moment of greatest danger, as the Romans were forced to learn.
The tale goes of how a great Roman General returning to Rome having conquered some exotic foreign land was always acclaimed by the crowd. But there was also a man riding next to him in the chariot who warned him that his moment of triumph was also a moment of peril. He should be careful that amid the celebrations he takes steps to ensure the next moment doesnât mark his doom.
Doom for the Premier League has often been predicted and in the last 20 years it has shown a remarkable capacity to prove the soothsayers wrong and buck even the worst recession since the 1930s.
But success shouldnât make it ignore the problems of ownership and finance that clubs face, problems for which there are no easy solutions. However, these are problems for which solutions must be found. The Premier League has grown because it has seized opportunities and lacking any fixed ideology it has always been flexible enough to move swiftly. However, its success means it now needs to think about a game plan because its success has changed the game.
The old pre-Premier League system of English football, which didnât allow whatever wealth there was then in the game to trickle down and had a sort of democracy of sorts, has gone. But nothing has replaced it. The Premier League has shown itself to be a master tactician. Now it needs to develop a strategic plan to deal with the success it has created. If it fails to develop one on issues such as ownership, then like the Roman General, it may find its moment of triumph carries the seed of its own doom.
It should be remembered that the Premier League sponsorship deal with Barclays was renewed for three seasons from 2013, just days after the bank was fined $453m by US and British authorities for providing false data to help manipulate Libor, the London interbank rate and a key global interest rate. A spokesperson at Barclays was quick to explain that the new CEO Anthony Jenkins feels it is time for the bank to âshut up for five years and get on with our jobâ and the introspective review the bank has carried out in recent months has led to the exposure of further reckless behaviour among its traders and the bank faces further multimillion fines from the Financial Conduct Authority as it tries to clear up the mess.
Against such a background, the directors must feel that promoting a tarnished brand on a global basis is probably not the best way to spend what could be ÂŁ200m as the sponsor of the English Premier League after the current deal expires.
If we dig a little more deeply, clearly Anthony Jenkins is putting his personal stamp on how he wants the bank to start to regard itself, as it may have, to use a well-known expression, âbecome too big for its own bootsâ.
So pulling the plug on âglamour projectsâ and focusing instead on much higher levels of technology for customers, far fewer staff and fewer branches marks a new chapter for the bank in trying to rebuild its business, which may also see the loss of 40,000 jobs globally over the next six years. According to brand guru Martin Lindstrom, the views of GM and Barclays come as no surprise, as he remains convinced that most sponsorship does not work, as it often lacks context:
The vast majority of sponsorship doesnât work because itâs aimed at the conscious part of the brain, which neuroscience tells us accounts for no more than 15% of our cognitive capacity. We are bombarded with thousands of direct marketing messages a day, very few of which we are able to take in, let alone process into changing buying behaviour.
The communications industry spends its time measuring awareness and hoping that some value transfer takes place, something that we have never been able to prove. Now we can, and Iâm convinced that weâll see the sponsorship model change dramatically as a result.
Marketing people must realise itâs not about plastering your logo everywhere, itâs about context and about embedding your message within the narrative of the story being told, whether that is a football match or a James Bond movie. Our research into this is extensive and it tells us that when a brand appears in a story at the wr...
