Over recent years, with TV ratings crumbling and ad-skipping TiVo / Sky+ use going mainstream, there have been fewer ways to connect with younger consumers who have honed their ad-avoidance skills as pre-teens. Sponsorship has served as one of the few means by which marketers can ensure that their brands are where their consumers want to be - at sporting events and at music concerts.
The depth of the recession has affected more than just sponsorship funding, but has also affected why any brand marketer would want to be seen to be a sponsor in the first place - to the extent that recently, a high-profile company actually paid additional money to a group whose event it was sponsoring, to take down its signage and remove its branding altogether. This may sound extreme, but for publicly 'bailed out' companies, this has been a very real consideration.
However, the notion that sponsorship spending is frivolrous has been strongly contested from some quarters. Says Bank of America Chief Executive Ken Lewis, "I was never inclined to pump big sums of money into sports marketing until i saw the facts and the numbers. In general terms, for every $1 we spend on sports marketing, we get $10 in revenue and $3 in earnings. This is not wasted money."
This approach is in direct contradiction to Senator John Kerry's proposed legislation to ban all organisations that receive TARP funds from spending on sponsorship, describing it as an "idiotic abuse of taxpayers' money." Lesa Ukman, Charman of IEG (the world's leading expert on sponsorship), disagrees, saying that "By any measure - awareness and attitude shifts, customer acquisition and retention, increased market share and shareholder value - sponsorship is as effective, if not more, than any form of marketing."
Ukman argued in his rebuke of Kerry that sponsorship has helped companies like Red Bull build a whole new brand and drinks genre - energy drinks - from scratch. Ukman also points to the success of established brands like Coca-Cola and Visa: "Sponsorship's ability to concurrently build businesses and the local and global communities in which they operate is why sponsorship's growth rate has outpaced the growth of advertising and sales promotion for each of the last 15 years."
This piece has been adapted from Yinka Adegoke's article in Marketing Week - a weekly marketing publication that we highly reccommend to all members.
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