Spon­sors still spending

A seg­ment that bucks the trend of mar­ket­ing in­dus­try

Finweek English Edition - - Advertising & Marketing - TONY KOENDERMAN Justin Samp­son

WHILE AD­SPEND IS un­der se­vere pres­sure, the sports spon­sor­ship busi­ness is con­tin­u­ing to grow healthily. “Over the past four years the sports spon­sor­ship in­dus­try has grown yearon-year at a rate not seen any­where else in the world,” says Justin Samp­son, CEO of Exp, a lead­ing sports spon­sor­ship con­sul­tancy, event man­ager and strate­gic plan­ner.

Yes, the 14,3% growth in out­lays on spon­sor­ship rights fees last year was down slightly on the 17% to 18% level of the pre­vi­ous three years – but few busi­nesses would be dis­ap­pointed with that in an eco­nomic en­vi­ron­ment be­ing com­pared neg­a­tively to the Great Crash of 1929.

A lot of that’s at­trib­ut­able to next year’s Soc­cer World Cup, which not only ben­e­fits its ap­pointed spon­sors but also forces com­peti­tor com­pa­nies into spon­sor­ship and mar­ket­ing ac­tiv­ity just to main­tain their own aware­ness.

Also in­ter­est­ing is a pat­tern that’s ap­peared re­cently, in which growth has slowed down in the last three Olympic years. That may be re­lated to the poor per­for­mance of the South African team at the Olympics and the con­se­quent lack of pub­lic in­ter­est. Our Olympic team to Bei­jing couldn’t find a spon­sor – though our much more suc­cess­ful Par­a­lympics team had no trou­ble at­tract­ing back­ers.

But there’s an­other fac­tor at work, says Samp­son. “Spon­sor­ship has come into its own as a le­git­i­mate mar­ket­ing tool as ac­count­abil­ity and best prac­tice from around the world is adopted in the SA mar­ket. A lot is writ­ten about how spon­sor­ships are lever­aged in SA (or not, in a lot of peo­ple’s opin­ion) but long gone are the days of a chair­man spon­sor­ing a per­sonal in­ter­est. Now the de­ci­sion is based on re­search and achiev­ing mea­sur­able busi­ness ob­jec­tives.

“An­other fac­tor is that it’s be­com­ing more dif­fi­cult for brands to reach con­sumers in the tra­di­tional way. And even if they are able to lo­cate their audiences they’re less sus­cep­ti­ble to stan­dard TV ad­ver­tis­ing. Spon­sor­ship is about tap­ping into the pas­sion of ‘fans’ and en­gag­ing them as op­posed to in­ter­rupt­ing them. It’s no longer a ‘nice to have’ but rather a medium that – if lever­aged prop­erly – will gen­er­ate bet­ter re­turns than any other.”

Nev­er­the­less, as Jo­han Grob­ler, of BMI Sports Info, points out, the amount spent on lever­ag­ing has de­clined from 85% of the di­rect spend in 2006 to 72% last year. “The sig­nif­i­cant inflation in spon­sor­ship fees, as well as the im­pact of the credit crunch, re­sulted in spon­sors not be­ing able to af­ford to spend as much on lever­ag­ing as in the past,” says Grob­ler. BMI con­ducts spon­sor­ship re­search and eval­u­a­tions for spon­sors and also mon­i­tors spon­sor­ship ex­pen­di­ture.

Di­rect spend is the out­lay on rights and other funds re­quired for the event to take place. Lever­ag­ing is the ex­pen­di­ture on sup­port­ing ac­tiv­ity (ad­ver­tis­ing, pro­mo­tions, hos­pi­tal­ity) to max­imise the im­pact of the spon­sor­ship. A global rule of thumb is that ev­ery rand of di­rect spend should be matched by an equal amount on lever­ag­ing.

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