Sponsors still spending
A segment that bucks the trend of marketing industry
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.