Chapter Six Event Sponsorship

Chapter learning objectives 6.1 Appreciate the motives for, and the key characteristics of, event sponsorship 6.2 Discuss key trends that have led to the growth of event sponsorship over recent decades 6.3 Understand the benefits of sponsorship from the perspectives of sponsors and event organisers 6.4 Identify the main types of event sponsorship

Chapter learning objectives 6.5 Understand the concept of sponsorship leveraging 6.6 Appreciate the importance of sponsorship fit 6.7 Understand the value of sponsorship policies 6.8 Discuss the key sponsorship issues associated with the implementation phase 6.9 Understand the process of sponsorship planning and evaluation.

Units of Competence and Elements SITXMGT501 Establish and conduct business relationships Build business relationships Conduct negotiations Make formal business agreements Foster and maintain business relationships SITXMPR501 Obtain and manage sponsorship Determine sponsorship requirements and opportunities Source sponsorship Service sponsors

Introduction It is important to recognise the distinction between patronage and sponsorship. Patronage involves the provision of a donation where no commercial advantage is involved. Sponsorships, on the other hand, don’t arise from altruistic motives In fact organisations generally gain significant commercial benefits from sponsoring events.

The nature of sponsorship Sponsorship represents a key revenue source. It is a form of marketing for many organisations. These organisations expect exposure and commercial benefits for their investment. The growth of events has created a new way for organisations to communicate with their target markets. The funds gained through sponsorship allow event managers to purchase the resources needed to run the event.

The growth of sponsorship Organisations are taking a more holistic approach to marketing. Includes ‘big picture’ approach to viewing the marketplace. Marketing is now more about building relationships. ‘Integrated marketing communication’ Significant growth in sponsorship of major event, particularly sporting events and music festivals.

The growth of sponsorship Growth in prominence and popularity of events Increased exposure Event audience should be in line with target market Maximising value. Growth in perceived effectiveness of sponsorship People buy from socially responsible organisations Sponsorship of events is positive. Cost of traditional forms of advertising Television, radio, magazines and newspapers. Increased exposure – Association with an event can greatly increase an organisation’s exposure. Maximising value – The event, sponsor and product should all be a fit together in order to get the most value out of the sponsorship deal. Responsible – The perception of a business as socially and environmentally responsible increases the likelihood that people will buy from them. Advertising – Traditional advertising costs have increased, and do not always have the direct benefits and ability to reach such a targeted market that event sponsorship can have.

The mutual benefits associated with event sponsorship Benefits for the sponsoring organisation Enhancing the organisation’s image Promoting brand awareness Demonstrating product features Promoting brand image Repositioning a company or brand image Integrating with other marketing activities Providing employee access to events Enhancing client relationships. Enhancing image – Links image of organisation and product to image of the event. Sponsors will be attracted to events that send out the same message they are trying to achieve. Promoting brand awareness – Popular events with media coverage can help boost how well know the sponsor’s product is, especially when they have significant coverage at the event, or naming rights. Product features – Live demonstrations or displays of products can show consumers how they work, or the range available to them. Brand image – An event can increase the image people have of a product, by association with the event. Repositioning – can help to counteract or reposition a negative perception in the marketplace of their products. Organisations in industries such as oil, banking, etc. that have negative connotations often seek sponsorships which will show their CSR. Other marketing – using event sponsorship to enhance the product and brand image can ensure other marketing methods are more noticeable to the target market. Employee access to events – event tickets can be used as rewards or incentives for employees of the sponsoring organisation. Client relationships – improve relationships with business partners and key clients by having an opportunity to invite them to events as VIPs.

The mutual benefits associated with event sponsorship Benefits for the event manager and event: Funds, products and services Development of business partnerships. Sponsors needs must be met in order to Ensure compliance with agreements Create long-term relationships. Funds, products and services – Sponsors can provide money or in-kind contributions, such as resources, products and services which allow the event to run. May also provide things like media coverage, etc. Business partnerships – Successful sponsorships can enhance a sponsors’ brand, but they can also increase interest in an event if a particular sponsor is involved. Compliance with agreements – Sponsorship agreements spell out the terms of the sponsorship and must be complied with. Relationships – In order to ensure future sponsorship and, hopefully, event growth.

Types of sponsorship Sponsorship packages Packages created to meet different preferences E.g.: Gold, Silver, Bronze. Tailor-made sponsorship packages Agreement is negotiated between parties Maximises benefits to both parties. Value-in-kind sponsorship Provision of goods and services for free. Naming rights or title sponsorship For primary sponsor. Sponsorship packages – Higher level (e.g.: Gold) has more benefits and costs more to engage in. Tailor-made – Can ensure that both parties can leverage their requirements more effectively. The sponsor becomes a partner in the event. Value-in-kind – very popular for community-style events as well as top end corporate events. Naming rights – Event becomes synonymous with the brand or product.

Sponsorship leveraging Provision of funds, goods or services for a sponsorship is only the beginning. Sponsors spend money on additional promotion of the event to gain the most from it. This is called ‘leveraging’ or ‘activating’. This additional marketing and promotion is outside of the sponsorship agreement. Provides mutual benefit by increasing interest in the event and the sponsor.

Sponsorship leveraging In view of the mutual benefits associated with sponsorship leveraging, it is generally encouraged by event managers. Leveraging investment continues to raise the profile of both the sponsor and the event. It can be viewed a useful extension to the sponsorship partnership.

Sponsorship fit Sponsors usually choose events that have audiences similar to their target market. The event should fit with the organisations’ values and image. Finding a good fit requires research Event organisation Event itself Environment where event will be held. Research established what the event can offer sponsors and what it needs from sponsors.

Sponsorship fit Conducting a SWOT analysis for sponsorship Strengths internal factors of the event that may appeal to sponsors examples include: media coverage sound public image Weaknesses internal factors of the event that may concern sponsors logistical issues with the event site lack of management expertise

Sponsorship fit Conducting a SWOT analysis for sponsorship (continued) Opportunities external factors that can be exploited to achieve objectives examples include: growth in popularity of event type demographic changes in favour of the event Threats external factors to be avoided in order to achieve objectives increase in local government regulation potential for new competition.

Sponsorship fit PEST analysis STEER analysis Political Economic Social Technological. STEER analysis Also examines factors in newly-important areas socio-cultural ecological regulatory. PEST Analysis – used to examine the environment around the event and therefore develop sponsorship strategies that will attracts the right sponsors STEER Analysis – takes into account additional areas of interest that are becoming increasingly important to organisations looking to utilise sponsorships The sponsorship fit will ultimately be decided on judgements from the event manager and organisations.

Sponsorship policies Organisations – should be developed to guide decisions on what events should be sponsored. Event managers – should develop policies on the type of sponsors to be approached and ignored. Questions to ask when creating a policy: Extent of commercial sponsorship Sponsors that are unsuitable Sponsorship activities that are unsuitable. Event managers – Some organisations prove too complex, fussy or problematic, or may have a negative effect on the event through their involvement. Not all sponsorships are ideal. Questions – The event stakeholders need to decide how much sponsorship they will chase – is there a limit or a structure to who and what will be considered? There may also be sponsors and sponsorship activities that will detract from the event or not provide appropriate outcomes.

Sponsorship implementation After identification of potential sponsors, an approach can made. Issues upon approaching sponsors include: Ambush marketing sometimes referred to as ‘guerrilla marketing’ or ‘parasite marketing’ occurs a company with no sponsorship agreement still conducts a marketing campaign around that event ambushers often find creative ways of connecting their brand with the event without actually breaking any laws can undermine the capacity to attract sponsors. Ambush marketing – is where a company with no link, sponsorship agreement or payment can be seen to be linked to the event through their marketing or perception of the public. Incompatibility – It is unlikely that events would have major sponsors from two different clothing companies. But if an agreement is made with one company, they may have a sister company or division dealing with another product or brand, and you may already have an exclusive deal with a competing brand. It can get very complex, and intense research is required to avoid pitfalls or bad relationships.

Sponsorship implementation Incompatibility between sponsors It would seem obvious that no one event would consider gaining sponsorships from both Adidas and Nike or from Reebok and Puma. Similarly, only one beer company, one mobile phone distributor or one motor vehicle manufacturer would be signed up as a sponsor at any particular event. In the case of large conglomerates with commercial interests in a huge variety of product brands, the situation becomes somewhat murky. This poses a risk to exclusive arrangements

Sponsorship implementation Title sponsorships Problems may also arise as a result of the utilisation of title sponsorships such as the Toyota AFL Grand Final. Title sponsors may be genuinely regarded as event partners. They are unique to the event and as a result, are strongly supported by the event. However, having a title sponsor may make it difficult to secure other event partners or other sponsors. Reliance upon one sponsor can also be a risk

Sponsorship implementation Perceptions of inequity among sponsors Sponsors are likely to to compare the benefits they receive from event sponsorship with the perceived benefits acquired by other sponsors Sponsorship agreements need to be developed in a manner that takes equity considerations into account at the outset. They need to be as clear as possible about the nature of sponsorship benefits includes They need clarity in terms of how far the sponsorship agreement extends. Title sponsorships – Having a title sponsors may cut off other avenues for sponsorship opportunities, especially from competing firms. Need to decide if the best revenue and benefit comes from a title sponsor or an alternate mix. Perceptions of inequality – Sponsors compare their deal with what they think others have. Agreements need to be build around clear guidelines of what each level of sponsorship gets, or what the tailor-made package limitations are in order to be transparent in order to guarantee future participation. Logos – Need to ensure that logos are used correctly. May require prohibition of competitor logos e.g.: team sponsors as opposed to event sponsors.

Sponsorship implementation Sponsor logos Getting it right when it comes to sponsors logos is absolutely essential. The design of logos, rules about exhibiting logos and about competitor logos, need to be very clear. In large sporting events, many athletes may have sponsors other than the event sponsors but exhibiting their logos on the event site may be prohibited.

Evaluating sponsorship impact Evaluation of sponsorship agreements and outcomes appears not to be a priority. Is it worth continuing? Can be difficult to measure sponsorship benefits when other marketing is also undertaken. Evaluation can assist event managers in creating more targeted sponsorship policies for the future. It can be very difficult to pinpoint whether benefits to a brand come from sponsorship or other marketing activities without accurate measures in place. If sponsorship is working, both parties will be benefitting. Generally, the needs of both parties are met as per the agreement, and are often exceeded or met in unexpected ways.

Evaluating sponsorship impact Surveys are effective in measuring impact Views about the sponsor organisation Attitudes toward the organisation and brand Change in attitude due to the sponsorship General brand awareness Specific knowledge about brand and product features Aspects of sponsorship with the greatest impact. Survey formal and informal responses. Surveying participants at an event will often result in measurable data. A formal survey will provide the most quantifiable information, yet having someone note down informal comments can be of enormous value.

Chapter summary Sponsorship involves a financial motive. It is a form of marketing aimed at building brand awareness, goodwill and exposure. Events seek sponsors to assist with the cost of running an event. The aim is to build relationships. Event sponsorship is growing. Different package options allow different levels of support.

Chapter summary Leveraging is often required to increase the effectiveness of a sponsorship agreement. The right ‘fit’ is essential for a successful outcome. The use of SWOT, PERT and STEER analyses can assist with assessing the fit. The implementation of sponsorship agreements can lead to a number of issues. Sponsorship evaluations are essential in assessing whether or not the relationship should continue.