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Why Brands Shy Away from Sponsorship

By Jim Andrews Feb 19, 2013

Why Brands Shy Away from Sponsorship

Exploring the differences between traditional advertising and sponsorship is familiar terrain for those of us at IEG, but I have reached some new conclusions about these two vehicles for communicating with a brand’s consumers.

For years now, sponsorship pros (and practitioners of other disciplines) have expressed frustration that advertising continues to command a huge portion of marketing budgets, despite universal agreement that its effectiveness continues to diminish. Don’t get me wrong—advertising still serves many purposes and deserves a meaningful share of most companies’ marketing spends, just not such a disproportionally large one.

When everyone agrees that marketers need to be concerned with relevance, dialogue and engagement, why do companies cling to advertising with an iron-fisted grip?

Simply because it’s easier.

To be “successful” advertising requires a good creative idea and the right media to communicate that idea. Only two entities lay between the brand and the consumer: a creative agency and a media buyer/planner. I’m not including the ad medium here because in most cases it is a passive player.

Sponsorship, because it requires integration and activation, involves multiple entities in the mix, including internal business units, trade partners, specialist agencies, promotional suppliers, and, very significantly, an active partner in the sponsored property.

The complexity of all these moving pieces and the time needed to coordinate them is intimidating. Marketers don’t need to be convinced that sponsorship is a more effective way to communicate with an audience—they know that. They need to be persuaded that they can manage sponsorship effectively.

With the exception of the largest sponsoring companies like Coca-Cola, PepsiCo, IBM, etc., companies do not have internal staff and structures to manage every aspect of a fully integrated sponsorship. That is a huge deterrent.

But neither do most companies have the staff and skills to create, plan and execute an advertising campaign. So why are they so comfortable investing most of their marketing dollars in advertising?

The answer is agencies. Creative and media agencies do the work for their clients. The clients’ advertising departments manage agencies. That is not the case in sponsorship.

Perhaps it should be. It would benefit everyone if the “process” of sponsorship mimicked advertising, i.e., a brand contracts with an agency to create, plan, buy, negotiate, execute and measure the entire program. The chief job descriptor for a sponsorship director would be to manage the agency.

This would require a major change to the current sponsorship landscape: Rightsholders would have to let go of the notion that it is highly preferable to work directly with the client. Many properties perceive working with an agency as the kiss of death. It’s time to get over that idea. Provided the agency truly understands sponsorship—and there are many that do—agency involvement is a benefit to all.

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Jim Andrews

About the Author

A 30-year sponsorship industry veteran, Jim is responsible for developing and sharing thought-leadership content based on ESP Properties’ groundbreaking work in the areas of sponsorship strategy, valuation, measurement, digital content, data-driven marketing and fan engagement.

In addition to identifying key trends and delivering his unique insights into the critical issues facing rightsholders and their commercial partners, Jim is the chairman of the Annual Sponsorship Conference, responsible for the program and speakers, as well as hosting and delivering the event’s opening address. He also is responsible for the company’s annual report and forecast of overall sponsorship spending, as well as its compilation of biggest spending companies and annual industry surveys.

A frequent media commentator and guest, Jim has been a featured speaker at hundreds of sports, entertainment and marketing conferences around the world.

 

Comments

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Cheryl Lawson 9/27/2013 10:29 AM
Great post. As a small conference organizer who relies on sponsorships, I find that many brands need assistance designing sponsor packages to fit with corporate edicts. We often have to develop both the conference and the specific brand sponsorship.
 
James Graham 3/5/2013 1:03 AM
Great Blog Jim on "Why Brands shy away from Sponsorship"! Sponsorship is so delicate and it can be viewed as advertising. I look at sponsorship as icing on the cake when a sponsored company marketing strategy and objectives are in place because in my opinion, it goes hand in hand. Without an effective marketing strategy, a sponsor looses ROI.
 
David Rachell 2/21/2013 11:07 AM
Good job Jim. We've been making this very case for a long time now. To drive this idea more quickly, it's imperative we help traditional agencies find a way to make money from sponsorships, or they'll continue to put it on the back burner. My experience has been that brands are a bit leery of adding another "specialized agency" to their line up, especially around sponsorship which for many companies, seems more of a personal decision rather than an objective business decision. Thanks again!
 
Todd Norenberg 2/19/2013 8:58 PM
Jim,Great Blog on "Why Brands shy away from sponsorships"! I am in full agreement with your perspective and have for the last 2 years been looking for an agent that could help with Sponsor prospecting, development and activation for our up and coming race team, NRN Racing LLC. We're hoping to find an agent ready to help us move forward and are open to discussing next steps immediately. Any recommendations you can offer would be greatly appreciated.

Best Regards,

Todd Norenberg
 

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