Opinion
Assertions
12/22/08: For most of the past two decades, issuing IEG SR’s
annual forecast has been akin to delivering a great big holiday present to the industry, complete with double-digit growth projections and generally
good news about the state of the medium. This year’s outlook is
decidedly different.
Certainly, a
drastic drop from the past few years of significant growth was to be expected in our look at next year’s spending climate. After all, the current
recession is accompanied by
unprecedented circumstances. For instance, we are used to hearing about
small nonprofits and
mom-and-pop businesses closing their doors during economic downturns, but this time it is
General Motors that tells us it is just weeks away from running out of cash.
In the face of cold hard facts such as that one, our projection of even
modest growth for ’09 will cause some to accuse us of having
rose-colored glasses. However, although we do think growth will be
historically low for our industry at
2.2 percent, we are confident
more will be spent on sponsorship in
’09 than was spent in
’08. That doesn’t mean many companies won’t
cut budgets or at least
hold the line on spending. It doesn’t mean many properties
won’t fail to match the sponsorship income they received this year. It doesn’t mean many rightsholders won’t have to
scramble to
cobble together revenue through
low-level packages that will be easier to sell. It doesn’t mean those same properties won’t
temporarily forgo the idea of creating value by offering fewer, larger sponsorship opportunities and charging a premium to partners for a more exclusive, clutter-free environment. Unfortunately, all of those things will happen.
But other properties
will secure new deals at significant levels, such as the national
cause–not a household name, by the way–we spoke to who recently
surpassed the
$2.5 million goal it set for the first year of its sponsorship program by
$800,000. Others will forge partnerships with companies who understand sponsorship is a
smart investment in increasing business and market share, especially in a down economy, like the performing arts center who in the midst of the financial crisis sent out
proposals to
four retail banks in its market (the ones who were buying up the others) and
signed three of them.
What will be the
dividing line between those properties that will
survive and thrive in the new year versus those that will
struggle to maintain what they already have? It is somewhat passé and a little
unfair to simply say those who are
smarter about their value proposition and those who
work harder to prospect and package and service–like those quoted in our selling tips story–will be the ones to
win out. There are
many other circumstances including geography, the viability of top prospect categories, etc., that will play a
major role in determining who will prosper and who will not. However, even though getting your
packaging,
sales,
pricing and
servicing strategies right is
not a guarantee of success,
falling short in that regard is one
sure route to failure when there is such little room for error.
So, to all of you who allow this newsletter and our colleagues throughout IEG to help you face the challenges and seize the opportunities that sponsorship presents, a heartfelt
thank you and sincere best wishes for
happy holidays and a
healthy and
flourishing new year.
Jim Andrews