Assertions

As with many surveys, the groundbreaking consumer study conducted by Performance Research can be interpreted in myriad ways. Certainly the number of consumers who want to see sponsorship spending levels held firm or grown is encouraging, but the across-the-board decline in positive associations evoked by specific examples is a clear sign the industry needs to do a better job of communicating the specific benefits of sponsorship–including what would be lost without it–for consumers, for properties, for the greater community, for the economy, etc.

In sharing the specific results of those 13 examples averaging a 35 percent loss in positive feelings about the sponsorship, we have been concerned the sponsors mentioned–as well as other sponsors with similar relationships–would be tempted to equate the drop in goodwill with a decline in the value of their sponsorship. Although a halo effect that doesn’t shine as bright as it once did is no doubt important, it is but one piece of the total picture. For example, could a bank still use a golf tournament sponsorship to achieve B2B goals despite consumers’ dislike of the deal? Could a soft drink or credit card company still earn positive return from on-site sales rights or preferred payment system status? Of course. Even in cases where a sponsor’s return hinges on consumers embracing the association with the property, it would be short-term thinking to view the current situation as an opportunity to beat up the property on price. The more strategic position would be to challenge the property to do everything it can to improve the relationship between its sponsors and its audience, such as helping to develop more meaningful activation platforms.

If the decline in positive feelings about sponsorship is collateral damage inflicted by consumers’ overall lack of faith in corporations following the financial collapse, it is an example of how the economy can affect the value of sponsorship. In determining what that impact is, we first have to distinguish between value and price. An economic downturn has its greatest effect on price. Bankruptcies, budget cuts and other ramifications reduce the demand for sponsorships and create a buyer’s market. Our colleagues in the IEG Valuation Service have spent a great deal of time on this subject recently, and they anticipate that fees commanded by many sponsorship packages will drop between five and 25 percent over the next six to 12 months. When it comes to value, the economy does not affect most of the factors that account for value–including tangible benefits such as impressions driven by sponsor ID–but it can prompt changes in consumer behavior that are related to intangible factors such as loyalty. For example, general distrust of corporate motives may cause consumers to be less interested in a cause marketing campaign. Even if avid supporters want to purchase the brands that support their favorite causes or NASCAR drivers, they may not be in a position to do so if they have lost their jobs.

What is extremely important to remember in this discussion, and in any current sponsorship negotiations, is that these circumstances are temporary. The fundamental value of sponsorship has not been altered. The bedrock relationship between consumer and property has not changed, only the consumer’s short-term ability or inclination to act on it has.

Jim Andrews