When it comes to category exclusivity, many sponsors show signs of a split personality.

While exclusivity tops the list of the most valuable sponsorship benefits, many companies are reluctant to pay the price for the designation—or don’t need it at all.

According to the 2014 IEG/Performance Research Decision-makers Survey, category exclusivity ranks as the most valuable sponsorship benefit with 58 percent of respondents ranking it a nine or a ten on a 10-point scale.

HOW VALUABLE ARE THE FOLLOWING BENEFITS TO YOU?
HOW VALUABLE ARE THE FOLLOWING BENEFITS TO YOU

Percent of respondents who ranked the factor a 9 or a 10 on a 10-point scale, where 10 is extremely valuable. Source: IEG/Performance Research 2014 Sponsorship Decision-makers Survey

While category exclusivity gives sponsors ownership of an entire category, the benefit offers rightsholders many advantages as well. That includes the opportunity to sell bigger packages, reduce clutter and maximize sponsor servicing by working with one company in a category instead of several.

“We’re huge fans of exclusivity. It’s important to limit fan confusion,” said Troup Parkinson, senior vice president of corporate partnerships with the Boston Red Sox, which has exclusive deals across its portfolio.

Another major advantage of category exclusivity: more sponsor activation. A company may be more likely to activate a sponsorship without the threat of a competitor promoting the same property.

Tough Mudder has gained national exposure as a result of offering exclusive packages. That includes exposure in TV ads for Oberto beef jerky, on packaging for Met-Rx supplements and inclusion in an in-store sweepstakes at Chipotle restaurants.

“We want partners to include us in their marketing plans. Oberto probably wouldn’t have included us in TV spots if we could have partnered with Jack Link’s the next day,” said Jon Martone, Tough Mudder’s head of partnership sales.

Moving Away From Exclusive Deals
While sponsors have much to gain from locking up entire categories, many struggle with the price tag associated with exclusive packages.

That has prompted some properties to move away from exclusive deals.   

Baltimore’s Artscape arts festival broke up the auto category after failing to secure a sponsor willing to pay $100,000 for the entire category. The festival has signed a deal with Ford and is negotiating a partnership with Chrysler.

“Exclusive deals are easier to manage and have less clutter, but many companies can’t afford the price,” said Bob Sicard, director of corporate sponsorship with the Baltimore Office of Promotion & the Arts, which produces Artscape.  

The Pittsburgh Pirates echo that sentiment. The team has exclusive deals in the health insurance, hospital and financial services categories (including PNC, title sponsor of PNC Park), but has split auto, beer and other categories.

The Pirates work with eight sponsors in the beer category, up from one sponsor prior to the Great Recession.

“We’d like to have one monster partner in every category, which makes life a lot simpler. But the reality is many companies won’t spend millions of dollars to fill these categories, and we’re left working with multiple partners,” said Aaron Cohn, the Pirates’ senior director of corporate partnerships sales and service.

Further exemplifying the growing trend of non-exclusive deals, the NFL in 2014 split the insurance category with its partnership with Nationwide Insurance. Nationwide shares the category with USAA, a league sponsor since 2011.

“Professional sports leagues have historically granted exclusivity, but that has started to shift,” said Tim McGhee, president of MSP Sports, a sponsorship consultancy. The sponsorship veteran helped negotiate USAA’s NFL partnership while serving as a senior vice president at IMG Consulting.

“Category exclusivity was very important for USAA. Fast forward four years, and Nationwide is another player in the space.”
McGhee points to two factors that may have driven the decision to break up the category: an opportunity for the NFL to squeeze more money out of a hyper-competitive category, and an interest by USAA to offset rising rights fees.  

“If you want to be in the game, you have to let other players be in the game with you.”

Replacing Exclusivity With Ownable Platforms
A growing number of sponsors are replacing exclusive deals with marketing platforms that provide ownership of specific inventory or activation platforms.

Nationwide’s partnership with the NFL affords founding status of NFL Now—the league’s digital video service—and presenting sponsorship of the Walter Payton NFL Man of the Year Award. In contrast, USAA activates its sponsorship in support of military veterans.

“Nationwide is excited to partner with the NFL and considers USAA a strong competitor that does a great job protecting military members, veterans and their families. We have no concerns about co-sponsoring with USAA,” said Brad Barnett, Nationwide’s associate vice president of national media and sports marketing.

Properties with a long season have much to gain from non-exclusive deals. The San Francisco Giants have carved out platforms that allow competing sponsors to stand apart from each other in AT&T Park.

“There are so many games in baseball, and there are so many ways for sponsors to connect with our fans. The pool is big enough for everyone,” said Jason Pearl, the Giants’ managing vice president of business development.

Pearl points to the luxury auto category as an example. Lexus and Audi both title specific areas in AT&T Park: Audi sponsors the Audi Legends Club, while Lexus sponsors the Lexus Dugout Club.

“You won’t see them next to each other on TV, fans won’t go by them both at the same game, and they both offer different types of experiences.”

The Pittsburgh Pirates take a similar approach to the category. Lexus sponsors the Lexus Club in PNC Park, Chevy gains vehicle display during the month of July, Honda receives media inventory, Baierl Automotive sponsors Friday night block parties while #1 Cochran sponsors the family fun zone at Sunday games.  

“They each have their moment to shine,” said Cohn.