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Goalposts Shift As Sponsorship Game Turns More Complex

London Evening Standard, January 29, 2014

By Gideon Spanier

No recent sporting event, festival or museum has been complete without a big-money sponsor, even during the economic downturn. But a combination of factors — from the rise of social media and brands creating their own “content” to a growing reluctance for some advertisers to look like they are showing off — is forcing a surprising rethink.

Barclays could drop its £40 million-a-year sponsorship of the Premier League, just months after it announced an early end to its backing for the “Boris Bike” hire scheme. Vodafone has dropped its Formula 1 sponsorship of the McLaren team, said to be worth upwards of £30 million a year, as part of a “radical” change to its marketing strategy. Instead the mobile giant has a new grassroots focus on ordinary people doing “remarkable things for the first time”, rather than flashy top-down sponsorship campaigns.

This isn’t yet a case of sponsorship in decline. IEG, a subsidiary of advertising giant WPP, reckons the global sponsorship market jumped 20% to $53.3 billion (£33 billion) in the last five years.

“We’ve never been busier,” declares Steve Martin, chief executive of sponsorship agency M&C Saatchi Sport and Entertainment. “The 2012 Olympics was the best showcase of how sponsorship can work.” Social and digital media have made it easier for brands to communicate their sponsorship directly to consumers and measure the effectiveness, he adds.

But the kind of advertisers that want to get involved in sponsorship is shifting. Brands from emerging markets and new entrants are more willing to invest in sponsorship because it remains an important way of raising awareness. Look at Korean car firm Hyundai’s 11-year sponsorship of Tate Modern museum’s Turbine Hall, announced last week and said to be worth much more than the £4.4 million paid by previous sponsor Unilever. Or there’s German sportswear firm Puma’s £30 million-a-year deal this week to replace mighty Nike as Arsenal’s main sponsor after 20 years.

Expect more “challenger” brands from Asia, the Gulf and emerging markets to become sponsors in Britain.

In contrast, established names such as Vodafone, Barclays and Nike are questioning the purpose of sponsorship when there are so many new (and cheaper) ways to engage consumers directly on a one-to-one targeted basis — through their own social media fan base and by creating their own events and content such as digital video.

One leading business figure, with a marketing budget running into hundreds of millions of pounds, says: “Formula 1 and the Premier League have incredible viewership. The question is: What’s the emotional engagement? It is great for awareness, but not for brand love. I can spend the money differently.”

Questions about sponsorship are part of a wider issue, as brands rethink their entire marketing strategy. Vodafone said last week it was reviewing its £600 million-a-year global ad-buying and planning account for the first time in five years because of “advancements in the media and digital landscape”.

The tech revolution has allowed brands to look beyond advertising and “paid” media. Now they can create their own “owned” media — from websites and apps to video, magazines and live experiences. Then, hopefully, that content is shared, creating further “earned” media coverage. This is why some companies are moving away from “big badge” sponsorship which they see as paying to put their brand next to someone else’s content or event. “We don’t need to bolt on to other brands,” says one marketing director.

Instead they look enviously at how, say, energy drinks firm Red Bull teamed up with Felix Baumgartner for his skydive from the edge of space — an event broadcast live on YouTube that Red Bull “owned”, and “earned” a lot of positive coverage from. But few brands want to take such risk in the quest to become not only valuable but also “loved”.

Sponsorship works when there is a good fit between the sponsor and the subject because it connects with consumers’ passions — be it sport, music or entertainment. It will always be hard for a bank to generate much brand love. With an energy drink, it is just about possible to feel a sense of excitement.