CorpComms Magazine

On the face of it, the past 12 months does not look like a halcyon period for the corporate sponsorship world. Tiger Woods' eye for a birdie meant the world discovered he was far from a perfect driver, and spooked sponsors quickly reversed out of their deals with golf's number one star.

Former England football captain, John Terry, then took a trailblazing approach to team bonding. And to complete the unholy trinity, Chelsea's Ashley Cole used a mobile phone to send a bevy of beauties images of himself modelling his underpants, a move which was perhaps not quite what his club sponsor meant when it introduced the slogan No matter how you stay in touch, Samsung connects you in style.

Coupled with all that, the UK has experienced the longest recession on record. But strangely, despite the gloom, the corporate sponsorship market still seems buoyant.

According to sponsorship consulting group IEG, the global market for sponsorship deals increased by two per cent last year to $44.4 (£29) billion - a considerable slowdown from growth rates of 15 per cent in 2008, 12 per cent in 2007 and ten per cent in 2006, but growth nonetheless.

Sponsorship is also taking a greater slice of marketing budgets, with advertising spend growing by 50 per cent over the past ten years, compared to a 90 per cent rise in sponsorship, according to the World Advertising Research Centre. Meanwhile, the global sports sponsorship market - which accounts for more than 85 per cent of the total corporate sponsorship market - is projected to increase to $60 billion over the next five years, according to accounting group PricewaterhouseCoopers.

Stephen Cheliotis, chief executive of the Centre for Brand Analysis, says: 'Sponsorship has been affected by the recession for sure. It has hit the market, but it has not had the same impact universally across the board. For example, the big four football clubs are still confident of increases to their last sponsorship deals, while for smaller entities budgets are coming under pressure. The nature of this recession - greed and credit - means that more and more sponsors are reluctant to spend lavishly, so things are now being done more sensibly. There are moves from sponsors towards cultural brands or personalities that can deliver increased return on investment and potentially this will open up a gap between the haves and have nots.'

Also, the corporate sponsorship market is in some ways insulated against a downturn as deals often run over a number of years. Ardi Kolah, chief executive of marketing agency Guru in a Bottle, says: 'Sponsorship is a basket of intellectual property rights which you expect to help brand building, reputation and so on. It's not always about the money spent on rights, but how companies activate those rights. Yes, there has been a slowdown in growth, but there has still been growth. There will still be a slight increase in terms of new sponsorship deals being signed. This year we have the Winter Olympics, the FIFA World Cup and we are working towards the Olympics in 2012. It creates a perfect storm. For sponsorship to be meaningful it has to start before an event and have a legacy afterwards, so you use all rights you've got to drive sales and incentivise staff.'

Sporting results

So why has sponsorship held its own, even during a crushing recession? Andrew Owen, London managing director of sponsorship agency The Sports Business, explains: 'Sponsorship is fairly unique as it engages people around their passions, which means it is meaningful and memorable. Also, strategically, companies are looking towards corporate responsibility and sponsorship can help with that, perhaps by sponsoring a grass roots sporting event. Finally, the industry has added rigour, so the finance director now sits and looks at sponsorships and has to be satisfied with what they are delivering. It is now far less prone to the whim of the chief executive. Those days are gone, and rightly so.'

Still, the process of delivering those results is far more complex than simply writing a cheque and having your logo stamped all over an event. Consumers are increasingly savvy and understand marketing and when they are being marketed to,' says Cheliotis. 'You're not going to get a great uplift to a brand just because it sponsors something. There needs to be a contribution, so maybe a sponsorship saves a club or an event from going under, or the brand is part of the creative process and collaborates with an event or team [such as Shell's technical partnership with Ferrari in Formula One]. If it's just logo stamping then that's just an alternative media buying strategy.'

Experts say that sponsors should be able to put very clear objectives and metrics in place and then measure them. So, for example, how many people came to the brand through a promotion? What business was generated from potential customers who were taken to a sporting event?

Kolah continues: 'The point about sponsorship is that you attract potential customers who are very motivated, which is really valuable. But the paradox is that this is getting harder, not easier, as there has been a fragmentation of channels. However, London 2012 will be one of the very few opportunities where we all make an 'appointment to see' which is partly what makes it so interesting to sponsors.'

So, those are the benefits a sponsor gets, at least according to the sponsorship text book. But, as we all now know, this is a high risk area of marketing where circumstances can frequently conspire against you.

At the 2004 Olympics, Greek sprinter Katerina Thanou famously failed a drugs test, a double blow as she was the poster child of the Games. Quite literally. Her image was plastered across billboards all over Greece.

'We are already tuning down our communication around Thanou and changing billboards and outdoor posters wherever we can,' Jan Runau, Adidas's director of PR, said at the time - presumably knowing full well that this type of set-back could strike again. And it did.

Adidas continued its run of bad form at the 2006 World Cup in Germany, covering a footbridge across the Autobahn adjacent to Munich airport with a huge image of a diving Oliver Kahn, the Germany goalkeeper. Unfortunately for the sportswear group, Kahn was then dropped from the team and didn't play a match in the whole tournament.

Guru in a Bottle's Kolah adds: 'Deals with personalities have tight contracts but you can't always dictate how somebody behaves in private. That's where the risk comes in. There is also risk of injury. But there will be clauses to protect sponsors. So if a player scores fewer goals it may be reflected in the amount of money he gets from a sponsorship deal. But because of the risk with individuals, some sponsors have a policy of avoiding them. So Nationwide is a mutual. With the values it wants to communicate, it prefers to support teams or leagues.'

Rules of the game

In a recent article written for US magazine Advertising Age on what communicators can learn from the Tiger Woods scandal - which saw Accenture terminate its sponsorship agreement with the golfer, although Nike remained - Jim Andrews, senior vice president at IEG, identified several guidelines for sponsors if their deals go sour. They included, being able to quantify the value of the partnership, so you can take an immediate view if it is worth persevering with the relationship; having a forward-thinking agreement and an exit strategy, including contracts providing an 'out' if bad behaviour puts the sponsor in a bad light; and understanding the relationship between your partner and your target market - which requires detailed market research.

Mark Borkowski, founder of the eponymous PR agency, says: 'There are bad behaviour clauses in most contracts these days - and if there aren't, you're pretty stupid. You can get on your high horse and say 'this is not what we stand for as a brand and we're moving away'. That becomes a positive message and allows you to say certain things about the brand. I don't think anybody blames a brand for pulling away, but you have to look at your deal and relationship. Nike has a long term relationship with Tiger Woods and is edgy. That's not the same for Accenture.'

There are also proactive actions that can be taken to avert bad publicity. Owen adds: 'We work with Carling across the Old Firm [the lager brand sponsors both Celtic and Rangers] and you have to be extremely careful. You need knowledge of the sectarian issues and you have to work with each club fairly. But there is also a responsibility regarding drink and alcohol consumption and sometimes you need to be ahead of the curve. So we worked with Carling to take the logo off replica shirts sold to children.'

But in the end, most experts seem to agree. Undertake lengthy risk analysis before entering into sponsorship deals, for sure, but the unforeseen event can always strike. Then, as Adidas's Runau will testify, you need the attributes of the athletes who might have got you into trouble in the first place. Quick feet.

share me: del.icio.us | digg | reddit | Tweet