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Sport Sponsorship Chapter 15 Introduction • What is sponsorship? – Cash and/or in-kind fee paid to a property in return for access to the exploitable commercial potential associated with that property • One of most prolific forms of sport marketing • Sponsorship fees often exceed $5,000,000 per year and are structured as multiyear deals • Provides a company with association, value, exposure, and opportunities to leverage their affiliation to achieve marketing objectives History • Origins traced back to ancient Greek Olympics • Increasing commercialization of modern sports has led to tremendous growth in sport sponsorship – $11.3 billion spent on sport sponsorships in 2009 • 1984 Los Angeles Olympic Games – Watershed year in the evolution of sport sponsorship – “Less is more” sales strategy (President Peter Ueberroth) • Signed a limited number of companies to exclusive official sponsorship contracts – The first Olympic Games to turn a profit for the host city History: Reasons for Sponsorship Growth • Increased media interest in sports. • Companies can “break through the clutter” of traditional advertising. • Sponsorship can reach its target consumer through consumers’ lifestyles. History: Reasons for Sponsorship Growth (cont.) • Enable corporate marketers to reach specific segments, such as the following: – Heavy users, shareholders, and investors; or specific groups that have similar demographics, psychographics, or geographic commonalities. • Today, sport sponsorship has become a discipline involving serious research, large investments, and strategic planning. • Buying decisions have become much more sophisticated, requiring sellers to provide compelling business reasons to the prospective sponsor. • Return on investment (ROI) Sponsorship Activation • The sponsor commits financial resources in support of its sponsorship through promotion and advertising that thematically includes the sport property’s imagery. • The oft-cited rule of thumb for activating a sponsorship is 3 to 1; that is, $3 in advertising/promotion support for every $1 spent in rights fees. Sponsorships Trends • Green Partners program that today numbers over 20 companies ranging from Eaton Electrical (which supplies electric vehicle–charging stations) to MillerCoors (Mickle, 2013) • Social media space – Among the most active sponsors is the location-based social networking site Foursquare, which over the past several years has inked sponsorship arrangements with sport properties ranging from the U.S. Open Tennis Championships to the NFL, NHL, and Major League Soccer (MLS) (Botta, 2013). Sales Promotion • A variety of short-term, promotional activities that are designed to stimulate immediate product demand” (Shank, 2009, p. 312). • Efforts also aim at increasing brand awareness, broadening sales distribution channels for products or services, and getting new consumers to sample products or services. Sales Promotion: In-Venue Promotion • Increase the amount of “value-added” benefits that teams provide their paying customers • Traditional giveaways: Sponsor underwrites the cost of a “premium” item in exchange for its logo on the item and advertising support that pre-promotes the event • Continuity promotions: Require fans to attend multiple games to obtain giveaways • Success of promotion varies widely based on time of season, teams’ win–loss record, day of promotion, opponent, and perceived quality of the item. • Incremental increase in fans Sales Promotion: In-Store Promotion • Companies often leverage sponsorships at retail level. • Premiums – Merchandise offered for free or at a reduced price as an inducement to buy a different item or items. • Contests/sweepstakes • Sampling – One of the most effective sales promotion tools to induce consumers to try a product • Point-of-sale or point-of-purchase materials – Used by marketers to attract consumers’ attention to their product/service and their promotional campaign at the retail level • Coupons: Free-standing inserts (FSIs) Cross-Promotion • Joining together of two or more companies to capitalize on a sponsorship is becoming increasingly popular and effective. • Creates more “bang for their buck” under the premise that two sponsors working together can generate more interest and awareness among targeted sport consumers. – Codependent partners • Used to gain exposure in nontraditional and unexpected retail settings. • It has become increasingly important to think outside the box as to how sponsors can be joined to increase the overall effectiveness of sponsorship investments. Sponsorship Packages: Sponsor Benefits • Exclusivity in one’s product or service category • Official designations – Leagues and teams offer multiple designations tied to the sport and to the sponsor’s product or service category • Rights to utilize the sport organization’s intellectual property in advertising and promotion campaigns • Advertising support • In-stadium signage and promotional announcements • Access to tickets • Potential new business through access and opportunity Sponsorship Packages: League/Team Benefits • • • • Rights fee Multiyear commitment Advertising commitment Commitment to team-oriented promotions Sponsorship Platforms • Governing body sponsorship – Entails securing “official sponsor” status • Team sponsorship – Appropriate platform for local/regional companies or companies with smaller marketing budgets • Athlete sponsorship – Involves some type of endorsement of the sponsor’s product or service Sponsorship Platforms (cont.) • Media sponsorship – Companies that purchase advertising or programming during sport-related broadcasts • Facility sponsorship – Enables companies to tie directly to the event atmosphere • Event sponsorship – Tie directly to event atmosphere • Sport-specific sponsorship – Enables company to direct its sponsorship efforts to a specific sport Evaluating Sport Sponsorship • Vital due to growing financial commitments necessary to effectively activate sport sponsorship programs • No one exact formula for measuring ROI. • For ROI, companies use the following: – Internal feedback, sales/promotion bounce-back measures, print media exposure, television media exposure, primary consumer research, dealer/trade response, and syndicated consumer research Evaluating Sport Sponsorship (cont.) • The evaluation of sponsorships has become a necessary component of the sport sponsorship process. • Difficult to determine precisely how much incremental sales are directly attributable to a specific sponsorship program. • Many companies conduct periodic consumer surveys to determine ROI. • Companies often hire professional sport research firms to perform media evaluation research that examines corporate sponsorship and brand exposure through television and print media coverage of sports events (Performance Research). Sponsorship Agencies • Many companies engaged in sport sponsorship outsource the negotiation and/or implementation of their sponsorship programs. • They rely on agencies because they do not possess the expertise, experience, or resources to negotiate and implement sponsorship programs. Current Issues • Ethnic marketing – Sport organizations have begun to adopt strategies to target ethnic groups more effectively. • Overcommercialization – Do consumers have an emotional threshold for accepting a constant bombardment of corporate names, logos, and messages? • Gambling – Sport organizations have embraced gambling (LGEs) as a growing source of sponsorship revenue. Summary • Sport sponsorship has evolved into a billion-dollar industry that has grown increasingly competitive. • Competition has heightened the necessary degree of sophistication in the sales, implementation, and servicing of sport sponsorships. • Companies continue to place an increased emphasis on the evaluation and measurement of the return on their investment.