What Are Today's Sponsors Looking For?

 

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By Lars Haue-Pedersen

Lars Haue-Pedersen is Director of the Swiss/UK consulting group, TSE Consulting (www.tseconsulting.com), one of the leading providers of consulting and training services to the international sports world. He is an associate professor in sports economics at the Copenhagen Business School and he lectures in sports management and marketing at various European universities.

INTRODUCTION
Revenues from sponsors are important to every sports organization - big or small, local or international. Moreover, it can be expected that with a continuing decline in revenues from television, the importance of sponsorship as a source of income for sports organizations
will increase over the coming years. At the same time, sports sponsorship is changing quite dramatically at this time and so is the focus of the sponsors.

This article will seek to provide a brief overview of these changes as well as provide some advice for sports organizations on how to adjust to these changes.

THE CHANGING MARKET
New technologies and the increase of options within all areas have provided consumers with the power. The consumers hold the cards now: in general, they are better informed, better
educated, and they can afford more. Moreover, they (we!) are unconvinced of advantages of the products advertised and the subsequent information overload leads to increased “zapping”
in every aspect. It has become very difficult for companies to reach consumers. At the same time, today’s consumers constantly seek new challenges and want to explore new horizons.

These trends point to the fact that the loyalty between consumers and companies or brands is getting weaker and it is becoming more difficult for the companies/brands to reach the consumers and to maintain relations with them.

These changes in the market have consequently led to changes in corporate marketing. A much wider choice of communication and distribution channels are now available (multi-channel strategy). At the same time, individual companies’ products have become more interchangeable and with an increasing imitation in most sectors, the profit margins of many consumer products are shrinking. Moreover, because of the changes among consumers and the difficulty for companies in reaching these consumers, the customer acquisition costs are rising.

So if this is all bad news for the companies/brands, what should be done about it? Two inter-related keywords are in play: relationships and loyalty. Creating relationships is becoming the key instrument in the marketing efforts of many brands, because the establishment of a relationship between the brand and the consumer is a way to create loyalty between the consumer and the brand.

So how should one create a relationship? Well, the trick is to move the brands upwards in terms of differentiation and pricing. As shown in fig. 1, the price of a product will increase with the differentiation and if a product or a brand can get to the final stage where it actually provides an experience to the consumer, then a strong relation can be built and loyalty established.

Sport and sports sponsorships can play an important role in the process of adding experience to a brand and that is why many brands are now adjusting the way that they use sponsorship within the marketing mix.

SPONSORSHIP IS CHANGING
Sponsorship is traditionally defined as “an investment in an activity, in return for access to the exploitable commercial potential associated with that activity.” That concept is still valid, but it is the way that the commercial potential is being exploited that seems to be changing.

A) TRADITIONAL APPROACH
Traditionally, sponsorship has been used as a tool to build awareness and increase the image of a brand. It has served as a new and different instrument, yet still integrated into the communications mix with classic advertising, PR, sales promotion, and direct marketing.

The keyword has been brand-centric. As shown in fig. 2A, brands were looking to sponsor events that could help build and promote their brands. The brands “grabbed,” or at least tried to transfer the values of the event into their brand in order to build an image of their brand that could attract customers. If a relationship could then be established between the consumers and the event, it would further build the brand. Whether it was about creating awareness for the brand, building an image for the brand or repositioning a brand, the companies used sponsorships to answer brand needs.

B) NEW APPROACH
The core element of the new approach for sponsors is that the focus is not on the needs of the brand but on answering consumer needs. As described earlier, one of the main objectives for a
brand today is that it must build relationships with consumers in order to create build loyalty. Today’s brands must add value to their consumers and sponsorship offers a unique opportunity for brands to do something for the consumers that they really care about.

The key word is consumer-centric and the process is illustrated in fig. 2B: brands are looking for events that provide an authentic link with the consumer that the brand needs to target.

What do the consumers like, what interests them? When such an event has been identified, the brand gets involved and supports the event- places itself behind and in front of the event-and thereby pleases the consumers, who will recognize the involvement of the brand. Thus, a new way for building loyalty has been created. The better the event, the more satisfied the customers (of the event and the brand) will be. The better that the relations between
the customers and the brand become, the more the customers are likely to stay with both the event and the brand.

It can often be difficult for sponsors to find just the right event that provides this authentic link between event and consumers. That is the reason why many of the brands involved is this consumer-centric sponsorship start to create events/rights instead of buying events/rights and this is a trend that will probably grow steadily over the coming years.

WHAT DO THE CHANGES MEAN TO YOU?
The market, marketing, and sponsorship are changing. So, what does this mean to you and the way your sports organization would approach sponsors? Well, first of all you need to keep in mind that all trends are relative and that sponsors still have many different reasons for
sponsoring.

The so-called “donating sponsor,” whose sponsorship decisions are based not on any marketing-related considerations but merely on personal preferences for certain
sports or events, is still in play. In general, the first thing you have to identify is what the objectives of the potential sponsor are and try to work out how you can help them to achieve these objectives.

Basically, these sponsorship trends are good news for you because it will provide a much wider field of options for you when you approach a potential sponsor. You do not necessarily need to offer the sponsor huge media coverage of your event because that might not be what they are looking for. Perhaps they will be more interested in doing something new or special for their customers or for their potential customers and therefore you need to identify how your organization/event can help.

Even though sports sponsorship is developing fast and is becoming ever more sophisticated, it basically comes down to this: every company is constantly looking for ways to build better relations with their customers and other groups who are important to them. How can you help? The more closely you can tailor your proposal to the potential sponsor’s specific marketing needs, the greater your chance to achieve your own sponsorship goals and revenue.

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