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Sponsorship is changing a lot in venue-land, and not all of the changes are good. Over the past few years, many venues have come to believe that they’ve hit the jackpot, but as highly strategic corporate sponsors increase exponentially, current trends in venue sponsorship will become unsustainable. Naming rights are being sold (and resold and resold) for new and venerable old venues alike. Venue sponsors are wielding vastly increased control over the content of events. And overall trends in venue sponsorship are running counter to the very positive trends across all other types of sponsorship. Before I go any further, my perspective bears some clarification. I don’t work for a venue, consult to venues, or seek sponsorship for any type of sponsee. I consult to major corporations around the world, advising them on how to get the most out of their sponsorship investments and learn a great deal from them in return. I have a box seat for the inner workings of corporate sponsorship strategy, and there is a very clear trend away from what most venues are selling. There is no question that you will still be able to find some sponsors willing to buy old school packages for some years to come, but it will become increasingly difficult as more and more sponsors learn to harness the far more experiential and connection-oriented aspects of modern sponsorship. A few venues really understand what modern sponsors are looking for and are creating much more fulfilling sponsorships because of it. Unfortunately, this is still far from the norm. My hope is that this article may serve as a wake-up call so that all venues have a fuller understanding of what they can offer that will create the kind of meaningful value that is fast becoming the centrepiece of modern sponsorship. The first major challenge is one of the biggest: venue naming rights. From a sponsor’s perspective, the problems with venue naming rights aren’t complicated: they are expensive. They are very long term (what sponsor knows what their objectives will be in 10 years time?). But most of all, despite the fact that they are big, they rarely provide a strong catalyst for changing people’s perceptions or behaviour – the primary goal of all corporate marketers. Creating strong and long lasting results from any sponsorship these days revolves around the concept of connecting a sponsor with a target market in a meaningful way – using the emotional power and relevance of sponsorship to forge and enhance that bond. People feel strongly about teams and music and events – all great opportunities for making that connection. They don’t tend to feel that way about venues. Ask yourself what’s more meaningful, the Dom Perignon or the bottle it’s in? Even the most wonderful bottle in the world is still just a vessel, and so is a venue. That doesn’t mean that there aren’t meaningful ways to connect a sponsor to an audience via venue sponsorship, but if the focus is on plastering a sponsor’s logo and name all over your building, you’re not even close. There are a couple of great ways to make venue naming rights work for a sponsor, as well as some techniques to make them more relevant. While I am clearly not a big fan of naming rights, I am looking at those investments from a marketer’s point of view. We marketers, however, may be getting this all wrong, because the true benefit doesn’t lie in the marketing impact but, seemingly, in the share market. According to a study published in the Journal of Advertising Research, share prices of companies that invested in naming rights of 49 major American stadiums increased by an average of 1.65 percent at the time of the sponsorship announcement. The length of the contract, team winning percentage, and whether the sponsor was locally-based were all highly correlated with contributing to even greater increases.
I still think most stadium naming rights are marketing duds, but if the overall effect on the company’s market capitalisation exceeds the cost of the sponsorship, and can be sustained, then it could rightly be called a cost of doing business. That being the case, I think the best option for you is to encourage those sponsors to accept it and move on, rather than pumping a lot of money into ineffective consumer leverage programs. Another approach that I’ve seen work really well is as a revenue- generator, particularly if the rights-holder is a retailer. Basically, you provide the sponsor with far more benefits than they need to achieve their marketing goals and allow them to on-sell the excess benefits. A couple of major retailers have done this very well, packaging arenas full of skyboxes, tickets, and signage with guaranteed in-store promotion and circular advertising, and then selling the enhanced packages to key vendors. When done shrewdly, it is entirely possible for the retailer to have naming rights and all of the associated benefits, as well as walk away with a net profit. The second major trend in venue sponsorship is the experiential value-add. This approach ditches exposure as a major component (although there are inevitably some signs) and concentrates on creating meaningful improvements to the audience’s event experience. A few examples: • The car company that negotiated parking rights next to the stadium’s main gate, so that people who drive their cars get a convenient, ego-boosting, what-money-can’t-buy experience every time they go to a game. There is no discount on parking, because that isn’t the important part to the customer – convenience is. • The sunscreen manufacturer who provides everyone attending a theme park in the hot summer months with a hospital-type bracelet that changes colour when they’ve had enough UV and it’s time to cover up or put on some sunscreen. Of course, that sunscreen is available for sale throughout the park, so it is not only a real service to those of us who often burn before we know it, but it is a sales-booster, as well. • The numerous stadiums that have created sponsored family only areas, with extra restrooms and foodservice staff, in-seat foodservice (which is not the norm in many countries), a family-friendly behaviour policy, and priority parking for families with kids under five. The list could go on and on, but the key here is that the sponsorship revolves around adding real value, not visibility. Speaking of visibility, this is my last word on signage… if you are selling signage as a major feature of your sponsorship packages, you are going to find that a harder sell in the future. This is particularly true of the new wave of interruption signage, such as rotating signs and electronic insertion. This is due to two factors that sponsors are cottoning to very quickly: 1. Stand-alone signage has been proven not to impact on perceptions and buying intentions, as determined by numerous academic studies dating as far back as the 1980s. Most spectators are used to it, but pay about as much attention as they would to wallpaper. 2. Sponsors know that one of their primary goals is to enhance their target market’s event experience, thus creating a deeper bond with them. They also know that interfering with the experience the target market is trying to have by intruding on it with interruption signage is not going to have a positive effect on that bond. The final trend that I’m going to touch on is writing contracts with sponsors that give them veto power over the sponsors of events that use the venue, allowing them to block competitors from sponsoring anything in that venue. On the surface, this may sound lucrative for you and shrewd for your sponsors, but the facts of the matter are much different. The downsides for the sponsors include, again, that they are sponsoring a vessel, not the contents – which hold most of the marketing power. This doesn’t bother most of these types of venue sponsors, however, as they see this as a defensive move, not a proactive marketing exercise, which brings me to the downsides for the venue. By limiting the sponsors that events can bring on board, it may – and has for many venues – limit the number of events and corresponding revenues that come through your door. In addition, defensive sponsors don’t leverage their investments, thus limiting any additional marketing grunt that an active, strategic sponsor could bring to you. It may be a short-term win, but it is likely to hurt you in the longer term. The biggest lesson in all of this is that sponsors’ needs are changing very rapidly and they are requiring an increasingly sophisticated and strategic approach from their partners. If they don’t get it, they have a lot of choices and will go elsewhere. If you are taking your cues on what sponsors need, will buy, and will pay from other venues, you are going to miss a lot of opportunities. Instead, concentrate on what the best sponsors in the world are doing – go to conferences, read books like Experiential Marketing and the Experience Economy, subscribe to sponsor-oriented publications – and get creative as to how you can deliver what they really need, not just what history and convenience dictate.
Kim Skildum-Reid is a
corporate sponsorship consultant, trainer, and co-author of |
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© 2004 International Association of Assembly Managers 635 Fritz Dr. Coppell, TX 75019 USA Phone: 972/906-7441 Fax: 972/906-7418 |
At
the height of the IT boom, many technology companies took up stadium
naming rights roughly coinciding with their IPO. The fact that many of
those companies tanked within two years of taking up the sponsorship
hasn’t dampened interest and, for established, bricks-and-mortar
companies, showcased the potential stock market impact of coupling genuine
managerial confidence with blatant audacity.