Strategic intent in sponsorship marketing

Forethought in sponsoring events will drive directed returns

Sponsorship marketing has become an indispensable part of the marketing mix for international brands, with the US$40bn sponsorship market enjoying double digit growth annually. A global audience size at major events extends to billions of people; sponsorship can considered more cost–effective than purchasing comparable levels of media coverage with conventional advertising.

Sponsorship for the 2008 Beijing Olympics for instance, has grown to US$1bn compared to US$338mn for the 1988 Seoul Olympics.

Yet many sponsoring companies spend the most time on tactical considerations relating to the sponsorship platforms, such as choices of banners, awards, ambassadors, teams, equipment, or giveaways, product placements, naming rights, or logo size. Instead, Synovate's research has shown that marketers who first consider the focus of their possible strategic objectives when investing in an integrated sponsorship approach, accrue the most relevant returns for their specific needs:

1. Building awareness.
   Lenovo is sponsoring the Beijing Olympics to promote itself to the world, and plans to leverage on the excitement associated with such a major event, to build momentum in customer interest. Successful marketers have shown to always measure their investments, and usually baseline brand awareness is the first performance metric to be surveyed.


2. Growing brand equity.
   The Olympics celebrates culture, education, sportsmanship, effort, friendship, human dignity, and solidarity. Being part of such noble aspirations builds goodwill for a sponsoring brand. Such games also restrict sponsors to best–of–class companies in various categories.
   Being associated with leading names such as Coca–Cola, Visa, McDonalds, or Kodak is also a form of co–branding. Sponsors are taking this a step further with joint promotions where synergies may be found. To understand a brand's health, marketers first measure its awareness and image, so as to later track changes in customer loyalty.


3. Building corporate citizenship.
   Sponsorships build organizational self–esteem. In 2007, HSBC's CEO led a 100km walk in Singapore, greatly enhancing company culture and fitness. Panasonic believes that its sponsorship in China will help it gain confidence to win in the world.


4. Enhancing stakeholder relations.
   Special VIP tickets or lounges allow sponsoring companies to meet and entertain their business partners, customers, or employees. Enhancing relations with government officials could pave the way such as towards opening tightly regulated sectors such as utilities, finance, or telecoms.


5. Re–positioning.
   Where required, sponsoring major events allows companies to shape consumer attitudes, depending on each company's strategic objectives. For instance, as a foreign brand, Coca–Cola supports major events especially to localize its brand image in nationalist markets. Standard Chartered Bank organizes 4 marathons each year to differentiate itself from its competitors. Other objectives may include gaining market leadership, correcting negative quality perceptions, launching brand extensions, or shifting to premium prices.


6. Engaging customers.
   During major events, viewers are excited to receive information such as athlete profiles or medal tallies. Companies have been able to drive website traffic and online transactions by forming linkages with such content. Interactive media interfaces such as blogs or games also allow companies to truly engage with customers. In addition, it may be possible for electronics companies to leverage on increased online activity to boost sales of 3G handsets, notebooks, and computing equipments such as video cards.


7. Showcasing products.
   Sponsors use major events to launch new products or encourage trials. For instance, the 2002 and 2006 FIFA World Cups led to a global spike in multimedia projector and plasma tv sales respectively. Similarly, the 2008 Olympic Games may drive demand for HDTVs among particular segments.


8. Direct marketing.
   Products are frequently featured at specific events or channels, to target a particular segment. For instance, namelists of attendees to major events may be purchased to introduce discounted rates for cameras or camcorders. Specific segment–targeting, based on audience interest in a specific theme, such as arts or sports, even allows psychographic–targeting of a fan base. Unlike less–effective demographic–level targeting, understanding customer adoption even provides viral marketing possibilities.


9. Driving sales.
   Strong performance in F1 racing has directly allowed carmakers like Renault and Subaru to boost their sales. Proprietary World Cup content such as video clips and score updates helped Malaysian telco Maxis take market leadership from Celcom in 2006. Visa offered a donation to the US Olympic team for each time customers make a purchase on their credit cards so as to boost cardspend. A clear understanding of consumer behavior and purchase drivers will allow companies to launch promotions that will successfully boost their toplines. For instance, if white goods manufacturers sized the potential of the home viewer segment that would entertain guests during a major sporting event in summer, they may possibly drive sales such as of airconditioners and refrigerators.


10. Deepening penetration.
    China is the world's largest market for consumer products, and the Beijing Olympics is a source of nationalist pride for the Chinese. Arowana Oil is sponsoring the Beijing Olympics to license to use of the Olympics logo on its PET bottles, as it believes that this will convert more non–users to its products. In the long term, such major events also drive infrastructure development, tourism, employment, and therefore purchasing power. As wealth is created over time, companies with a deliberate brand association may gain a disproportionate preference in future purchases, due to altered consumer perceptions and intent.

When executing a sponsorship strategy, marketers need to consider not only their sponsorship platforms, but also their strategic and tactical objectives, impetus, and target segments; their media strategy, including their audience, attributes, desired brand experience, and message; and how they can measure and value their ROI, such as in press coverage, competitive differentiation, and increased sales.