CORPORATE SPONSORSHIP



Corporate Sponsorship 272
Photo by: RosLobsos

Akin to advertising and promotion, corporate sponsorship is a type of marketing where a corporation partially or fully funds a program, project, activity, or event in exchange for public recognition. In other words, corporate sponsors pick up the bills for public programs, projects, activities, and events in return for the rights to associate their corporate names, images, and advertising with the programs and events they are sponsoring. During the 1990s, corporate sponsorships skyrocketed. Sponsorship expenditures rose by 337 percent between 1987 and 1997, according to the IEG Sponsorship Report.

Recent partnerships in the corporate sponsorship tradition include the Blockbuster Bowl (the marriage of college football and a videotape rental company), United Center (Chicago's sports arena supported by United Airlines), and the Budweiser Monte Carlo (a race car sponsored by Anheuser-Busch). Corporations associating themselves with events in some form can be traced back more than 100 years. For example, tobacco companies first created baseball trading cards. In the 1920s football teams were owned and cross-promoted by everything from starch companies (Decatur Staleys, which became the Chicago Bears) to meat packers (Green Bay Packers).

Corporate ownership of sports teams still is common, but in recent years the tie-ins have been more subtle with few fans thinking twice about Turner Broadcasting owning the Atlanta Hawks and Braves, or the Chicago Tribune Co. Inc. owning the Cubs. That is changing, however. The Disney Corporation owns a professional hockey team called the Mighty Ducks, named after two Disney movies about a kids' hockey team of the same name. Blockbuster Entertainment's founder, who owns several professional sports teams, is also planning a south Florida amusement park. He envisions an entertainment empire of cross-promotions and discount tickets that would send consumers from one entertainment venue to another.

Individual sponsorship by corporations is more likely than actual team ownership or renaming an arena. Sponsorships can take such forms as an auto racing series (the Indy Car series sponsored by PPG Industries Inc.), a specific race (the Daytona 500 by STP), a major golf tournament (the Vantage on the Seniors Tour named after a cigarette manufactured by R. J. Reynolds Tobacco Company), or women's tennis series (Virginia Slims, another cigarette).

Besides these traditional kinds of sponsorships, companies also align themselves with everything from rock concerts to high school students. In 1997 Sprint paid from $4 to $5 million to associate itself with the Rolling Stones' Bridges to Babylon tour, the biggest concert tour ever. In addition, Hanes Hosiery paid Tina Turner an estimated $1 million to be linked with her 1997 Wildest Dreams tour. Finally, a New York investment firm created the Student/Sponsor Partnership, which helps place poor and disadvantaged children in parochial schools.

According to companies that monitor corporate sponsorship, such as International Events Group (IEG), the trend to attach a company's name to an event or a particular person associated with a popular event is growing. In 1989 corporations spent $1.4 billion for sponsorships. By 1996 it mushroomed to over $5 billion. In the late 1990s, IEG estimates that more than 6,000 corporations participate in some kind of sponsorship and that companies are spending $16.6 billion worldwide on sponsorships. Sports events account for almost two-thirds of the sponsorships followed by music concerts, festivals and fairs, "cause marketing" (corporate donations of profit portions to save the rain forests, help the homeless, etc.), and the arts.

Another market research study has found that spending on corporate sponsorships has been increasing by 17 percent a year at a time when most other forms of marketing, such as print and broadcast advertising, have leveled off or are growing at much smaller rates. There is a lot of growth potential left in sponsorships. In the late 1990s, U.S. companies spent nearly $200 billion a year on all forms of marketing. Consequently, the $5 billion devoted to corporate sponsorship represents only 2.5 percent of total marketing efforts.

The reason for the growth of sponsorship can be attributed to companies looking for alternatives to advertising. Ad messages are always competing to "cut through the clutter" of all the other advertising messages. At the same time consumers report through surveys that they are becoming increasingly annoyed with advertising. As one enthusiastic sponsorship user puts it, advertising is designed to intrude on a person's life to make them pay attention to the sales message. Sponsorships try to establish a relationship with that person to become part of the lifestyle rather than interrupt it.

Corporate sponsorship, however, began to suffer from its own popularity in the late 1990s. Since the more companies flocked to sponsor various programs and events, the more cluttered the programs and events became with sponsorship insignia and banners, individual corporate sponsors struggled to get noticed and therefore they struggled for return on investment. As a result, corporate sponsors tried to make their presence or association stand out by establishing a logical connection between their products and services and the programs or events they sponsored. For example, when Sprint sponsored the World Cup, it supplied communications technology that linked the nine soccer fields in different cities together. Sprint's technology provided video clips, scores, schedules, and statistics and facilitated media coverage of the event.

THE MODERN SPONSORSHIP ERA

Aside from sports team ownership, corporate sponsorship of events not directly owned by the companies was not very common until recently. This trend changed in 1971, however, when the modern era of corporate sponsorship was born. The stock-car race-team owner and former driver, Junior Johnson, approached R. J. Reynolds Tobacco Company (RJR) with the request that the company sponsor his race car on the National Association for Stock Car Auto Racing (NASCAR) circuit. The cost would be under $100,000, but was big money in those days. RJR thought about individual sponsorship, looked at the demographics of the people who attended stock-car races, then plunged into sponsoring the whole racing series. Over the past 25 years, what used to be called NASCAR's Grand National championship has been transformed into the Winston Cup Championship. Each year RJR pumps millions of dollars into the Winston Cup's 30 races, and at least 3,000 other smaller racing events all over the country. Sources say RJR has spent more than $200 million over 26 years in prize money, advertising, banners, signs, "gimme" giveaways such as baseball caps emblazoned with the Winston logo, entertainment, and hospitality.

Corporations generally refuse to reveal how effective such sponsorships are in increasing sales, but numerous new companies enter the fray each year and tap into new events and programs, suggesting that corporate sponsorship works. For example, RJR has been joined in NASCAR's sponsorship ranks by over 100 corporations. The largest companies spend up to $4 million just to put their corporate name on a car. They spend a matching amount or more in off-track dollars for public relations, hospitality events for distributors, sales force and customers, and special race-related versions of the products. Some firms, such as Miller Brewing Co. and Coca-Cola, sponsor individual races on the circuit for close to $1 million. In exchange for that cash, all advertising, directional/promotional signs, sports page mentions, and radio/TV announcer dialog will revolve around the race. Furthermore, an emerging company, Lycos—an Internet search engine—became a full participant in the corporate sponsorship of auto racing by funding not only a motorsports team, but also a race, the Lycos 250.

MEASURING CORPORATE SPONSORSHIP
EFFECTIVENESS

While auto companies such as Ford Motor Co. and General Motors Corp. coined the phrase "Win on Sunday; Sell on Monday," any evidence that corporate sponsorship is that simple and effective is hard to find. No market research company has developed a way of determining if people buying cases of Miller Lite beer on Monday were inspired by watching NASCAR driver Rusty Wallace in the Miller Lite Ford Thunderbird win the previous day.

One of the ways companies do justify sponsorships is by converting sponsorship "views" or "mentions" during a radio and TV broadcast of a race into something that can be measured: the dollars such notice would have cost had it been purchased as advertising. Sponsors hire companies to watch TV and listen to radio coverage of races in order to calculate how much air time they get. Once total air time is established, most companies multiply that by several times the actual sponsorship cost. The multiplication is done in the belief that simple exposure to a company logo is not as valuable as a coherent, factual advertising message selling the product. If the multiplied value is more than actual sponsorship cost, most sponsors are happy.

Other companies rely on consumer surveys designed to demonstrate that sponsorships are working. NASCAR fans are repeatedly surveyed to find out if they buy sponsors' products. These surveys have been remarkably consistent. As many as 70 percent of NASCAR fans "always" or "frequently" buy products from companies that sponsor race cars or the races themselves. Market researchers, racing officials, team owners, drivers, and fans all agree that the reason for this high degree of loyalty to racing sponsors (only 36 percent of NFL fans say they buy sponsors' products) is that the fans know how expensive racing is. They know that without the millions of dollars sponsors bring to the sport, ticket prices would be much higher and the caliber of racing would be much lower. Fans seem to go out of their way to remember sponsors. In one telephone survey of 1,000 fans, more than 200 companies were correctly mentioned as racing sponsors, though only about 50 companies are primary sponsors of race cars. (The primary sponsor gets the official mention such as "Mark Martin driving the Valvoline Ford Thunderbird.")

Anecdotal evidence also exists, which demonstrates fans' identification with corporate sponsors. For example, a couple painted their washer and dryer to look like boxes of Tide detergent. They loaded the appliances on the back of a pickup and drove to a race. An alert marketing executive persuaded Darrell Waltrip, then a Tide-sponsored driver, to meet the couple and autograph the appliances as they drove in the gate.

MAKING SPONSORSHIPS WORK

Effective sponsorships involve more than spending several million dollars in exchange for being named "official sponsor" of the event or putting a logo on a car that may or may not be seen on television.

Sponsorships can be squandered, or simply lost in the shuffle as consumers struggle to remember exactly who sponsored what. A survey taken after the 1992 Winter Olympics found that 30 percent of consumers said that American Express Co. was an official sponsor, which came as a surprise to Visa USA Inc., which had paid more than $20 million for that title at both the Winter and Summer Olympics.

According to marketing experts, failed sponsorships result from two mistakes: assuming that sponsorship visibility at the event results in sales, and treating the event as a short-term media buying opportunity rather than the start of a long-term connection between product, consumer, and event. Instead, marketing researchers argue that companies must establish a connection between themselves and what they are sponsoring, that is, to practice "relationship marketing" and not to treat sponsorships as a replacement for advertising. The goal of sponsorships is to show consumers that they have something in common with the sponsors.

Putting a logo on a car and erecting a giant balloon in the shape of a product does not necessarily generate sales. As witnessed in successful racing sponsorships, most of the top sponsored teams use a variety of marketing techniques that only begin with the race car on the track in order to establish relationships. Most teams have a "show car," a car outfitted and painted the same as the real race car. The show car visits shopping centers so fans can see and touch it. The driver sometimes accompanies it so fans can get autographs. Some teams develop specialty products tied to the racing. For example, Kellogg's Corn Flakes boxes have featured the Kellogg's NASCAR driver and these boxes have become collectibles.

Sponsors' public relations people work to get local press interested in profiling team members, particularly drivers. Sponsors may stage special contests such as pitting consumers against drivers. In 1994 the winner of the Daytona 500 competed in a lawnmower race against a grandmother. Even though the professional driver lost the race, the lawnmower company's products still were linked to the driver and seen on TV.

A growing number of companies are using sponsorships to entertain customers and sales forces. At every major event from golf to racing there will be sections set aside for tents where VIPs are treated to food and a place to get out of the sun. Some companies carry the incentives to another level, using the chance at perks to boost sales. For example, John Hancock Mutual Life Insurance Co. boosted its 1994 quota for its sales staff by 20 percent. The prize for anyone meeting the quota was a free trip to the Winter Olympics in Lillehammer, Norway, where the company, an official sponsor, would fete them.

CAUSE MARKETING

The newest form of corporate sponsorship is cause marketing, which links companies with various social and community causes through their donations. Cause marketing first got widespread corporate attention in the 1980s when American Express headed a drive to restore the Statue of Liberty. According to research, corporations spent an estimated $2 billion on cause marketing in 1997, up 50 percent over 1992. Cause marketing thrives in part because of funding shortages at many nonprofit organizations. Campaigns can be whatever captures the corporation's attention and could have nothing to do with product. Sears Roebuck & Co. has sponsored Phil Collins in a concert tour to raise money for the homeless. Kraft General Foods Inc. has issued coupons good for money off on Stove Top Stuffing with a portion of the profits going to college scholarships for African Americans. Analysts contend, however, that the most effective campaigns come about through partnerships between related companies and causes.

Studies indicate that consumers are ambivalent about cause marketing. A Roper Starch Worldwide survey in 1996 found 76 percent of people surveyed said they would switch brands if the purchase supported a cause that concerned them—providing the price and quality were equal. An earlier survey by Roper Starch Worldwide also found 58 percent of the people said cause marketing is just a way to improve the corporation's image. This survey reported that only 12 percent said a cause was the most important factor in purchasing decisions. The most important factors in making a purchase were the same ones that have always been important: experience with the brand (71 percent), price (62 percent), company's reputation for quality (56 percent), and word of mouth recommendations (31 percent).

THE KEYS TO SUCCESSFUL
SPONSORSHIPS

The following tips are offered by corporate marketers as being necessary to generate sales from corporate sponsorships.

The company must be able to afford to go beyond the entry fee of sponsorship. Count on spending up to $3 in marketing support for every dollar spent in direct sponsorship.

Company products must be compatible with the image of the event being sponsored. Hanes, which makes sweat clothes, is not likely to sponsor a Harley-Davidson rally where leather is the clothing of choice.

The people who come to the event must be the right target market. A company that makes male hair coloring with a target market of well to-do older men concerned with their appearance could not find a more targeted market than the fans of the Seniors Golf Championship. The Seniors tour does not even allow professional golfers to compete until they are over the age of 50. Lowe's Home Centers, which tell men and women they can undertake most home projects themselves, could not ask for a more perfect, captured market than the six million middle-aged, middle income people who attended NASCAR events in 1994.

Sponsorships should not be short-term handouts of money. They have to be long-term relationships that build each year so the public begins to associate the sponsor with the event. It is a "background association" that transcends advertising. Only long-term race fans even remember NASCAR's old "Grand National" championship. "Winston Cup" championship sounds natural.

Sponsorships should generate news coverage and publicity. Sponsoring the CEO's passion for a tournament for stud poker will not generate the same attention from television and the sports pages as being the sponsor for a major auto race.

New business opportunities should be a consideration. McDonald's sponsors race cars on both the NASCAR and National Hot Rod Association circuits. One wonders if corporate officials have possibly asked sanctioning officials about the future possibilities of selling hamburgers to the millions of race fans who attend those events each year.

Employees should feel connected to the sponsorship. They cannot view the sponsorship as just another management perk that does not benefit them. Some companies send their employees to sponsored events as sales and service incentives.

Consider whether line managers support the sponsorship. It does no good to buy millions of dollars worth of sponsorship if the sales force is not out selling the tie-in to customers.

How far can sponsorships go? Corporate sponsors may one day find out by pushing the envelope. Led by CBS Inc., which was stung by losing NFL football to the Fox network, a number of companies spent 1993 investigating the idea of starting an advertiser-owned league of its own. Individual advertisers would own football teams, which would play in advertising bedecked stadiums with only advertiser/owner commercials being allowed during the game. The team uniforms would feature decals promoting their corporate owners and may even adopt team names of the sponsors. Imagine, for example, the McDonald Big Macs versus the Coca-Cola Bottlers in the Sears SuperGame playing in the Sony Surround-Sound Bowl.

SEE ALSO : Corporate Identity

[ Clint Johnson ,

updated by Karl Heil ]

FURTHER READING:

Barr, John. "Maximizing the Value of Sponsorships.' Public Relations Journal 49, no. 4 (April 1993): 30-31.

Brynes, Nanette. "Rolling Billboards." Financial World, 12 April 1994, 47-56.

Grimes, Eoin, and Tony Mennaghan. "Focusing Commercial Sponsorship on the Internal Corporate Audience." International Journal of Advertising 17, no. I (February 1998): 51 +.

Kate, Nancy Ten. "Make It an Event." American Demographics, November 1992, 40-44.

Kelly, Tim. "Money Is Not Enough: Become Part of the Event." Brandweek, 23 October 1995, 17.

Marmet, Roger. "Sponsorships Are Not Ad Buys." Brandweek, 20 April 1998, 17.



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