Advertising represents approximately 60 per cent of the corporate marketing budgets. Direct, promotional, experiential, online and sponsorship make up the balance of the spending. Sponsorships might seem like a small chunk of a smaller chunk but it’s all relative. It is estimated that more than $2.5 billion is spent on sponsorship campaigns per annum in Canada.
Jean Chrétien is proud of his signature golf balls. Telus has only one but it’s just as proud. But where the former prime minister used his collection of balls in an attempt to deflect unwanted public attention regarding his role in sponsorships, Telus hopes that by putting its name on Vancouver’s really huge ‘golf ball’ – Science World on False Creek – it’ll garner all sorts of the right attention. And it will be seen as a good corporate citizen to boot. The telecom isn’t alone. Bell, RBC and Rona are spending millions of dollars tying their identities to the 2010 Olympics. Why are they doing it? The simple answer is for increased profile and goodwill. The deeper answer is that it can make for good business and bigger profits. If and when it’s done right. So the core questions: how do these companies make decisions on what to sponsor and how do they achieve a satisfactory return on investment? Advertising represents approximately 60 per cent of the corporate marketing budgets. Direct, promotional, experiential, online and sponsorship make up the balance of the spending. Sponsorships might seem like a small chunk of a smaller chunk but it’s all relative. It is estimated that more than $2.5 billion is spent on sponsorships per annum in Canada. Of these billions, 67 per cent goes to sports properties. Big crowds, big payoffs in terms of visibility. But that’s changing. Although the amount of money going into sponsorships is growing, the percentage directed at sports has declined in the last 10 years. Although sports still dominate, entertainment tours, attractions, festivals, fairs, charity causes and the vast world of the arts are now much more proactive in securing corporate support. The trick for you is winnowing down the pile and finding the best possible fit. During my time as an in-house consultant in the sports promotions department at Coca-Cola USA in the early 1990s, I reviewed sponsorship proposals ranging from a league-wide NBA opportunity to local events such as the Garlic Festival in Gilroy, California. Without established selection criteria in place, it would have been impossible to determine which sponsorship properties suited our needs. Before you determine what to sponsor, figure out your corporate objectives and use them to judge opportunities. The most common objectives are enhancing brand profile, building relationships with customers and increasing sales. The most effective sponsorship campaigns occur when promotions, hospitality, advertising, direct marketing and public relations are all built into the plan. As a marketer, it’s important to determine how a sponsorship program can affect all audiences – retailers, consumers, business customers, media, employees and the public. Of course, budget plays a role too. There’s no rule of thumb as to how much should be spent relative to sales revenue. One of the most common errors is spending the bulk of the budget acquiring a property – leaving insufficient funds to activate the investment. For every dollar invested in rights fees, a minimum of two times this investment should be spent on activation. Having only a few tickets, limited signage and few advertising mentions does little to achieve your business objectives. The next step: determine which opportunities appeal to your audience. The right match creates an emotional connection between the brand and your consumer. A good example: Holt Renfrew’s sponsorship of the Vancouver Opera. Holt’s is a high-end retailer and the VO has a prestigious image. The partnership helps enhance both parties’ brand image. The gold standard in sponsorship programs was PetroCanada’s Torch Relay which led up to the 1988 Calgary Winter Olympics. For 89 days prior to the games, 65,000 Canadians relayed the Olympic torch through 800 cities from coast to coast. Along the way, the runners and PetroCan sold more than 50 million branded glasses and raised more than $6.5 million to support Canadian athletes. Prior to negotiating a contract, determine how you will leverage your investment. If hospitality is a key objective, negotiate more tickets than offered in a standard package. For example, Telus decided it had sufficient brand awareness in the market and decided to opt out of the title position of the Vancouver Canadian Pro Golf stop and retained only pro-am teams and tickets for hospitality purposes. The most successful companies generate a significant portion of their return-on-investment prior to the actual event taking place. Through well-planned and executed promotions, they drive sales, awareness and enhancement of their brands. So can you. . . and you don’t need a golf ball to do it.