Fuelled by the hosting of the 2010 FIFA World Cup, the South African sponsorship industry experienced significant growth from 2006 through to 2010.
Breakthrough Sponsorships: An International Perspective
Sponsorship is the business link between commercial companies and events
or activities, through the provision of funds and services to achieve a
predetermined marketing and communication objective. Primarily this
tends to be the corporate or brand exposure via the media and in
addition, superb PR, promotional and business returns, which benefit the
sponsor's internal and external relationships
A cash or in-kind fee paid to a property (typically sport, art, entertainment or causes) in return for access to the exploitable commercial potential associated with that property. Sponsorship and event marketing is the fastest growing segment in the marketing industry worldwide
"We've had to find new and more efficient methods of reaching decision-makers with meaningful messages. Sponsorship helps us do that" ... Mike Goff. Director of Corporate Sponsorships. Sprint USA.
What makes a sponsorship breakthrough? What is the current state of sponsorships and where is it and where should it be going?
Sponsorship has become the fastest growing segment of the marketing spend globally and has enjoyed dramatic growth in South Africa since 1995 and South Africa's reintroduction to the international sporting arena. Increased competitiveness in the sports market through the development of the South African television industry has contributed to this growth whilst also being responsible for higher sponsorship price tags. This has seen greater sponsorship spend and airtime allocated to the major sporting codes, but to the detriment of smaller sports.
Marketers are becoming more and more aware of the fully integrated nature of breakthrough sponsorships well orchestrated in their interaction with the customers.
"The reason sponsorships make breakthrough marketing sense can be attributed to the fact that sponsorship is the most intense strategic discipline in the marketing industry. Companies embarking on sponsorship marketing programmes need a thorough understanding of global marketing trends, brand positioning, consumer promotions, PR, event management as well as skills to negotiate effective sponsorship deals especially media negotiations. We believe that when sponsorship embraces some or all of these elements they are set to achieve breakthrough branding".
Most marketers need no convincing that they should spend 5x, 7x, 10x the cost of producing a television commercial in flighting that commercial. However, most experts argue that the supporting expenditure after purchasing sponsorship rights falls hopelessly short of acceptable leveraging spend levels. A one-to-one ratio is generally considered the minimum, and internationally they now consider that for every rand spent on sponsorship, R3 should be spent on back-up advertising and support. But what's happened here is that ratio, which never quite got to 1:1 has deteriorated.
"The first big mistake sponsors make is assuming the visibility they get by contracting with the event is worth much. If the sponsor wants to make the link with an event, he has to do it himself. Presence at the site is a good vehicle to impress good accounts, but isn't much good to consumers, unless you amortise your sponsorship across a few thousand customers." Jim Crimmins, Executive VP - Director of strategic planning & research at DDB Needham Worldwide.
WORLDWIDE INCREASE IN MARKETING SPEND
A - Sales Promotion
(Veronis, Suhler and Associates, USA)
B - Advertising
(McCann Erickson, USA)
C - Sponsorship
SPONSORSHIP SPEND BY TYPE OF PROPERTY
BREAKTHROUGH SPONSORSHIP TODAY
Most Active Sponsors
Packaged goods 10%
Beverages - alcohol 7%
Beverages - non alcoholic 6%
Information services and .com's 5%
Consumer electronics 4%
Sporting goods 3%
30% of sport spectators see "great value" when advertisers and sponsors engage with local sports groups to promote sportsmanship over major international sporting season
Free gifts and seeing favorite sports icons on advertising among a list of things that sports spectators in South Africa see as "great value", during major international sporting seasons
Formula One is a massive sporting event, attracting a global audience of over 500 million people and reportedly generating revenue of $3.5 billion per year.