SCORPIO PRODUCTIONS

SCORPIO PRODUCTIONS

The promo video appears to run out before the end. Is this deliberate?

Sounds a bit Buester Rhymes ...I quite liked it.

Ardi

 

The Future of Sports Sponsorship?

• Sponsorship has steadily risen up the marketing agenda to the point where it is now a fundamental part of the marketing mix. This journey has taken the best part of 30 years to reach this point.
  
  For many brand owners - such as Marlboro, Coca-Cola, Shell, Gillette and Vodafone - sports sponsorship has been pivotal in their marketing communication activities by providing a highly effective brand communication platform for their products and services.
  
  Sport is ubiquitous – unlike the arts, education, environment or other property types that in many respects are products of a country’s history, language, traditions and culture.
  
  Sport transcends language, class, culture and continents. It is a universal currency in its own right – and the ultimate manifestation of its power is the Olympic Games – the biggest sponsored event on the planet.
  
  Global forecast for sports sponsorship
  
  However, current global expenditure on sponsorship is nowhere near the level of advertising ($406 billion) at around 7.4% or $30.5 billion (2005). Sport accounts for around 80% of all global sponsorship activity ($24.4 billion) or around 6% of the budget spent on advertising globally. Admittedly, this is a crude percentage but it reflects the size of challenge for sponsorship in the marketing mix.
  
  On this basis, if sports sponsorship is to grow, it must demonstrate its power to influence the behaviour of the sports fan, customer and consumer who are ultimately the purchasers of a product or service.
  
  And unless the brand owner can measure the value of tangible and intangible benefits derived from a sponsorship program and the sports rights holder can demonstrate to the satisfaction of the sponsor’s Board of Directors a return on investment, then sports sponsorship risks slipping down the marketing agenda and into oblivion.
  
  However, the outlook for sports sponsorship is far from futile and the next quarter of a century will provide an ideal climate in which sponsorship will flourish on a global basis.
  
  According to current growth rates, sports sponsorship will break through the $100 billion barrier by 2019.
  
  In 1970, futurologist Alvin Toffler wrote: “The acceleration of change in our time is itself an elemental force that has personal, psychological, as well as sociological consequences.”
  
  In his best selling book, Future Shock, Toffler described the dizzying disorientation wrought on society asked to absorb too much change, too soon.
  
  If the future was rudely intruding upon us then, how much more insistent has it become now – and how much more critical will our appreciation of it be in 25 years’ time. So rapid is the rate of change that forecasting has now become an intimate part of marketing and sponsorship strategy and planning.
  
  In relative terms, changes in the sponsorship industry have happened slowly – some say evolved - over the past 30 years. For example, some major sports rights holders are still selling sponsorship on the basis of free media exposure for the sponsor, served up on terrestrial, cable and satellite TV.
  
  But in a world where brands are creating their own TV channels and ‘brandcasting’ content across a range of platforms, how valuable is the advertising media equivalency of TV coverage to a sports sponsor?
  
  And whereas the web was an emerging channel for brand communication, today brand owners are increasingly running mobile text messaging campaigns and providing content for PSP3 and Xbox 360 video games in order to reach the next generation of consumers.
  
  But it would be wrong to assume that change is being driven by technology. In fact, technology is an enabler of change rather than change itself.
  
  Four forces for change
  
  There are four forces for change that will impact both brand owners and sports rights holders over the next 25 years - globalisation, behaviour, permission and technology.
  
  And although these forces for change already exist today, collectively they will have a much bigger impact on the development of sports sponsorship in the future.
  
  A brand owner will move increasingly from supply to demand-side, driven by satisfying the needs and requirements of its customers and consumers – wherever they are in the world and will compete in a ‘global village’.
  
  The global movement of people, goods and services, intellectual property and capital will be less restricted over the course of the next 25 years and this will generate intense competition between brand owners in their chosen market segments as well as in market segments that have yet to be created.
  
  Over the past decade, brand owners grew by riding market waves, bought growth through mergers and acquisitions or cut costs via ‘efficiency and effectiveness’ measures. But this is coming to an end and for the vast majority of brand owners they must now earn growth again.
  
  Organic growth can only be created or earned through a combination of factors that include consumer insights as well as ideas and innovations that deliver genuine competitive advantage and differentiation.
  
  Competition in the future will not simply be about one brand versus another, but one business model versus another. There may even be no competition for a while.
  
  The ‘old’ market space is defined by industry boundaries and competitive rules where brand owners try to outperform each other by grabbing a larger share of existing demand.

In this ‘old’ market space, established brand owners that enjoy dominance in a particular market niche will quickly lose this competitive advantage in the face of lower production costs, higher levels of product quality and service coupled with the ability to meet customer demand in an ever-decreasing timescales.

Then there is a very different type of market space – one that the brand owner of the future inhabits. In this untapped market space, the boundaries are defined by demand creation rather than competitive rules.

These untapped markets may fall well outside the boundaries of the ‘old’ market space or indeed could be created by expanding existing industry boundaries.

In this context, competition is irrelevant because the rules of the game have yet to be written. The brand owner will therefore find itself in a new world full of uncertainties but also unbound commercial opportunities.

It therefore follows that brand building in the future will be very different to the way it was done even ten years ago.

Achieving customer insight will be essential in order to exist in this new market space and this will necessitate the need for brand owners to get closer to customers through sponsorship and other collaborative marketing efforts.


Behaviour

At the same time as brands become more global, customers are becoming better informed and much more demanding.

Not only does this mean that the value of customer insights and understanding will be at a premium in the future, but a brand owner will also be under increasing pressure to create a total ‘brand experience’ if it wants to be successful in its marketing and communication efforts.

In order to achieve this, it will be necessary to enter a dialogue rather than a monologue with customers and consumers or put another way, ‘showing’ rather than ‘telling’.

These changes go well beyond the ability of a brand owner to integrate its sponsorship and marketing activities.

Ultimately, the brand owner must seek to collaborate with its customers in the development of new products and services and sports sponsorship will exert considerable influence over this process where it brings these two realms of understanding closer together.

Permission

The continuing explosion and fragmentation of media will lead to further fragmentation of audiences – requiring the brand owner to seek permission (consent) to communicate with a particular group or ‘community of interest’.

At the same time, the ability of these audiences to screen-out messages will be more sophisticated than at present.

For example, in the future children and young people will be much more media and marketing savvy - and at an increasingly young age. Current laws and regulations that seek to protect this group from advertising and sponsorship activities will appear out of step as children and young people learn to be their own ‘internal censors’ more than they do at present.

Therefore, the brand owner will need to earn the right or the permission to communicate rather than take this right for granted as it does at present.

And in order to gain such permission, the brand owner will need to demonstrate it can be trusted – placing a higher premium on effective brand communication in this challenging competitive landscape.

The net result is there is going to be more, rather than less, opportunities for non-traditional advertising such as sports sponsorship where this can engender a closer relationship between the brand owner and its customers and consumers.

Technology

Without doubt, many of the forces for change in terms of globalisation, permission-based marketing and the fragmentation of media have been enabled by technology.

Software tools currently have the power to unlock identities, addresses, purchasing habits and intimate information of customers and reach them through emerging channels such as iPods, broadband, 3G mobile devices and gaming platforms.

Recent research indicates that brand owners are beginning to eschew the expensive 30-second TV commercial in favour of more targeted communication that has a higher degree of accountability and direct response rate.

However, in wanting to make increasing use of these ‘transmit’ channels, the brand owner must also have a ‘license to operate’. Such permission is only available where it has earned the trust and confidence of the audience.

Sponsorship, as a collaborative marketing platform, can create such a climate of trust and confidence with the target audience.

Ardi Kolah FCIPR is a sponsorship and PR consultant based in London. ardi@kolah.com +44(0)20 7580 3267 www.kolah.com