1. Digital and tech
Shiny and new
With the advancement of digital innovations, marketers are increasingly seeking new technologies to enhance their sponsorship activations and efforts. From mobile to geotargeting to geofencing, we are seeing a major shift in the sponsorship industry away from stationary tents and sampling to more sophisticated digital activations. To capitalize on this new technological landscape, marketers are re-evaluating and changing their approach to sponsorship and events.
In-venue entertainment is benefitting from various innovations. The now generalized use of smartphones that act as second screens can create an opportunity for sponsors to provide an added value to their target audience’s experience, such as the Barclay Center application. Barclay seized that opportunity to activate their venue sponsorship with the creation of an app that delivers exclusive content and valuable information for a better user experience.
Major League Baseball was one of the first to use Apple’s iBeacon in 28 stadiums during the 2013 season. Phase two was rolled out in an increased number of venues in 2014. The intent was to improve the visitor’s experience by allowing iPhone owners to check in to games automatically and to collect special offers. New features will provide users with additional content and interactive functions to the exhibits via their devices.
In addition to improving the fan experience with on-site tactical teams and events, there is an interesting commercial potential with new technology, especially for sponsorship activation. For instance, Coca-Cola tested a new concept in stadiums throughout Brazilfor the 2014 World Cup, where it sent offers to consumers depending on their location. The capacity to contact consumers directly according to their exact position can benefit both consumers and the brand, providing consumers with extra-targeted offers.
So, is the adoption of digital just a fad? We think no. Beyond the associated ‘cool’ factor that a brand may gain by activating with a shiny new device or a ‘wow’ technology, there are many business benefits of digital activation. First, it can be much cheaper than a standard on-site event presence. While the up-front technological investment may be more costly than a standard activation space, it has the potential to reach more customers and increase a brand’s footprint and message at a nominal cost. Second, it can provide a specific measurement of your brand’s impact and presence. Through this, marketers can customize their desired metrics and use the data to gain valuable customer insights.
But, while this technology has great potential, digital activation remains very generalized. For smaller sponsors, the technological investment is perceived as too great to support a single event. And, despite the aforementioned benefit of broadening customer engagement, in many cases companies don’t have the capability to apply the data and turn it into a relevant and actionable brand-building strategy.
The challenges extend to the customers as well. Your audience may not have adopted the technology required to participate in the activation. And, even if they find themselves armed with the newest phone or the right social media account, it’s impossible to know if they will be motivated to participate. Whether it’s downloading an app or having the newest device with the required functionality, it is virtually impossible to guarantee that your audience will connect and then interact with your activation – and your brand.
And, just as the second screens can be used to compliment and enhance your sponsorship, they also have the potential to sabotage an activation. Mobile supported activations open the door to ambushers when you ask consumers to transfer their attention from the main event (or your brand) to their personal devices. This was clear during the 2012 London Olympics when Nike, Pepsi, Burger King, and Google all used an online video to get a piece of the action—for free.
As the digital landscape continues to shape how marketers execute their sponsorships, we must keep in mind the importance of making activations relevant to consumers.
Technology is a means to an end, not the end itself. Through the adoption of digital technology, the goal for sponsors should be to create a memorable and relevant brand experience. But it doesn’t end there. A successful activation must also produce results – results that deliver against the overall strategy. Because, in the absence of results, you’re merely providing very expensive digital entertainment.
2. Uncharted territories
Don’t jump on the bandwagon
As sponsors mostly aim for blue chip properties, it is clear that a large portion of tier one events are seeing a succession of different sponsoring brands, to the general indifference of the public. That said, some brands have found interesting avenues in uncharted or less popular territories, such as the Paralympics, grassroots sports and small local events and fairs. For instance, Pabst sponsors small, local, and underground events to reinforce its independent and cool vibe. The Home Depot created a local program to improve municipal infrastructure, such as outdoor hockey rinks in cities across Canada.
Going smaller has genuine advantages. First, it is easier to claim a space in the consumer’s mind in a less crowded context. Second, the rights fee and activation costs are significantly lower. Furthermore, if done respectfully of the crowd’s attachment to the property, such partnerships can lead to an authentic connection with your target and even a possibility of turning fans into advocates for your brand.
Big companies sponsoring small organizations can bring some challenges, as their respective objectives often diverge. For a big brand to go small, there must be a strong rationale. Pabst needed to align itself with the underground music movement to support the product’s popularity amongst Brooklyn hipsters. The brand could not go big without alienating its newer and cooler consumer base. Smaller art and indie music events were a natural fit.
There is a definite opportunity for smaller properties to capitalize on and showcase their uniqueness when they approach sponsors. But it is a challenge, as companies find themselves bombarded by a growing number of proposals from an ever-larger property pool.
Sponsors can find gems by going off the beaten path. To own the sponsorship space while supporting smaller properties, brands should invest larger sums in activation to counter the lower media plan and visibility of small organizations.
3. The era of “co-” (creating, funding, working, etc.)
Come out and play
If the emergence of social networks brought us an era of sharing and networking online, the new trend is to get involved and participate. Crowdsourcing and crowdfunding have gained definite momentum recently: Kickstarter has redefined how creative ideas can be brought to life and even NASA has turned to the public for help with the “Be a Martian” website which enables the public to participate as citizen scientists to assist science teams studying data.
The crowdfunding trend has segued into sponsorships in interesting ways. For instance, The popular Japanese F1 driver Kamui Kobayashi used it to create a platform for fans to donate money to help him get a spot in a car race. The Europcar cycling team allow fans to support them for as little as 10 Euros in exchange for unique benefits. Fans are increasingly involved in donating to their favourite teams to be a part of the action. These examples are clear opportunities for properties to create more engagement with their fans, and in return, create more value for sponsors.
The trend has gathered momentum as fans have a natural tendency to get involved with their favourite organisations. In addition, both properties and sponsors are getting better at harnessing the huge potential for co-creation. For example, Coca-Cola recently succeeded in involving soccer fans during the 2014 FIFA World Cup with the Happiness Flag, which was created from content provided by fans using social media—and thus ensuring exponential visibility for the brand.
With that in mind, properties must seek to understand fans and craft a program where participation and engagement targets their core motivation. The iconic Montreal Canadiens did just that with a new fan program, Club 1909, which pushed the envelope and ushered the team into the digital world by allowing fans to be rewarded for each of their actions supporting the team.
Show your true values
Over the past few years, companies that subscribe to a cause, such as Tom shoes and Patagonia, have shown interesting growth, no doubt due in part to their brand identities, which are closely tied to the cause they are serving. In parallel, we have also seen a trend as marketers are increasingly using sponsorship to promote a worthy cause or highlight an ethical aspect of their organization.
Chipotle’s motto is to serve high quality food quickly. This evolved into a company mandate focused on food with integrity, meaning the best ingredients produced with respect for the animals, the environment and the farmers. They used partnerships and branded platforms to push that message to their consumers in an original and relevant way with a game Chipotle created and branded, inviting you on a journey to bring real food back to the people.
Other companies have succeeded in adding a social element to their marketing with sponsorships. For example, P&G’s now famous “Proud Sponsor of Moms” campaign used a great marketing insight to create a fund for the mothers of the athletes so they could attend the Games. The “Thank you, Mom” advertisement was just the tip of the iceberg, as P&G developed a whole program providing transport for the athletes’ mothers and offering additional services after their arrival. The sponsorship gave P&G the authenticity to tell that story, beyond giving the IOC money to be associated with the mythical rings. This helped the company promote their overall strategy targeting female consumers.
Danger can lie in such social claims. Brands must engage in concrete actions to gain consumer acceptance. And for their initiatives to feel legitimate, the company’s values have to align naturally with the cause they are supporting. There are many infamous examples of brands selling pink products to support breast cancer foundations, with no real relevance to their brand.
With all the energy devoted to such a communication program, sponsors must be in for the long run and for the right reasons.
5. Know your audience
Firms are increasingly using big data to tailor marketing communications to groups according to their specificity. Sponsorship too will benefit from that shift in hyper segmentation and bull’s-eye targeting. Properties are getting more sophisticated in knowing their own crowds. Plus, brands are putting together programs to better understand consumers, such as reward and fidelity programs.
One of the most interesting examples applied to sponsorship is O2’s privilege program. The European telco company has built an online platform as well as an app to provide a vast array of benefits to its members—and all according to their specific tastes. O2 sponsorships are key to the platform as O2’s modus operandi is to secure a prominent venue and a tier 1 sport teams in their markets.
The platform serves as an activation tool for O2. Once consumers are on board, the offers are targeted to consumers according to their specific preferences and the cost of reaching them is reduced to almost zero, compared to traditional media buy that are costly and imprecise.
As the capacity to gather data and analyse it increases, properties and brands should make the most of their information systems to pinpoint consumer insights and fine-tune activation programs to specific tastes and needs.
6. Sponsorships key to building marketing alliances
In some occurrences, the relationship between the sponsor and the sponsee is so relevant and natural, they transform into true alliances between brands.
An example of such an alliance is Shell and Ferrari. Their partnership, which spans over 50 years, extends from pure branding to ventures into product development. This has been used in many of Shell’s commercials, highlighting the fact that the premium fuel sold at the pump is quite close to the one used in the Formula 1. Shell is also the only partner that has the exclusive rights to feature Ferrari road cars (GT) in their commercial. This is hugely important, because the mythical brand doesn’t do any advertising. These initiatives provide both brands with extremely rich content to promote the partnership in meaningful ways.
Such closeness between two companies involves a certain level of risk and it requires a lot of engagement and confidence from both sides. However, the payoff can be quite impressive. These alliances are more difficult for rivals to emulate and can give both players a true competitive advantage on the market. For instance, Acer was able to craft a premium image with its technological partnership with Ferrari over the years by co-designing a Ferrari line of computers. The partnership was not merely co-branding as an employee of the Ferrari racing team participated in the creation of the new computers. This gave Acer an edge in European markets.
We now live in a world where quick gratification is sought after. We want it, and we want it now. Technology made access to content easy. This further exacerbated our desire to get what we want without the wait.
Most sponsorship revolves around an event of some sort: a real climax where all the attention is focused on the property. Traditionally, sponsors focused on occupying as much space as possible—before, during and after the event.
That desire for instantaneity got some brands to create spontaneous activations. One famous example is the Oreo Tweet during the 2013 Super Bowl where the San Francisco 49ers faced off against the Baltimore Ravens. The agency set up a war room during the game to offer real-time engagement with fans and better leverage the costly TV ads.
Such activation requires extreme agility, for instance, setting up a simplified chain of command for the approval of messages and using a war room where production can be done by one team in minutes.
We now have to consider that activations have a shorter expiry date than before. Even if most companies will not be able to create an Oreo-like setup, it is important to consider shorter delivery on important elements like a video recap of the event, which can be posted in a 24- to 48-hour time frame.
8. Multi-level strategy
Own the space
In most professional sports, properties can be classified in different layers or levels, from the individual athlete all the way to the governing body and broadcaster.
Multi-level strategies have been employed to reinforce a sponsor’s link to a specific sport, with each level having its own benefits. For example, venue sponsorships bring visibility. The team offers money can’t buy: an experience and a deep connection with fans. The championship brings extra credibility, as the “official product” and the broadcast sponsorship serve as great awareness tools, and effectively eliminate the possibility of wannabe ambushers.
Sponsorship strategists now have to think in “3D” when looking at a new sponsorship opportunity and consider sports as whole rather than looking at one single property.
9. Low right (no rights), high activation
Red Bull creates its own event from scratch, controlling 100% of the process. This means the company does not have to cover rights fees, only production fees.
This practice was pioneered by the tobacco industry in the 1990s when it was more costly to sponsor the event than to own it outright, and, in so doing, acquire all the revenue and control the event’s image, marketing, other sponsorship and merchandising activities.
Red Bull made the model popular, and it is quickly catching on, as many tier 1 properties are out-of-range of the average sponsor’s budget. This trend is common within the beer industry. Molson Dry created its own string of concerts under the umbrella “Party Pros” and more recently, Pabst launched the Project Pabst Festival, a three-day music event in Oregon.
Sometimes a non-profit organization is bigger than its sponsors, and that tends to limit the positive benefits that stem from such an association. So instead, some brands are choosing to own a broader cause without having ties to a specific non-profit organization. As we mentioned earlier, P&G now owns the “Mom” label in consumers’ minds. In Canada, Bell has associated itself with mental health. It has no formal association with a specific organisation, but it has created a 360 degree campaign—using traditional and new media, as well as a celebrity endorsement—to raise money for various mental health organizations (which are not explicitly named in the campaign). The result: Bell has succeeded in owning the mental health cause in its market.
The “no rights trend” could put increased pressure on properties in an already competitive environment. Furthermore, there could be a market tendency for lower rights fees when more sponsors are considering the “in-house” alternative.
10. Increase competition between properties
It’s getting crowded out there.
The end of the last decade saw an increase in the number of non-profit organizations and small events jumping into the sponsorship game in search of new revenues. This phenomenon is particularly acute in the arts, culture, and corporate social responsibility (CSR) worlds as it helps compensate for the loss of revenue from government funding.
The offer now exceeds the demand, with two direct consequences. First, sponsors now have an unprecedented amount of choice. And, second, it has pushed properties to acquire sponsorship competencies to better sell and manage their partnerships.
The vast choice for sponsors can be tempting as a buffet. But there is the danger of expanding the portfolio into a non-strategic alignment just to protect the market from opponents.
The increased competitions between properties will force older and established organizations that might be out-of-touch in terms of branding and positioning to innovate in order to follow sponsors who are increasingly realigning their sponsorship programs to be more relevant to their brands and objectives.