SBJ/August 22-28, 2011/Opinion

Results of Canadian sponsorship study relevant for everyone

In conjunction with the Formula One Race in Montreal in early July, we were invited to speak at the seventh annual Canadian Sponsorship Forum. The forum is, by most accounts, Canada’s top annual sponsorship conference, with three days of presentations, workshops, tremendous hospitality and a link to a spectacular major event. (In 2012, it will return to Montreal linked to the Just For Laughs comedy festival).

An annual staple of the forum is the Canadian Sponsorship Landscape Study, which surveys sponsors; properties of all types (professional, amateur and grassroots sports, causes, events, festivals and entertainment); and agencies for their views, spending patterns and opinions on sponsorship trends over the past year and their forecasting of said trends for future years. Although the data is specific to the Canadian market and designed for Canadian marketers, there are some important findings that are relevant to readers in the U.S. and around the world. In some markets, there are comparable studies (e.g., IEG Sponsorship Report in the U.S.).

Indeed, with more than 400 companies responding on more than 50 variables in 2011, the data produced for the fifth annual version of the study provide an important and relevant perspective for Canadian Sponsorship Forum attendees. There are four specific points we believe are worth sharing with a broader North American audience.

First, in the last five years, the study has shown a 40 percent growth in sponsorship spending. Importantly, this includes the economic crisis of 2008 and 2009, when respondents of the third annual study (completed in early 2009) had expressed an expected 25 percent decline in spending. Although 2008 was a lower growth year than others (which have trended around 10 percent normally), sponsorship still grew modestly, despite marketing budgets overall decreasing. Said another way, the ability and effectiveness of sponsorship in cluttered environments was and continues to be clearly demonstrated in a period of constrained spending.

GETTY IMAGES
Canadian sports sponsorship has grown quickly; so has the need for activation and evaluation.
Second, although it is clear that sponsors and property organizations are more committed than ever when it comes to articulating evaluation and proof of sponsorship effectiveness, they are not putting their money where their mouth is. Less than 5 percent of sponsorships are evaluated, and only a fraction of those are structured evaluations with benchmarks for measurement set pre-sponsorship. The conundrum is that across all three stakeholder groups, sponsorship practitioners express an overwhelming desire for better evaluation, improved ROI assessments and proof. In the advertising world, that metric has always been as simple as stating CPM or a ratings guarantee. To wit, an ad either delivered against a targeted demographic or the programming reached the minimum number of households set by the broadcaster. In sponsorship, the formula is more complex. In either case, there has rarely been a conclusive or open discussion on whether the creative worked or whether customers changed their buying habits. Sponsorship requires a more custom approach. According to respondents, we have that ability but now must follow through and allocate budget to implement.

Third, there continues to be a problem with many companies not providing enough activation to support their initial sponsorship investment. This was perhaps the most controversial point in the study results because the sponsorship-to-activation spending ratio of 1 to 1, 2 to 1 or, on the low side, 0.5 to 1 was brought up. It was suggested that Canadian sponsors activate less than their American, Australian or British counterparts, but this was debated in some corners on the accuracy of the numbers used in creating these ratios (i.e., what is included in a rights fee differs from study to study, from respondent to respondent). That said, across large samples of data, one can assume these errors all cancel out, so we’re comfortable to say that Canadians are underactivating. Regardless, and most important as a take away, is the point that sponsors (and properties to some extent) need to activate more in Canada. As George Orwell might have suggested in his seminal work “Animal Farm,” it appears all sponsors are created equally, but some are more equal than others when it comes to activation.

Fourth, property servicing remains far below sponsor expectations on a variety of metrics. This is perhaps less surprising on second review but is clearly tied to the price-value challenge every sponsor faces. Also, putting data behind this point was very illustrative and had conference attendees’ eyes popping. In reality, property organizations are facing increases across the board in costs and are asking for ever-increasing dollars. Sponsors are paying those dollars and extracting their ounce (or gallon/liter) of blood from the property but still protesting that they are not serviced the way they expect. To that end, property organizations are slowly learning to assign more account representatives at a time when boards and CEOs are calling for layoffs and using the always handy expression that “We’ll just need to do more with less.” The reality is that sponsors have the right to push properties to provide more for less. Sponsors have the money, and there are always other properties in which to invest.

“The issue of maximizing and measuring sponsorship ROI is often too narrowly considered,” said Mark Harrison, president of sports marketing agency TrojanOne and founder of the Canadian Sponsorship Forum. “But it needs to be evaluated across all related marketing activities, including activation touch points pre-, during and post-event. The real issue, though, is not only having the data the study provides, but getting stakeholders to use it to their advantage to validate their proposals, servicing and/or activation plans. If they don’t, they’re going to fall behind the curve of an industry that’s only getting smarter.”

The final report of the Canadian Sponsorship Landscape Study was set to be released last Friday. It endeavors to dig deeper and provide guidelines for sponsors, properties and agencies per Harrison’s important recommendation.

Rick Burton (rhburton@syr.edu) is the David B. Falk Professor of Sport Management at Syracuse University. Norm O’Reilly (norman.oreilly@uottawa.ca) is an associate professor of sport business at the University of Ottawa and lead researcher on the Canadian Sponsorship Landscape Study.

Return to top

Related Topics:

Opinion

Video Powered By - Castfire CMS Powered By - Sitecore

Report a Bug