Sponsorship Trends in 2014

2013 was a good year for the sponsorship industry when viewed from a global perspective. While some UK companies experienced a year-on-year downturn because there was no London 2012 to boost their earnings, sponsorship measurement consultancy IEG estimated that the overall global sponsorship market was worth more than US$53 billion, up from US$51.1 billion in 2012. Just as significant is the fact that this is part of a long-term trend that has seen sponsorship spend rise at a consistent rate since 2009 (when it was worth US$44 billion).

Looking ahead, IEG expects this trend to continue. Although IEG warns that sponsorship growth might slow (due to clients spending more on digital media), it still expects the market to expand by 4.1%, reaching a total of $55.3bn by year-end. Here we look at some the factors that are likely to play a key part in driving sponsorship’s success during the coming year.

Brand Engagement

A key reason for the sector’s expansion was identified by Havas Sports & Entertainment in a recent survey, conducted and analysed by Global VP – Strategy and Marketing Fredda Hurwitz and Global VP – Digital and Social Media Jez Jowett. According to Hurwitz and Jowett, part of sponsorship’s continued momentum is down to the fact that 76% of people believe brands should “provide funding and/or be actively involved in the sponsorship of sport and entertainment”. When you break this figure down further it becomes clear that the majority of people want to see active engagement on the part of sponsors/partners – not just funding. In the case of professional sport, for example, over half of those surveyed by Havas S&E expect brands to provide funding and get actively involved. That figure approaches two-thirds when dealing with other headings such as the environment and healthy living.

In other words, sponsorship’s future as a sector is being boosted by the fact that consumers expect brands to play an active part in their day-to-day lives. And for brands that make the necessary commitment, there are potential rewards. Get it right, say Hurwitz and Jowett, and consumers will use your brands more and recommend them to friends. This is true across a range of sectors such as finance, energy, telecoms, sportswear and consumer goods, according to their survey.

Digital Activation

This trend towards increased brand engagement comes against the background of a digital revolution. At a superficial level, this represents a threat (as expressed by IEG’s spend forecasts above). But for brands and agencies that manage to get to grips with digital it can actually be a benefit. At Havas, for example, they have identified various ways in which digital can be harnessed to improve a sponsorship’s prospects. Firstly, at a creative level, innovative “acts of kindness” by brands can get noticed and go viral via social media. Secondly, the rise of digital media has created new rights and assets that can be leveraged as part of a sponsorship campaign. Thirdly, there is greater opportunity for targeted real-time marketing, bringing sponsorship close to the passion centre of activities and introducing more personalisation to relationships. Finally, there is scope to bring sponsorship nearer to the point of transaction, creating positive value transference at the precise moment in the consumer journey when people are most engaged.

Brands As Storytellers

Greater demand for active engagement combined with digital’s immersive potential has forced brands to change the way they present themselves to consumers. While brands still need to sell themselves, they have also recognised that they must dress their communications in a more entertaining way if they want to capture people’s attention. This has given rise to the idea of brands as storytellers. While stories can be told in various forms (two minute TV ads, YouTube videos, posters etc), there is clearly a role for sponsorship to play its part developing a consistent narrative that works across all media platforms. This can be articulated via channels such as branded content.

Idea Co-Creation With Stakeholders

So coming into 2014, the following will all be big themes: brand engagement, digital activation, fan participation and creative storytelling. But these are only possible if companies add one more ingredient – collaboration with other stakeholders. To really have the kind of impact that audiences expect, brands need to co-create sponsorship ideas with rights holders. Brands that don’t develop a creative, organic ongoing dialogue with rights holders will find it harder than ever to achieve objectives. Rights holder which focus too much on box ticking and off-the-shelf packages will find that they fall out of favour with brands.

Relevance To Consumers

All of these factors are really about demonstrating relevance. Brands which don’t add value to people’s lives via sponsorship-style activities will find that their equity erodes. Summarising the key points of their survey, Hurwitz and Jowett say: “Know who you’re speaking with, why and who you are; use brand buzz words and DNA; think partnerships and shared value; go beyond TV, turnstiles and tickets; and involve, experiment, innovate. Embrace the power of the crowds.”

Innovation In Sponsorship Selection

Another company that has been synthesising trends in 2013 and making predictions for next year is research firm Sponsorium, also a sponsor of the UK Sponsorship Awards. In the January edition of its Global Sponsorship report, Sponsorium’s goal was to look at trends in sponsorship spend and see what conclusions can be drawn about brand behaviour. One of its most interesting finds was that spend on sport dropped from 41% of the total cake in 2012 to 38% in 2013.

Explaining this, Sponsorium takes the view that “brands are diversifying sponsorship portfolios and moving into more non-traditional categories. Brands, even at the highest levels of sponsorship, are diversifying with more unique partnerships.”

Rise of Cause-Related & Blurring of Definitions

This trend is evident in a number of ways, explains Sponsorium. Echoing Havas S&E, it says rights holders are creating “more sponsor-able assets”. But it also sees more cause-related activity and more partnership-based activity that stretches the classic definition of sponsorship: “The lines have become increasingly blurred in defining true sponsorship. Companies around the world are increasingly executing more creative and integrated campaigns through causes and unique alliances.”

Looking at five-year trends, Sponsorium says that sport and the arts have been pretty consistent when it comes to achieving sponsorship objectives. But one area which has seen real advances is the use of consumer shows as sponsorship platforms: “Consumer Show promoters have found additional elements for sponsors to own, or new methods for sponsors to interact with Consumer Show audiences and followers.”

Timing Of Investment

With the Sochi Winter Olympics just weeks away, Sponsorium used its report to take an in-depth look at the way the Winter Olympics works as a sponsorship platform. A couple of interesting points emerged. Firstly, ice hockey and skiing are by far the dominant sports in terms of popularity and sponsorship activity. Secondly, there is a significant rise in activity in the year prior to the Games. Echoing the point made earlier regarding London 2012, the winter games sector can expect a major retrenchment in 2015 before a gradual increase in activity as the 2018 edition in Pyeongchang approaches.

From a rights acquisitions point of view, this means the cost of working with winter sports is significantly lower immediately after an Olympiad. As a result, “Sponsors should learn from each Games where they can create engaging partnerships and begin working towards activation following that years’ Games.”

Reassessment Of Sponsorship Inventory

Reference to Sochi and Pyeongchang is a reminder that there is a seismic shift in the way the hosting of major events is now allocated. Echoing the current shift in geo-political and economic power, the next few years will see a Brazil World Cup (2014), Brazil-based Summer Olympics (2016), Russia World Cup (2018), Korea-based Winter Olympics (2018), Japan-based Summer Olympics (2020) and a Qatar-based World Cup (2022). In practical terms, this means Europe’s sponsorship industry will need to get used to epic events being held elsewhere. It may mean, as a consequence, that UEFA events and domestic sports properties find themselves in even greater demand.

Sweating Assets

As a general observation, Sponsorium takes the view that brands are getting better at achieving their objectives. For 2014, it predicts that the science of sponsorship will keep improving: “As more sponsors create weighted criteria by which they can evaluate themselves, the partnerships they form will include more of the assets they are seeking.”

Don’t forget, the closing date for the UK Sponsorship Awards is approaching fast. Make sure you don’t miss out by checking out the details at http://www.sponsorship-awards.co.uk.