The current sponsorship situation has become polarized, and very few organizations are capable of obtaining resources necessary for sport sponsorship as we once knew it – including those sport organizations with television presence. Right now, there is an increasing difficulty in obtaining revenues through sponsorship. We can find examples of this with different professional teams in motor sports, handball, basketball, football, etc. In fact, all sports are finding it difficult to sustain revenues through sponsorship.
What is happening?
Is it possible that, except for the major sport brands, sponsorship is not profitable for sponsors?
Can ROI for sponsorship really be measured in terms of sales? The relationship models for sport sponsorship have been based on:
- Transferring values between brands. Uniting forces with a prestigious sport brand once meant benefitting from the values they both represented.
- Visibility. Being able to increase a brand’s visibility in a highly emotional environment with the objective of increasing brand positioning, awareness and prestige. The traditional communications media played a fundamental role here as amplifiers.
- Use of sport organization communications channels to disseminate a brand’s messages among members, spectators, participants, etc. – all potential brand customers.
- Brand presence, brand image in the sport competition environment.
- Capacity to do business with brands thanks to the competition itself. Capacity for increasing sales/revenues thanks to an alliance with the organizer of these sport competitions.
- Capacity for reducing costs thanks to fiscal deductions, depending of course on the fiscal laws of each country.
In the new economic situation, these attributes are insufficient for guaranteeing a return on investment for a brand in such an event, sport competition, club, etc.
Except for the direct sales that can be generated by the sponsor through brand positioning and awareness, the sponsor now calculates that the sponsorship cost is greater than the sales that might be generated (i.e. Would sales really drop if I didn’t sponsor this event?).
There are examples of major brands that do not undertake major sponsorships (or any for that matter) but have very successful sales figures (apple, google, facebook, bluetooth, wifi, blackberry, twitter, youtube, skype... to name just a few). They are all from the new economy.
Why have these brands not needed a sport marketing strategy within their overall marketing strategy?
The majority of these companies have continued growing despite a crisis situation in the economy, but why? I believe these brands represent the new economy because they know how to apply the following principles:
- Global dissemination through web platforms or online environments.
- Ease of use and free or low cost access.
- Strengthening the need to communicate among users.
- Growth strategy based on exponentials, where the capacity for dissemination is very high and immediate.
- The users carry out the work processes.
- They generate recurring passive revenues and are linked to an exponential model.
- Cost reductions for people using their products or services.
- In many cases, they have generated a new exclusive communication universe (youtube, facebook, skype...)
- Database management as an asset.
Have sport sponsorship relationships incorporated these principles? I think we are in transition. That’s why we are in crisis. Sport organizations are learning to incorporate social networks and their markets as an added value for their sponsorship relationships.
A possible key element in the future (perhaps even now) will not be media impact (audiences) but rather the capacity for direct interaction. This has always been true, but now it is possible to achieve where before it was not.
Thanks to the different communications technologies (smartphones, qr, app, ipads, etc.), companies can contact their potential customers directly without intermediaries, immediately, at a very low cost, on a mass level, all while maintaining an individualized approach.
Followers of facebook, twitter, app, etc. become influencers/ambassadors for our organization in the social networks, in the new economy.
In this new economy, strategies and instruments for 'playing' are different, but the concepts are the same. We continue having the same needs described by Maslow. Perhaps they are not expressed in terms of a pyramid but rather in terms of everyone’s ability to express themselves simultaneously or alternatively without order, but the instruments they use are different.
There continues to be a need for the exchange of goods, just as there continues to be a need to communicate the existence of benefits and positive experiences related to these goods. Only now, we do this in a new environment via the social networks.
By disseminating social network messages, a 'DCVS' communication cycle is established:
- Distribution and sending of messages to a greater number of people.
- Contact, people that 'actively listen' to our messages.
- Validation, people that validate our message.
- Sharing, amplification, people that distribute the message to their contacts. This is the key to viral marketing.
In the social network environment, the capacity for distributing contact validation, and especially the 'share' dynamic, is far greater.
Therefore, new sponsorship strategies must allow for interaction with different potential customers in order to initiate the DCVS cycle.
Sponsorship products must be incorporated to allow for implementation of the DCVS cycle in social networks of an event or sport organization in an exclusive way for a series of sponsors.
We need to keep in mind that, in this environment, any contact can be an excellent amplifier even if there is no purchase involved.
Will the sales strategies that work now be the same as the ones developed in the old economy? It is logical to think that in a new context it will be necessary to create a new relationship.
By contacting customers directly with the brand, or vice verse, the process of generating confidence is more delicate, more fragile, even though it can be faster. The new strategies are focused on creating communities that are bonded to the brand, that love the brand.
As such, I propose the following confidence generation process:
1. Clean Phase: initial phase for distributing the message. In order to generate a real impact, it is necessary to bring some value without needing the client to contribute anything. For example, this can be value information with no attempt to sell but rather position the brand so that the client recognizes us as a value-adding brand. Truth, sincerity and cleanliness of the message’s intention are key.
Linking a QR to the website’s home page does not add value. If it doesn’t offer engagement, it doesn’t bring value. Placing a banner has the same value as placing a billboard in a stadium that does not generate some kind of call to action.
2. High Benefit Phase: the phase in which an unequal but positive exchange takes place for the customer. For example, in exchange for your data, you can access a given promotion or obtain a free subscription by simply distributing the message among your networks. It is recommendable to ask permission for offering any such exchange. Costs are low, and it is easy for the customer to execute.
3. Sale-Experience Phase: the phase in which the customer happily accepts our promotion (discount, bonus, prize, drawing, etc.) and seeks a clear intention to buy our brand. The customer engages, and it is important to maintain constant contact with him/her in order to guarantee a satisfactory experience. If we go directly for this in the Clean Phase, we will fail.
4. Community Creation Phase: the phase where customers feel part of something. Customers show satisfaction. Then they amplify. Suddenly their identification with the brand becomes a social distinguisher. Customers want to be part of our group not only for the tangible benefits that apply to the product but also for the value these represent. Pierre Bourdieu’s theory of social differentiation can be applied to this phase in understanding such behaviors.
Being able to develop new sponsorship categories in this environment means using new instruments, new technologies that allow us to measure the social ROI of every sponsorship relationship, and new strategies that reduce the current high investment costs and guarantee greater revenues.
There are instruments that allow for immediate interaction with customers at any moment and with one simple click (cloudtag, qr, bidi, app). There are tools that allow us to measure the impact of campaigns in social networks (whitefire, for example) in real time and identify influencers. There are also technologies that allow us to find out immediately what people are saying about our brand online.
The implementation of these instruments in sponsorship relations modifies all the current sponsorship categories. A billboard no longer works unless it permits interaction. A competition where 60,000 people attend is not valuable until we can interact with them while they are enjoying the sport event. An event with 5000 people who distribute a promotion among their contacts and initiate a viral marketing strategy has more value than an event for 100,000 people where there is no such interaction.
We can now find cases of competitions or organizations with low media presence but high interaction capacity. Therefore, the value for the sponsor increases above other options offering less interaction.
There are already technologies that allow us to manage (plan, promote, control, evaluate) this interaction.
Our strategy focuses on being able to incorporate these new technologies in sponsor relationships.
Source: Johan Cruyff Institute