Sponsorship is an evolving area and the recent 2015 Relevent Conference shed light on a new way of approaching sponsorship. The speakers addressed numerous issues that are gaining traction in the sponsorship field such as the increased usage of social media as an important channel for activation, the effectiveness of the performance evaluation, the need to clarify precise objectives beyond awareness and finally is the logo dead? What the speaker Ian Malcolm, President of Desperado Inc. agency, would call the in-ice-logo dilemma, which stresses the fact that sponsorship is no more about visibility but way more about engagement.
The best practices for renewing and ending sponsorship agreements
the conditions that enable partners to generate value and to maintain a good relationship aren’t that well understood. Moreover, when a brand exits a sponsorship, it is often ill equipped to do it properly, which can make the situation even more uncomfortable.
The renewal and cessation of sponsorships are topics that—despite their huge importance—don’t tend to be well covered and for which there are few resources. That’s why we decided to devote our attention to the subject in this edition.
We will cover the ending of a sponsorship when a contract comes up for renewal or when a scandal strikes, the impact of a sponsor exit on fans, and the relationship between the sponsor and the property—a subject rarely touched upon, but which has significant consequences on the success of the partnership. We will also supply data that sheds a light on these aspects of the sponsorship industry.
You spend years building a partnership between a brand and a property and then, for various reasons—objectives not being met fast enough, lack of vision at the management level, a changing of the guard or simply the strategic realignment of a scattered portfolio—and the time comes to call it quits.
No matter how good the reasons are for leaving, every brand needs a solid exit strategy. There are multiple players involved, from the property to the media to fans and the general public, and their reactions should not be underestimated. You don’t want to run the risk of having years of hard work crumble with a single news story.
All good things come to an end, and partnerships between sponsors and properties are no exception. Financing sponsorships is becoming an increasingly costly endeavour, and when a contract comes up for renewal, there are times when a brand decides to walk away. The results of the above study suggest that even if pulling out of a sponsorship is negatively perceived by consumers, brand sponsors can mitigate that response by paying special attention to how they announce the news and when they decide to make it public.
When a scandal breaks, keeping quiet can seem like the most appropriate course of action for a sponsor. But there are, in fact, many different tacks a sponsor can take when the time comes to distance itself from an important property.
Turn the scandal into a business move: the Festina Affair
Long before Lance Armstrong, the Tour de France already had a number of scandals under its belt (hence the nickname: the Tour of Doping). The most significant scandal was the Festina Affair in 1998. For the first time in the history of cycling, an entire team was excluded from the Tour de France after their soigneur was arrested at the border with large quantities of doping products in his car. It was tough for Festina—the luxury watch brand sponsoring the team—to distance itself from the scandal when its name was peppered all over the media. The Festina team put an end to its activities in 2001, and the brand redirected its involvement in the event: it became the official sponsor of timekeeping for the Tour de France and set up a foundation to prevent doping.