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Fashions come and go, but there are always some trends that run deep and tend to stick. Here are nine of them (yes, nine and not ten!) from our editorial desk that are influencing our industry, from measurement issues to tech changes to broader advertising trends that affect how we plan and execute sponsorships. This is an excerpt of our full text published in our annual Sponsorship Guidebook that you can download for free here.
1. The measurement challenge
Sixty-eight percent of marketing professionals agree that there is added pressure on marketers to demonstrate return on investment (Adobe, 2016). The digital revolution and its influence on measurement has definitely played a role in this trend. Everything is now measurable in real time, and budgets are slowly migrating from more traditional forms of communication towards digital. In addition, the new marketing professionals entering the market are digital natives who have come of age in a digital-first environment, further enhancing this paradigm shift.
Regardless of the added pressure to show return, sponsorship measurement suffers from a lack of focus. Everyone may be talking about it, but very few are actually doing it. Some 72% of sponsors spend less than 1% of their sponsorship budgets on research (IEG 2010), and only 3.7% of sponsorship budgets (based on a 10-year average) is spent on evaluation (CSLS 2016).
2. Brand activism
Given the current political climate, cause sponsorships are definitely a trending topic this year. Partnerships with causes and non-profit organizations don’t represent a major part of the sponsorship sector, but they are growing. North American spending on cause sponsorship is expected to reach $2.06 billion this year, up from $2 billion in 2016 (IEG), accounting for almost 9% of all sponsorship spending. There is also momentum in the category as 56% of Canadian companies replaced their philanthropic budgets by sponsorships (Imagine Canada).
Regardless of the relatively low numbers, cause sponsorship is of great interest, as corporate social responsibility has become an indispensable tool for brands looking to set themselves apart from the competition. Furthermore, budgets traditionally allocated to pure philanthropy and donations are being repurposed to align with marketing communications, achieving greater results for brands.
Why this shift? Today’s consumers expect companies to do their part in the issues that are important to them, and to contribute to the collective wellbeing. Partnering with a cause has become an effective way for companies to get involved socially and earn the approval of consumers.
3. Purpose sponsorship
As part of the last edition of the Relevent Sponsorship Conference, Max Lenderman—author of Brand New World and founder of the purpose-led agency, School—presented “How the World is Moving from Cause to Purpose Sponsorship.” His talk really summed up the differences between cause and purpose.
Eighty-nine per cent of American consumers would switch brands if a different brand of a similar price and quality supported a good cause (2013 Cone Communications Social Impact Study). This reveals an undeniable connection between people’s value systems and a brand’s value system. On top of this, the world is currently moving from cause to purpose sponsorship. Having a purpose behind a brand is nothing short of a transformative shift, on par with what digital did for brands back in the mid 90s. Why? Because people look to brands to show them what to care about in daily life—and a purpose is the most effective way to demonstrate that.
4. The promo trap
Many brands still limit their sponsorship programs to promotional or tactical activations. They focus solely on the experiential side of things instead of having a program that uses many channels and dedicated messages to communicate the associations between the brands.
Don’t get us wrong. Experiential tactics serve a purpose and can be a lot of fun. But investing in an effective overall sponsorship program is another beast entirely. It requires more thinking, more planning and more money, It must be devised to support the overall brand or corporate strategy and have what we call “3D” activation programs that take full advantage of the sponsorship medium by activating every communication channel possible: public relations, advertising, digital, content, point of sales, etc. To tell the difference between a tactic and a strategy: A tactic is something you use once (“I am calling a friend to get me a meeting with customer X”) while a strategy is something you use repeatedly (“Always get a warm referral build your customer base”).
A sponsorship program that is tactical in nature has no long-term vision, goal or strategic alignment. Success is measured solely by the reach and number of interactions. Sound familiar? If so, a word of advice: put your money elsewhere.
5. Technology changing the revenue landscape
Rights holders have built empires selling broadcasting rights, tickets and sponsorships, with some held by private interests driven by a strong vision, like Ecclestone and Formula 1 or the France family and NASCAR. Changes in media are affecting these structures, both in terms of consumption habits and technologies used for display, which challenge the established revenue and sponsorship models.
While live events have been a relative safe haven with regards to media consumption, a strong current is taking hold as people decide to go cable-free and turn to other sources of content. The number of cable TV subscribers in the United States dropped from 44.5 million homes in 2010 to 37.8 million in 2015. This trend is particularly true for younger generations: only 46% of 18 to 36-year-old consumers subscribe to selected pay TV services in the US, whereas 63% of 68-year-olds and more do. Besides, younger generations show much more enthusiasm for new sources of content such as Netflix: In 2015, 65% of 16 to 24-year-old Internet users in the United States used Netflix versus 24% of 55 to 64-year-olds. Furthermore, with the growth of sports-related content now available on various platforms, there is more audience fragmentation. Why is this relevant to sponsorship? Well, TV rights are the foundation of many sports leagues and organizations.
6. New ambush marketing
Ambush marketing in its most traditional form has usually involved media buying, like Nike’s takeover of adjacent buildings during the 1996 Olympic Games in Atlanta, or on-site tactics courtesy of promotional agents. But now, unsurprisingly, it’s migrating from the physical to the digital space.
Indeed, many of the latest examples of ambush marketing are online initiatives. They may not be quite as impressive or imposing, but they’re still damaging for rights holders and for the actual sponsor, and they’re a tad harder to nip in the bud.
After pushing countries that won Olympic bids to introduce laws to protect the Olympic sponsors, the Olympic movement softened its position on ambush marketing to allow endorsers of athletes to do some advertising. This move stirred passionate debates and opened the door to legal forms of ambush prior to the Olympic Games, but it also provided athletes with much needed funding. It will be interesting to track how this change will affect ambushing in the near future.
7. The Expertise Problem
Sponsorship is the Swiss knife of marketing communication. Great sponsorship programs usually leverage multiple activation channels (PR, digital, traditional advertising, event marketing, etc.), which requires broad knowledge. While communication professionals tend to be experts in one channel, sponsorship experts must think across multiple platforms. You need a good strategic mind, strong analytical skills and negotiation talents. And yet sponsorship is seldom taught in school, or only in passing, and a lot of people working in the industry landed there largely by accident and had to learn things on the spot.
For 11% of sponsorship professionals, expertise and human resources is the number one concern (CSLS 2016). There is a lack of skilled sponsorship pros in the industry, and that has a negative impact on multiple fronts.
Traditional sponsorship is morphing in all kinds of ways, and the lines between different types of partnerships—brand partnerships, event marketing, content creation, endorsement, corporate social responsibility—are blurring more and more. The good news: the expertise that is relevant for sponsorship can be applied to those new communication environments as well. The challenge: the ever-evolving communication channels mean that professionals always need to stay on their toes, and stay ahead of the curve.
8. Finding your brand space
Just a few years ago, standard, and often rigid, sponsorship structures set most sponsors on the same level. But as brands get better at crafting their own narrative, generic platforms with properties are no longer working to create goodwill. Brands need to find a clear positioning for their sponsorship portfolio as well as within each property.
In the early 2010’s, the industry understood the need to contribute to the audience or fan experience. But now we need to go further than first-level relevance or a simple value-added experience. The desire to contribute to the consumer experience often led to on-site brand activation with a thin link to the overall communication strategy. Yes, giving goodies or providing a coveted service will generate positive attitudes—but then again, so would handing out cash on a street corner. What’s more brand attribution and any lasting impact with such promotions is almost always low.
9. Security
While we don’t want to overstate this issue, it is a sad realization that both event promoters and brands need to take new security threats into account. Promoters and local police forces have been quick to make adjustments in the wake of recent events. We saw that at South by Southwest, where police cars blocked street access near pedestrian areas, and in Europe, where giant (branded) sandbags were set up to prevent vehicles from entering crowded areas.
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