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Because anything can be sponsored—or almost anything—you’d think that companies would be busy transforming their sponsorship portfolio every time a new trend hit the market. Instead, they tend to focus on their existing partnerships because long-term relationships have a way of paying off.
We are seeing a stabilization of partnerships in the major sponsorship categories, which suggests that brands are adopting a more strategic approach. The average duration of a partnership has also gone up. There is less movement in the marketplace overall, with the exception of brands pulling out during more difficult economic periods.
We know that partnerships become more effective over time. Consumers make the connection between the brands more easily, and increasingly appreciate that the fit is a relevant one. Building a solid alliance over the years is also an excellent way for a brand to gain a competitive advantage, as a rival would be hard pressed to reproduce such a strong partnership.
Recent research[1] has shown that consumers continue to falsely associate an event with a former sponsor even when the partnership ended several years before. This is considerably more problematic when the former sponsor and the current sponsor are competing brands.
Many companies that use sponsorship as a core communication strategy have been investing in tactics for a number of years, adopting a very focused approach.
Ferrari, Shell and Philip Morris
Two of Ferrari’s partners have played the long game when it comes to sponsorship. Shell has been with the team for over 60 years, and Philip Morris has been a partner since 1972, despite the fact that their red and white logo hasn’t been allowed on the cars since 2008.
By adopting a focused strategy, Shell has used Ferrari’s prestigious brand image to effectively communicate its message to consumers in a category that lacks differentiation and generally inspires indifference in consumers. As a result, the oil company has risen as a key player.
Timex and IRONMAN
The most popular sports watch in the world was one of the very first products designed with sports marketing in mind. Since 1986, Timex’s success has rocketed, in large part due to its focused partnership with Ironman, selling anywhere from 500,000 to one million co-branded watches every year.
The success of the partnership is primarily twofold. The product was designed first and foremost for triathletes, which got sports enthusiasts on board fast. It is also a smart business partnership because it gives the brand legitimacy within the Ironman circle and with athletes at large. The partnership is still going strong today.
Gatorade and the NFL
The story of the partnership between these two brands, which have become almost synonymous during playoff season, began in 1968. The drink itself had hit the market shortly before, in 1965. Doctors at the University of Florida developed it after the coaches of the Gators, the local university team, had brought it to their attention that the players needed help with overheating. (Hence the name “Gatorade”).
Other teams quickly adopted the thirst-quenching beverage in the 1960s because it solved a need specific to athletes, but the partnership strongly influenced the emergence of a new category of products and assured Gatorade’s leadership position in the market. The success of this partnership was such that an end-of-game ritual took hold that still exists today: the classic “Gatorade shower,” where the coach of the winning team gets a cooler of the beverage poured over his head.
Gatorade is now associated with a broad range of sports, but its ongoing partnership with the NFL has been a huge factor in its success. Now owned by PepsiCo, the brand has more than 80% of shares in the sports drink market, which adds up to an impressive two billion dollars US in annual sales.
Examples of long-running sponsorships:
- Slazenger and Wimbledon – since 1902
- Ford and the Geelong Cats (an Australian football club) – since 1925
- Coca-Cola and the Olympics – since 1928
- RBC and the Olympics – since 1947
A few more modern examples:
- Rolex and Wimbledon – since 1978
- Gatorade and the NFL – since 1968
- Timex and Ironman – since 1986
As the cases above illustrate, a brand’s steady commitment to a property can pay off big, making it more profitable for a company to restrict its portfolio, to focus on its assets and to better activate its existing sponsorships than to compensate for gaps in its marketing plan by signing new partnerships and making frequent changes.
Clearly, there are other key factors that must be in place aside from longevity. The partners need to have shared values and a shared vision, an understanding of their respective roles and the ability to collaborate effectively.
With this long-term approach, there is an increase in the number of contracts with flexible clauses that give brands the right to leave the partnership before the end date or to make ongoing modifications.
Such clauses reduce the risk associated with long-term contracts that could weaken a brand’s competitive edge. Imagine if a company sponsoring a sports team suddenly saw its competitor sign a contract with the league in which that team plays. In such a setup, the brand would obviously become subordinate in relation to its rival.
In closing, a long-term commitment is generally worthwhile, but it’s smart to build in some flexibility.
Sources:
http://espn.go.com/espn/sportsbusiness/news/story?id=1742115
[1] Journal of Advertising: McAlister, Kelly, Humphreys & Cornwell.
