NEW YORK Thanks to the recession and criticism from U.S. Representative Barney Frank, the sponsorship business has been under a cloud for most of the year. As a result, a number of companies have cut back their activities in the sector or pulled out altogether.
But today, Mediaedge:cia, the WPP media agency, is issuing a report — supported with data from sister sponsorship consultancy arm IEG — that forecasts significant global growth in the sector, despite the economic downturn. As for the political fallout, MEC executives say it’s unfair and shouldn’t deter clients from embracing sponsorships as part of their overall marketing mix.
At a time when ad budgets are shrinking, the report predicts that spending on sponsorships and related activity will climb worldwide by 15 percent this year to $44 billion and by a little more than 2 percent in North America to roughly $17 billion, per IEG research.
Sponsorships came under fire in February when Rep. Frank, chairman of the House Financial Services Committee, lashed out at Northern Trust for allegedly spending “millions of dollars on a PGA golf tournament sponsorship and associated parties” after accepting $1.5 billion from the Trouble Asset Relief Program.
Though Northern Trust strongly denied that any TARP money was used to support the sponsorship, Frank said that the financial firm’s sponsorship activity “demonstrates extraordinary levels of irresponsibility and arrogance” at a time when the recession was hurting consumers in many ways.
Frank’s missive, MEC believes, unfairly tainted the sponsorship business. In the ensuing months, Wachovia took its name off a PGA title sponsorship for a tournament in Charlotte, N.C., while Morgan Stanley said it would cut back on entertainment during a tournament it sponsors.
“We think it’s unfair,” said Jon Levine, svp, MEC Access, the agency unit that houses its sponsorship practice. “Sponsorships are clearly under the microscope and it’s politically charged.” It shouldn’t be, he said, arguing that sponsorships are “not any different than an ad campaign and constitute a key and significant piece of the overall communications mix.”
Levine is urging clients not to bow to political pressure and to carefully consider sponsorship options. “Marketers are looking for new ways to reach consumers and deliver brand messages,” he said. “By aligning with partnerships [in the sports, entertainment or even cause-related marketing spaces], you allow yourself to connect to a passion point of the consumer.”
By example, Levine points to a recent deal that tied client Xerox with Citi Field and the New York Mets. As part of the arrangement, the team utilizes Xerox’s products and services at the stadium, while the client gets signage, media, hospitality and the ability to host business seminars at the venue. That last element, he said, “created new efficiencies and cost savings for [the client’s] marketing/business solutions.”
And contrary to what the politicians would have people believe, said Levine, sponsorships are based on stringent ROI goals, “not on drinking and rubbing elbows with celebrities,” although hospitality elements are often part of the package.
Research and metrics are key, Levine said. “They must be in place to better understand what works — and what doesn’t — so that informed adjustments for multi-year partnerships can be made along the way, guaranteeing that every dollar works best for your brand,” he said.
The sponsorship report will be available Tuesday at www.mecaccess.com.