The Importance of Sponsorship in the Event Industry - Research Paper Example

Table of Contents 1. Introduction 2. Defining Sponsorship 3. Benefit to the Sponsor 4. Benefit of Sponsorship to the Event Organization 5. Issues with Sponsorship 6. Measuring the Effectiveness of Sponsorship Relationships 7. New Media and Sponsorship 8. Conclusion The importance of sponsorship in the event industry 1. Introduction Sponsorship is a form of marketing that has the benefit of the opportunity to support a cause that is beneficial to the branding of a product. In creating an association between an event and a product, a business can benefit from the relationship. The benefit that the event experiences is funding that might not otherwise be available if this marketing opportunity was not possible. Sponsorship provides a mutually beneficial relationship between the sponsor and the organization of the event, a conduit for communication that then occurs between the event and the market that exploits that relationship. The benefits of this relationship are defined by the elevation of the image of the sponsor through association and the event through monetary resources from which to fund the event. The following essay will explore the relationship of the sponsor and the event, their unique blend of product and cause creating an opportunity for associations that connect through an emotional context to consumers. The essay will first explore the meaning of sponsorship, transitioning to the benefits to the sponsors and then to the event organization. Although a mutually beneficial relationship, there are issues that can arise that will cause problems for either the sponsor or the event. These issues will be examined for their effect on the sponsorship relationship. The conclusion of the paper reveals that sponsorship is a powerful resource in enhancing a brand, creating positive emotional context through transference of social equity from an active entity to a supporting entity. 2. Defining Sponsorship According to Damster and Tassiopoulos (2006, p. 174), the simplest way to define sponsorship is through recognizing that it is the way an event is funded, making it first and foremost a commercial activity. Events can be defined as being anything from a sporting event or a musical performance to an art show or museum exhibit. The list of events that are sponsored by other entities is lengthy and includes almost all types of affairs. According to Bowdin (2006, p. 228), “sponsorship is said to be one of the most powerful mediums now used to communicate and form relationships with stakeholders and markets”. The relationships that are formed during the act of sponsorship connects the sponsor to the event, allowing the market to relate one to the other, in spite of direct relevance to the connectivity between the sponsoring entity and the purpose of the event. As an example, a soft drink may have no direct relationship to a sport, but still may become associated with the emotional connections that a consumer makes to that sport as it is then transferred to the soft drink. As suggested, not only events can be sponsored, but individuals through either their participation in an event or through their participation in their sport or craft can be sponsored by outside entities. A specific example of intra-sport types of sponsorship can be seen through the sponsor of a celebrity sports personality through the equipment that he or she uses. According to Pringle (2004, p. 126), “customers perceive outstanding performance to be inextricably connected with a piece of sporting equipment and can assume with a high level of confidence that if they too were to play using that particular guitar, piano, racket, bat, club, or pair of boots, then their own personal performance would certainly be no worse”. In associating a piece of equipment that is related to the expertise of a celebrity, a brand can benefit from the perceived superiority of its product. Therefore, when defining sponsorship on a larger scale in terms of event sponsorship, it must be understood that this is undertaken by a company in order to associate its name with the purpose of the event. Whether it is names put on the backs of t-shirts for little league sporting events, or mile high blimps hovering over a stadium emblazoned with the name of a national corporation, the privilege for the exposure is traded for monetary support of the event. While there are many catalysts for a business to sponsor an event, the primary purpose is most often in order to promote the business through an association to the moment. Sporting events are one of the most used opportunities in this regard. Sporting events are the center of approximately 70% of all event sponsorship opportunities in the United States (Shimp 2010, p. 563). 3. Benefit to the Sponsor Sponsorship may be accomplished through non-related products in order to achieve that same sort of association with excellence. Sponsorship has a responsive element of endorsement. As a business sponsors a person or event, the business is then endorsed in return through exposure by that person or event, whether from direct endorsement or from inferred endorsement. A simplified example of this is through the use of fashion endorsements of designer lines. A celebrity will be given products and sometimes financial incentives to wear and use fashionable items in order to associate that designer with what the celebrity represents. According to Easey (2009, p. 227)“If a brand is linked with a personality who is outstanding or popular in their chosen field of endeavor, then the brand and the personality will begin to share similar characteristics”. Therefore, the association is the link, not the specific product relevance and the association has a powerful potential to advance the reputation of the brand. Bowden (2006, p. 228)suggests that “With the emphasis now on “connecting with” rather than “talking at” the marketplace, event and festival sponsorship can be an ideal way for marketers to create brand interaction with consumers and stakeholders”. He goes on to say that “sponsorship is the purchase (either with cash or in-kind support) of exploitable rights and marketing benefits (tangible and intangible) that arise from direct involvement with a personality/player, special event, program, club or agency” (Bowden 2006, p. 228). Sponsorship allows a business to associate itself with a lifestyle, cause, or purpose that has no distinct relationship with the product of the business, but allows for the company to have positive reinforcement of its brand through emotional connections to the purpose of the person or event that is sponsored. The sponsor will receive a series of benefits from the act of sponsoring an event. These benefits include: access to the organizations audience, use of venue/performances or event, tickets for employees, marquee/program advertising, seats on the board, and brand differentiation (Raj and Musgrave 2009, p. 157). In sponsoring an organization, not only will the marketing benefit have an impact, the possibility of sharing resources allows for deeper exploration of the ways in which entity can successfully exploit the resources of the other. The addition of people from the corporate world on to the board of an organization can give it a new dimension of philosophy from which to approach the issues that the organization may face. 4. Benefit of Sponsorship to the Event Organization Sponsorship is a very important aspect of event organizing. According to Raj and Musgrave (2009, p. 156), “fundraising has now become the most important form of marketing for cultural organizations”. While sponsorship of an event allows for a branding enhancement and marketing tool for a business, the sponsorship also allows for promotional opportunities for the organization. Benefits for organizations can include: funds for special projects, in-kind donations, enhanced image, positioning of product (the cause or the entertainment such as a sports event), access to employees from the sponsoring entity for specified purposes, access to clients or customers of the sponsoring entity, and the sharing of expertise between entities (Raj and Musgrave 2009, p. 157). If properly managed, the attraction of sponsorship funds can be very lucrative in regard to funding for an event. Worldwide figures show that over 40 billion dollars are spent annually on sponsorship, with 15 billion being spent within the United States (Shimp 2010, p. 563). In 1992, Catherwood and Van Kirk (1992, p. 102) reported that economic issues were decreasing the available sponsorship funds. With the current economic crisis, the same problems are facing those who are competing for sponsorship funds. 5. Issues with Sponsorship The sponsorship market, especially in regard to sports sponsorship, has become a cluttered field. Sporting events have become so cluttered with sponsors that they sometimes negate the effectiveness of the marketing strategy. Because of this, Masteraleis, Pike, Barr and Hums (2009, p. 57) suggest that business are becoming more selective for the events that they will sponsor. With so many different businesses sponsoring each event, it is easy to become lost in a chaos of advertisement. A car race is a perfect example of the glut of sponsors that are competing for viewer attention. The race cars are covered with logos from their advertising, almost negating all but the most prominent which is usually the one who has spent the most money in sponsorship. One of the effects of a glut of sponsors for an event is ‘ambush marketing’. Meenaghan (1994, p. 79) states that “ambush marketing occurs when another company, often a competitor, intrudes upon public attention surrounding (an) event, thereby deflecting attention towards themselves and away from the sponsor”. This can cause confusion in the perception of the consumer and diminish the benefit that the sponsor should experience. Those who indulge in the practice or ambush marketing routinely associate themselves with an event without having officially entered into an agreement of sponsorship, nor providing any financial remuneration for their association with the event (Amis 2005, p. 207). A distinct problem that can occur through sponsorship is when the entity that is sponsored loses its elevated image, thus by association tarnishing the sponsoring entity. According to Mason (2005, p. 34) “A corporate sponsor hopes the consumer’s positive feelings for the sponsored event will become linked with the company. Then after the feelings are linked, a “halo effect” may then suggest to consumers that the sponsors products are better than the competition”. However, unfortunately, the opposite can also occur. If the consumer gets a negative feeling towards the sponsored event, that feeling can be transferred to the sponsoring entity, thus diminishing public perception (Kalb 2007, p. 29). Issues of control can also provide pause to the establishment of a relationship between a sponsor and an event. Artists, in particular, tend to be more careful when accepting offers of sponsorship. Fear of appearing to have ‘sold’ their integrity as artists can prevent beneficial relationships from forming between sponsoring entities and artistic event organizers. As well, if the reputation of a sponsoring entity is tarnished, some events will not want to be associated with that entity (Raj and Musgrave 2009, p. 157). Creating solid contracts and agreements is the best way to avoid any actual control issues, but public perceptions of artistic integrity must also be considered when creating a sponsorship relationship. 6. Measuring the Effectiveness of Sponsorship Relationships One of the problems with entering into a sponsorship relationship is that it can be difficult to assess the advantages of being in that relationship. There was a time when sponsorship was designed to provide a means for a company to give back to the community (Kilkenny 2005, p. 64). However, current marketing trends have asserted the exploitation of the relationship for the benefits of marketing associations as the primary reason for entering into a sponsorship. Therefore, it is important to have a way to measure the effectiveness of sponsorship opportunities for the purposes of marketing strategies. According to Peoples (2009, p. 12), new technologies are allowing measures to be made of how music event sponsorships are affecting the marketing of brands who act as sponsors. Music events allow for a great deal of sponsorship revenue to be spent in order to associate with the artist with 1.1 billion dollars having been spent towards this end in 2009. Large scale festivals and music concerts create opportunities for partnerships between sponsors and entities that can create high levels of exposure. Examples of these types of associations can be seen through Blackberry’s partnership with John Mayor and Denny’s Adopt-a-Band promotion. Mountain Dew has gone as far as to create its own music label in order to promote rising musicians, thus placing Mountain Dew at the center of the latest trends in music and creating a sound brand imaging strategy that is both effective and profitable. The technologies that now allow for a measure of how music sponsorship is affecting the brand image include metrics such as Nielson SoundScan and Nielson Buzz Metrics. These measures allow corporations to assess the effectiveness of sponsorship on brand image in the perception of consumers. What consumers think of a brand and how they are seeing a campaign reveals the effectiveness of a sponsorship relationship (Peoples 2009, p. 12). These metrics measure the number of downloads that are relevant to the association between a corporate sponsor and the musician. Through measuring internet chatter, these tools provide data that can be assessed for relevancy to brand image and the effects of the campaign (Hutchison, Macy, and Allen 2010, p. 15) 7. New Media and Sponsorship The idea of ‘new media’ is not as relevant to specific technologies as it is to social observations about the way in which communications have changed in the last twenty years. New media involves digital media, internet communications, and cellular communications which have emerged in such a way as to affect the act of communication (Lister 2003, p. 9). The elementary shift in the way in which communications is developed is the social experience which is defined as ‘new media’. The concept of sponsorship has been translated through the use of new media in communicating about the relationship between the sponsor and the event. Promotion, discussion, and page style advertising is accomplished through new forms of communication that links the consumer to the power of the marketing campaign of an event. New media builds awareness, creates a dialogue that supports attendance of an event, and provides a medium through which extension of the advantages of sponsorship can be made well before and after the actual event. Through associations with sponsors, events can provide better established communications through new media outlets, thus expanding the consumer base that can be attracted to the event (Masterman 2007, p. 63). 8. Conclusion Event sponsorship is one of the most powerful marketing tools of the 21st century, having begun to rise in the late 20th century. With the vast number of new media methods of communications, sponsorship provides an opportunity for cross associations for entities that both organize an event and want to be associated with an event. The mutual benefit of sponsorship provides a medium through which elevation of the image of either the sponsoring event or the sponsoring entity can be achieved. In addition, the event benefits from appropriate funding, which widens the potential of the event, creating a more substantive value to the experience. With technological methods of measuring the effectiveness of cross association through sponsorship, the importance of sponsorship as a marketing tool is ever increasing. With real data providing a framework for value where sponsorship is concerned, the once charitable act of sponsoring a public event has become a lucrative resource for marketing. Word count 2490 References Amis, John. 2005. Global sport sponsorship. New York, NY: Berg. Bowdin, Glenn A. J. 2006. Events management. Amsterdam: Elsevier. Catherwood, Dwight W., and Richard L. Van Kirk. 1992. The Complete guide to special event management: business insights, financial advice, and successful strategies from Ernst & Young, advisors to the Olympics, the Emmy Awards, and the PGA Tour. New York: J. Wiley. Damster, Greg, and Dimitrios Tassiopoulos. 2006. Event management: a professional and development approach. Lansdowne: Juta Academic. Easey, Mike. 2009. Fashion marketing. Oxford: Wiley-Blackwell. 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