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Chapter 11Chapter 11

Sponsorship Foundation Sponsorship Foundation and Failureand Failure

McGraw-Hill/Irwin ©2007 The McGraw-Hill Companies, All Rights Reserved

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FailureFailure

• Failure - Different Meanings to People

• Failure:– Failed to Meet Expectations– Sponsors Chose Not to Renew

• Dilemma Is that Sponsors Often Choose Not to Renew Some Sponsorships that Have Met All of Their Expectations

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Competitor ResponseCompetitor Response

• Natural Response by Competition is to Attempt to Neutralize Any Differential Advantage Based Upon a Sponsorship

• Responses by Competitors:– Piracy or Ambush Marketing– Increases in Promotional Activities– Aggressive Changes in Marketing Mix

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Sponsorships Fail WhenSponsorships Fail WhenThey Have a Poor FoundationThey Have a Poor Foundation

• Sponsorship Should Be:– Defined

• Need to understand what a sponsorship Is

– An Appropriately Selected Communications Medium

• Fit the target market and communications goals

– Objective Led• Decision based on Organizational Goals

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Sponsorships Fail WhenSponsorships Fail WhenThey Have a Poor FoundationThey Have a Poor Foundation

• Sponsorships Should Be:– Integrated

• Fits within the sponsor’s IMC plan

– Effectively Screened• Selected Based on Merits

– Contracted• Written contracts help to avoid surprises and to

provide recourse in the case of non-compliance

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Sponsorships Fail WhenSponsorships Fail WhenThey Have a Poor FoundationThey Have a Poor Foundation

• Sponsorships Should Be:– A Long-Term Commitment

• Ongoing serial sponsorship over time tends to be more effective than a “once-off” sponsorship

– Protected from Ambush• Both the sponsor and the sponsee should engage

in activities that identify and provide protection from ambush marketing

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Sponsorships Fail WhenSponsorships Fail WhenThey Have a Poor FoundationThey Have a Poor Foundation

• Sponsorships Should Be:– Leveraged

• Sponsor should recall that sponsorship is not a stand-alone promotional tool and invest an adequate level of resources for collateral support

– Evaluated• Marketer will not know if the sponsorship

succeeded or failed if there is no attempt to measure the results

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Other Reasons for FailureOther Reasons for Failure

• Decrease in Market Value

– The Benefits Are Not Delivered, So the Sponsor Considers the Sponsorship to be Over-priced, but Sponsee Does Not Reduce the Price Accordingly

– New Events at Lower Prices Drag Down the Market Value of Existing Events

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Other Reasons for FailureOther Reasons for Failure

• Cost Becomes Prohibitive

– Rights Fees Escalate because of Increased Demand as Events Prove to Be Effective

– Prime Properties such as the Olympics and the World Cup of Soccer Have Dramatically Increased their Rights Fees over the Past Few Sponsorship Cycles

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Other Reasons for FailureOther Reasons for Failure

• Change in Corporate Direction

– Even When a Sponsorship Has Been Effective, the Sponsor May Decide to Pursue a different Marketing Strategy that Does Not Involve the Sponsorship in Question

– Isuzu Terminated Its Sponsorship with the Celebrity Golf Challenge Solely because of Its Effort to Create a New Image for Isuzu

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Other Reasons for FailureOther Reasons for Failure

• Property Hopping

– The Sponsor Focuses on Short-Term Strategies that Result in the Movement across a Series of Sponsored Properties

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Other Reasons for FailureOther Reasons for Failure

• Timing Considerations

– Events Are Not Always Staged During the Same Time Period from Year to Year

– A Sponsorship that Made Sense for an Event Held in July May Not Make as Much Sense When that Event Is Staged in May

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Other Reasons for FailureOther Reasons for Failure

• Failure to Understand What Is Not Received

– “Due Diligence Overlooked” – The Sponsor Expected Certain Plan Components that Were Not Specified in the Contract

– The Sponsor Misunderstands Some Issue • Sponsor Expected Broader Category Exclusivity • Sponsor Expected Signage to be More Prominent

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Other Reasons for FailureOther Reasons for Failure

• Greenwashing

– Public and Media Scrutiny Arises in Regard to a Marketer’s Sponsorship of a Cause-Related or Environmental Property

– IEG Caveat: “Don’t sponsor green unless you are green”

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Other Reasons for FailureOther Reasons for Failure

• Over reliance on Small Sponsorships

– Small, Grass Roots Sponsorships Typically Do Not Provide the Benefits Associated with Major Properties; This Reality Is Often Perceived to Be a Failure which Results in a Greater Propensity for Property Hopping

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Other Reasons for FailureOther Reasons for Failure

• Failure to Sell Internally

– Many People Who Have a Vested Interest in Using Company Resources Wisely Are Not Sold on the Benefits that the Sponsorship Has Provided

– The Unconvinced May Want to Use Resources in Other Ways, So the Sponsorship Is Not Renewed

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Other Reasons for FailureOther Reasons for Failure

• Failure to Deliver Sought Results

– There Is a Deficit When Comparing the Actual Results to the Anticipated Results such that the Return on the Sponsorship Investment Is Deemed to Be Inadequate

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Overview of FailureOverview of Failure

• Some Failures Are Inevitable

• Learn from the Successes & the Failures

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Examples of “Failure”Examples of “Failure”

• Xerox & IOC– New Focus on “Other Customer-Facing Initiatives”

• Siemens & McLaren Mercedes F1 Team– F1 Racing Deemed to be Inconsistent with Siemens

Image

• Reynolds Tobacco & NASCAR– New Laws Limited Ability to Promote and Leverage

the Winston Brand of Cigarettes

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Closing CapsuleClosing Capsule

• Some View Any Non-Renewal as Failure

• Some Successful Sponsorship Relationships Are Terminated by Satisfied Sponsors

• There Are Many Reasons for Failure

• Learn from Successes and from Failures