What is sponsorship?
Published on
by Mara Kottke
In an era where traditional advertising is losing its impact, sponsorship is becoming increasingly important - and opening new opportunities for brand communication as a category in its own right. Sponsorship is much more than supporting sports clubs or cultural events. It is a strategic tool that can help companies on many levels. In this Insight, we'll explore how sponsorship works, what it can achieve, the upcoming trends and why it is a key factor in business success.
In this Insight:
Sponsorship is an effective and efficient communication tool used by companies in a wide range of different areas to achieve their marketing objectives. It is essentially a business relationship in which a company (rarely an individual) provides financial or material support to an event, person or organisation. In return, the sponsor receives advertising opportunities and positive publicity. Unlike donations, where nothing is given in return, sponsorship aims to reach a wide audience through targeted support. Sponsors benefit from media exposure and the opportunity to associate their brand with events of public interest.
How has sponsorship evolved?
Since the first partnerships in the 1960s, sponsorship has become one of the most established tools in the corporate communications mix. Initially used as a form of surreptitious advertising at sporting events and later as sports advertising, sponsorship took on a professional dimension in the 1980s. Since then, it has continued to evolve, adding new forms and uses.
Sponsorship has grown faster than any other communication tool, both in Germany and worldwide. While companies in Germany spent around 120 million Euro on sponsorship in 1985, this figure had risen to around 5.5 billion Euro by 2016. This trend is also seen globally, with spending reaching around $60.2 billion in 2016.
The importance of sponsorship in Germany is also reflected in its share of total corporate communications expenses, which stood at 12.4 per cent in 2013. The strong growth is primarily due to changes in the communications and media markets, which are bringing new challenges to traditional communication tools such as advertising.
What types of sponsorship are there?
There are many types of sponsorship - the most common are sports sponsorship, cultural sponsorship, educational sponsorship and social sponsorship.
Sports sponsorship is probably the best known. Companies support clubs, leagues or events in order to associate their brand with the positive image and emotion of sport. This allows them to reach a wide audience and build brand loyalty.
Cultural sponsorship focuses on supporting cultural events, museums or art projects. This form contributes to the development and promotion of culture and helps companies to maintain a sophisticated image.
Educational sponsorship involves investing in educational institutions or projects to support research and development as well as supporting young talent. This can be done, for example, by providing scholarships, equipment or finding for research projects.
Social and environmental sponsorship focuses on supporting charitable organisations or social projects. In this way, companies underline their social responsibility and demonstrate their commitment to society.
What are the benefits of sponsorship?
Sponsorship can be used to achieve a variety of objectives, and offers many benefits to both sponsors and the sponsored parties. For sponsors, the main focus is on revenue and sales objectives, as well as increasing brand equity and market share. Sponsorship helps to increase brand awareness, improve brand image and target specific audiences.
It can also increase employee motivation and identification with the company. Demonstrating a sense of responsibility and generating goodwill are particularly important in social and environmental sponsoring. In recent years, relationship-based goals have also gained in importance, strengthening personal contact with key target groups and promoting satisfaction and loyalty to the company.
Sponsorship also has many benefits for the sponsored parties - they receive financial support for their projects and can benefit from additional resources or valuable networks provided by the sponsor. In addition, working with a well-known sponsor can increase the visibility and awareness of the sponsored party in the public eye.
How do I plan my sponsorship strategy?
A successful sponsorship strategy is best developed on two levels: first, the broad selection of sponsorship areas, and then the fine selection of specific forms.
The first step is for companies to decide which areas of sponsorship are most suitable for them - be it sport, culture, social matters or the environment. This can be based on the so-called affinity concept, which establishes links between the sponsorship area and the products, target groups, desired images or corporate culture.
The next step is to determine the specific design of the sponsorship within the chosen area. Depending on whether individuals, groups, projects or events are to be sponsored, specific criteria must be taken into account. These may include the previous success of an athlete, the expected media coverage of an event or the activities of competitors in the same sponsorship area. It is crucial for success that the values and target groups of both parties are aligned. Such a partnership is based on mutual benefit and a clear shared vision.
The sponsorship strategy must be in line with the company's fundamental marketing objectives. It is necessary to analyse the communication challenge to be solved and the contribution that sponsorship can make to solving it. Different communication strategies can be used, such as competitive differentiation, target group development or relationship management. Particularly in the case of social and environmental sponsorship, it is important to ensure that the sponsorship is closely linked not only to the corporate purpose but also to the corporate identity, philosophy, image and culture, among other things, in order to convey credibility.
In addition, the effectiveness of the sponsorship should be regularly measured and evaluated. Figures and data such as reach, media presence and return on investment (ROI) can be used to measure the success of the engagement and optimise future strategy.
Trends in sponsorship
The sponsorship landscape is changing, driven by new technologies and digitalisation. Developments such as virtual reality and esports are opening up completely new and innovative opportunities for companies to develop creative sponsorship approaches. In particular, the growing importance of influencers and social media offers the opportunity to target younger audiences through new channels. Immersive marketing, such as VR experiences, is also becoming increasingly important.
Sponsorship will play an even greater role in brand and corporate communications in the future, as traditional forms of communication struggle to make an impact, as people are generally overwhelmed by the amount of information and develop a resistance to traditional effects. Sponsorship has become more than a communication tool, it has become a strategic value creation tool. In the future, companies will ensure that their sponsorship activities are more professional and efficient in order to achieve the best possible impact.
Another trend is the increased integration of sponsorship into companies' online presences. This allows for greater reach and interaction with target groups. The key challenge for future communication is to harmonise and systematically integrate sponsorship with other instruments. The full potential of sponsorship can only be realised with a holistic strategy.
Conclusion
Over the past few decades, sponsorship has become an essential part of corporate communications. Through strategic planning and the right forms of sponsorship, companies can not only increase their brand awareness, but also strengthen their image and reach new target groups. At the same time, sponsorship provides valuable financial support and access to key resources for the sponsored party. Sponsorship will continue to play an important role for brands as communication changes and becomes increasingly digital. Companies that are able to break new ground and integrate their sponsorship activities with other communication tools will be successful in the long term and gain an advantage over their competitors.
