Corporate Sponship in Event
Thanks to increases in leisure time and discretionary spending nowadays, community groups as well as individuals are becoming enthusiastic in events according to their interests. Events have occupy our newspapers and television screens as well as much of our free time and enrich our lives (Bowdin et al. , 2011). Moreover, events have a substantial contribution to the national economy. In UK, the event industry generates over ? 36 billion every year, which sustain at least 530,000 full-time jobs (Bladen et al. 2012). Under the trend, the business sector has take events and events’ sponsorship into consideration when making their marketing strategies. Globally, expenditure on event sponsorship has been escalating each year – from USD 44 billion in 2009 to an estimated USD 51. 1 billion in 2012 (IEG, 2013). The overall sponsorship spending in the UK each year is around ? 934 million, made up of sports (51%), arts and business (18%), broadcasting (20%) and others (10%) (Mermiri and South, 2009).
Before analyzing the relationship between sponsorship and event, the two concepts should be clarified first. An event can be defined as “an organized occasion such as meeting, convention, exhibition, special event, gala dinner, etc. an event is often composed of several different related functions” (Getz, 2005, p. 16). According to International Events Group (IEG, 1995), sponsorship is “a cash and/or in-kind fee paid to a property in return for access to the exploitable commercial potential associated with the property”.
In this essay, the scope of the event industry and main types of sponsorship will be introduced at first. Then, the importance of corporate sponsorship in the event industry will be examined by considering the benefits to both sponsors and events. Next, the essay will critically analyze the risks of corporate sponsorship and discuss other sources of event funding. Finally, the conclusion can be drawn as corporate sponsorship plays a significant role in the event industry but potential risks such as ambush marketing should not be ignored.
In addition, other sources of funding are essential to successes of events. The event industry has a large scope; here, only some key components will be presented. Event organisations, staging or hosting events, are core element of the event industry. Besides, professional groups or individuals who organize events on behalf of their clients are called event management companies are emerging with the event industry. There are also various suppliers covering staging, lighting , transport, accommodation and security of the event industry.
External regulatory bodies and publications have tight relations with the event industry as well (Bowdin et al. , 2011). As for types of sponsorship, cash is the most common source provided by sponsors to support the event (Wagen & Carlos, 2006). Sponsors can also offer ‘value in kind’ by providing free goods and services to events (Wagen, 2007). Other sponsorship may cover the media coverage, IT support, entertainment speaker sessions and etc.
From the sponsor’s perspective, sponsors have objectives that fit into one or more of these areas: to increase product or brand awareness, to develop corporate image, to drive sales, or to develop market strategy (Yeoman et al. , 2004). To begin with, sponsors can gain benefits from marketing area through sponsoring the event industry. Sponsorship is acting as a more effective way of market promoting, sales driving and reaching the target market (Bowdin et al. , 2011).
Among various traditional marketing promotion methods such as advertising or personal selling, sponsorship is argued to be one of the most effective means of communicate and form relationships with consumers and business partners (Grey and Skildum-Reid, 2003). Siegel (2001) investigated the sponsorship of tobacco industry and found that despite a federal ban on tobacco advertising on television, tobacco companies achieve the equivalent of more than $150million in television advertising per year through their sponsorship of televised motor sports events.
From 1997 through 1999, tobacco companies achieved 169 hours of television advertising exposure and $410. 5 million of advertising value for their products by sponsoring motor sports events. In addition, events provide sponsors with an environment where consumers are relax and better accept marketing message; therefore, sponsorship is key driver of product sales (Bowdin et al. , 2011). There are two main ways for companies with products achieve high sales goals including an exclusive in-game presence at sporting events or exclusive rights in their product ategory at a festival. For instance, Tiger Beer sponsors the Tartan Asian Extreme Festival and distributes samples of their beer to attendants as part of an integrated marketing campaign which also included the launch of The Tigers’ awards to celebrate Asian films in the UK (Anon, 2005c). The Stongbow Rooms, an online game company, launched the Scottish Courage Strongbow Rooms concept resulted in an estimated increase in 12% monthly sales gain (Scottish Courage, 2005). The sponsorship of the event industry is an emerging new channel of sales driving for sponsors.
Moreover, events also help sponsors get access to specific niche/target markets. For example, O2 sponsored music concerts to appeal to a youth market and establish itself as the biggest mobile network in the youth market (Carter, 2004). Saudia Private Aviation (SPA), an affiliate of Saudi Arabian Airlines, has renewed its sponsorship of the 6th edition of EXCS International Luxury Motor Show. The company believed that the event offer a platform for them to reach prominent people and the high-class segment of the community, who SPA targets through its marketing programs. (AMEinfo, 2012).
Next, brand awareness and brand image of sponsors’ can also be created and developed through sponsorship, especially for companies expanding into new international markets (Noordin et al. , 2011; Bowdin et al. , 2011; Yeoman et al. , 2004; Aaker and Joachimsthaler, 2000; Cornwell et al. , 2001). Perceptions of a brand are increasingly linked to consumers’ experience with the brand. Thus, in brand strategy, delivering a comprehensive brand experience is becoming paramount, whereby ‘‘marketing and external communications help build the brand, but nothing is more powerful than the customer’s actual experience’’ (Berry, 2000, p. 36). The case of Vodafone entering New Zealand mobile telecommunications market is a suitable example to illustrate the effectiveness of brand awareness and image building in the new markets through sponsorship. The initial step of Vodafone setting into the New Zealand mobile telecommunications market was in 1998, and it had dominated 45% of the market until 2003. Sponsorship was an integral component of Vodafone’s brand strategy. Vodafone sponsored Rugby, New Zealand’s national mass-audience sports, in order to quickly and effectively reated brand awareness among target groups when entering the new market. Then Vodafone use sponsorship as a platform to let customer experience products and develop emotional connections. Thus, it not only create broad awareness alone but also build brand personality among consumers and create links to popular youth culture, facilitating much closer bonds between customer and the brand (Cliffe & Motion, 2005). Besides obvious financial benefits, sponsorship allow sponsors to build up corporate images Bowdin et al. , 2011. Corporate image and brand image are two different concepts.
Corporate image may or may not be related with its products or services and usually be associated with corporate social responsibility (CSR) (Godfrey, 2006). Usually, companies support charity events to create goodwill in the community. For example, NPower became headline sponsor for Macmillan Cancer Relief World’s Biggest Coffee Morning improve to its brand perception (Anon, 2004). Wu (2002) added that companies such as petroleum, tobacco and weapon industries whose image need some polishing were likely to offer sponsorships to arts, culture and charity events to leave good impressions to the public.
Furthermore, sponsorships are also used as incentives for a company’s workforce and create better employee relations IEG (2008). Companies often perceive event sponsorship as a way to offer their employees access to the events or corporate rewards to motivate them. For example, Royal Bank of Scotland’s and Edinburgh International Festival secured New Partnership funding from Arts ; Business which enabled the bank’s staff to take part in ‘Royal Bank Turn Up and Try It’ workshops.
By involving staff in the arts sponsorship, the bank wanted to form more creative thinking, dealing effectively with customers or colleagues of their employees (Royal Bank of Scotland, 2003). The business involving staffs events aims to creating more intensive inter-staff relationships and loyalty to companies as well as staff moral and the like (Godfrey, 2006). From the event’s perspective, the financial investment, in-kind support and media exposure are three main benefits that event organizers seek from sponsors (Watt, 1998).
Watt (1998) argued that events could not be successful happen without adequate financial support. Financial investment is the most obvious and direct income for events. The 2004 Edinburgh International Festival received around ? 1. 73 million from sponsors and donator, accounting for 27% of the total income (Bowdin, 2006). Except for cash, in-kind support is vital to event organizers as well. Crompton (1994) summarize four main types of in-kind services including product support, personnel support, communication resources and expertise and intangible benefit of “institutional clout” conferred on the event.
According to the research done by Cultural Ministers Council (2002) on cultural sponsorship in Australia, in-kind support approximate 83% of organizations’ sponsorship commitment. Over 60% of respondents provide in-kind services covering legal and financial advisory services, IT support, auditing, marketing and management expertise and etc. (Richards ; Palmer, 2010). As for “institution clout”, if an event links to a sponsor with a strong, positive public image, then sponsorship may help legitimize the event and improve its public profile (Crompton, 1994).
In addition, media exposure is also beneficial for events by not only promoting events to the public but also securing financial sponsorships easier (Crompton, 1994). In addition, media exposure is also beneficial for events by not only promoting events to the public but also securing financial sponsorships easier (Crompton, 1994). In 2000 Sydney Olympics, Nike, one of official sponsors, launched its pre-Olympic advertising campaign, which not only promote its own brand but also the Sydney Olympic Games (Tripodi and Hirons, 2009).
In spited of all the benefits brought to both sponsors and event organizers, there are still a number of potential risks associated with implementation of sponsorship, which should be paid enough attention to (Wagen, 2007). For the sponsors, first and the foremost is the “ambush marketing” issue. McKelvey (1994) describes it as “a company’s intentional effort to weaken or ambush its competitor’s official sponsorship and seek to confuse the buying public as to which company really holds official sponsorship rights. Ambush marketing reduces the effectiveness of the sponsors message as well as pose a threat to sponsorship agreements (Meenaghan, 1996). In the 2008 Beijing Olympic Games, the torchbearer was Li Ning, a former gymnast and now the chairman of Li Ning company, which easily made the greatest 2 or 3 minutes of free advertising for Li Ning company. Although Adidas was the official footwear sponsor other than Li Ning, 67. 4% respondents incorrectly recognized Li Ning as the official footwear sponsor (Pitt et al. , 2010). Moreover, the ‘fit’ between a sponsor and an event is vital for the success of the sponsorship (Wagen & White, 2010).
Not every company is the potential sponsor for every enent (Decker, 1991). Inappropriate sponsorships not only cannot achieve the desired outcomes of sponsors’ but also waste time and money or may even negatively influence their brand images. For example, Southland Corporation, the former owner of 4,000 7-Eleven convenience stores, sponsored cycling events. There was no obvious link between the stores and cycling so that the target audience did not get the marketing information of the company thus no significant increase in sales(Crompton, 1994).
For the event organizers, it is well worth remembering sponsors are temporary and unstable for various reasons such as economic recession or government ban. For example, the government ban tobacco sponsorship in sport; thus, event organizers will lose all sponsorship from tobacco companies immediately (Bowdin et al. , 2011). In addition, sponsors are a stakeholder that event organizers have to make additional efforts to satisfy their requirements (Crompton, 1994). Sometimes, sponsors can be more trouble than they are worth.
Significant time can be spent in servicing sponsorship and sometimes this time would be useful to the event if it were devoted to other forms of support (Watt, 1998). Finally, the image of sponsors’ may also leave bad impression on audience due to unpredicted failure, which may result in jeopardize the event itself (Crompton, 1994; Walker et al. , 2011). Therefore, other types of funding are essential to success of events. Ticket sales are one of the major revenue generating strategies for the event organizer to adopt in the modern events market (Raj et al. 2009). In the 2012 London Olympics, the ticket sales was reached 587,294 million (London 2012 Organising Committee, 2012). Moreover, government grants are keen to provide support to events not only for financial reasons but also expert advice and information (Raj et al. , 2009). Selling merchandises, broadcasting rights, perceiving donations and other types of funding can also act as financial support for the event industry. In conclusion, corporate sponsorship is important in the event industry for both event organizers and sponsors receive benefit from it.
On the one hand, event organizers gain finical support, in-kind services and media coverage from sponsor, which can secure the income of events. In addition, intangible benefits such as positive influence from sponsors’ brand images are also pointed out. On the other hand, sponsors invest on events in exchange of more effective marketing strategy for financial purposes, brand building, better corporate image and facilitating employee relation. However, some pitfalls associated with sponsorship for both sponsors and event organizers are also critically discussed.
The ambush market and “fit” theory between sponsors and events are two main issues that sponsors should take into consideration before investing on events. The unstable feature and sponsors’ influence on events’ performances are critical to event organizers when seeking for corporate sponsorships. Last but not the least, other sources of funding such as ticketing and government grants are vital financial support for events. It can be conclude that corporate sponsorship is important in the event industry, but the drawbacks should not be neglected and other types of funding are also necessary.
