The Definition Of Sponsorship Marketing Essay

Sponsorship in events is a rapidly growing tool in both the commercial and social marketing areas. Growth in sponsorship has resulted from increased costs of media and other promotions and the apparent cost-effectiveness of sponsorship, at least in terms of delivering media exposure of the sponsor’s message, brand, or logo for a minimal outlay (Abratt & Grobler, 1989).

It’s a fiercely competitive world & strong brands have become a major source of

competitive advantage. Brands help companies distinguish themselves from

competitors, to justify a price premium, and to fend off potential market entrants. In general, sponsorship holds a unique position in the marketing mix because it is effective in building brand awareness, providing differentiated marketing platforms, facilitating direct business benefits and providing valuable networking and

hospitality opportunities (ADREVIEW).

Certain major events can intrinsically unite the whole world like the Olympics & FIFA World Cup and hence they attract the big brands, likewise with hallmark events & festivals. The sponsorship of mega events & festivals is now an significant and productive marketing avenue for corporate brands. Mega events & Festivals events have flourished in recent decades and public interest in partaking in them has risen accordingly. A mega event is more like a giant exhibition or market place of ideas & merchandise, even more so if it’s a sporting or cultural event because it brings with it hundreds of thousands of spectators in one place which could define a market. Such an environment is encouraging for big brands to associate themselves with events of such magnitude & with the added media coverage. Corporate organisations can reap many benefits from sponsorship (Irwin & Sutton, 1994; Cousens, Babiak & Bradish, 2006): for example, gaining direct media access, increased sales and improved market share, image enhancement, overcoming cultural barriers, building links with politicians and business leaders, and improving employees’ morale (Hickman, Lawrence & Ward, 2005).

It is estimated that in 2012, corporations around the globe will spend more than $35.6 billion sponsoring sports, arts, entertainment, causes, and events (International Events Group, 2011). Growth in sponsorship has resulted from increased costs of media and other promotions and the apparent cost-effectiveness of sponsorship, at least in terms of delivering media exposure of the sponsor’s message, brand, or logo for a minimal outlay (Abratt & Grobler, 1989). Sponsor awareness has been the subject of many empirical studies – also recent (Lardinoit & Derbaix, 2001), while brand image has received less research attention (Meenaghan, 2001).

Before the principal research question can be addressed, its main elements, sponsorship, events, and brand-equity must be introduced and clearly defined. This chapter summarizes the main advances reported in previous research on these topics culled from an extensive literature review.

Because an in-depth understanding of the characteristics of event sponsorship is the

main aim of this thesis, the subject will be looked at from various angles, ranging from an extensive review of definitions to an subjective history of sponsorship. The heavily researched topic “brand equity” will be discussed at a level appropriate to the needs of this study. The same is true for the construct “event,” which will be looked at from a sociological perspective.

This review is a study intended to appraise sponsorship success in

terms of its two main objectives which are brand awareness and brand attitude.

The main sources used for the review include:

Academic research

Press reports

Websites and information online

Definition of Sponsorship

There are various ways to define the activity of sponsorship. Meenaghan (1983)

offers a definition that describes sponsorship as “the provision of assistance either

financial or in-kind to an activity by a commercial organization for the purpose of

achieving commercial objectives.”

As the study and practice of events marketing has become more sophisticated,

companies have come to sponsor more than just “activities” as Meenaghan describes it.

As previously stated companies these days sponsor buildings, playing surfaces within

buildings, people and the like.

Pope (1998) is more specific about exactly what can be sponsored and about the

various types of objectives sponsorship can achieve in his definition. He defines

sponsorship as “the provision of resources (e.g., money, people, equipment) by an

organization (the sponsor) directly to an individual, authority or body (the sponsee), to

enable the latter to pursue some activity in return for benefits contemplated in terms of

the sponsor’s promotion strategy, and which can be expressed in terms of corporate,

marketing or media objectives.” In his definition, Pope eludes to the fact that both

parties benefit from a sponsorship. The idea of creating mutually beneficial relationships

has become a major theme in sports marketing thought. Authorities in the industry

continuously stress the importance of creating a “win-win” situation for sponsor and

sponsee. Cheng and Stotlar (1999) go so far as to compare a sponsorship relationship to

that of a marriage. The researchers contend that “both require long-term commitments

to assist each other in reaching mutual fulfilment.”

The leading professional authority in sponsorship consulting and research,

IEG, Inc. defines sponsorship as “a cash and/or in-kind fee paid to a property (typically

sports, entertainment, non-profit event or organization) in return for access to the

exploitable commercial potential associated with that property” (IEG 2001c). While this

definition is limited in terms of sponsorship being linked only to a cash contribution, it

does offer a different aspect than the others – the idea that affiliating with an entity has

value in and of itself. In other words, companies should consider sponsorships not only

for the exposure they provide, but also for the mere opportunity to be affiliated with the

event or organization putting on the event. Gwinner and Eaton (1999) conducted a

study to test this very principle. In an experiment, they tested the degree to which a

sporting event’s image was transferred to a brand through an event sponsorship. Results indicate that those exposed to the sporting event were more likely to report similarity on brand-event personality components than those in the control group who were not exposed to the event, thus supporting the idea that sponsoring an event has value in and of itself through the function of image transfer.

The Financial Impact of Sponsorship

As noticed earlier, many scholars proved that sponsorship may lead to increased financial performance using event study method. In these studies, sponsor’s effort to contribute to make sport event successful would be converted to investor’s positive evaluation of that sponsor company in two ways.

On one hand, being an official sponsor can be accepted in terms of advertising as reliable appeal to consumers, investor and shareholders as well. Because we are living in the society flooded with mass advertising using mass media, undifferentiated advertising has little effect on consumer purchase and stock market value. In this sense, sports sponsorship, as unique advertising, is expected to persuade the existing investor and shareholder to invest additionally or to attract new investors to buy the stocks of the sponsoring company.

On the other hand, the sponsoring company may enjoy the positive and socially responsible image from event sponsorship. Investors might have favourable impression to sponsoring company because they believe sponsors make much effort to facilitate business all over the world. Therefore event sponsorship is expected to improve the financial value of sponsoring firm.

Implications

Critical elements in the success of event marketing can be defined based on this empirical result. It is essential for companies to assess their brand value and sponsorship fit in selecting most appropriate sports event. This might be because choosing the right event paves way to better access to targeted audience (Shani and Sandler, 2006). For example, exposure to professional tennis Grand Slam broadcasting and indirect advertising of official sponsor are expected to create favorable image toward sponsoring companies that provide prize money and

technical support. Viewers and big fans may feel that sponsors are one of the main characters just as tennis player or sponsors who contribute to promote successful tournament. The research findings indicate that is not obvious that company with strong brand power enjoy more benefits from sponsoring than poor branded company. Of course, company with less strong brand power may have difficulty in sponsoring the big main sports event but if the condition is the same to each other, high brand equity is not always expected to leads to more improvement in firm’s value. Given this, sponsorship by company unfamiliar and low brand equity sponsors may result in high brand awareness and recall. Even if Sony, one of the most

notable global companies, sponsors big sports event, their existing brand image may be Journal of Management and Marketing Research

Practically, it is also important to understand the full range of marketing initiatives

involved in a sponsorship. Marketers should make every effort to establish a relationship with the sports event affiliated with the firms sponsored sport (Sherry, 1998). Compared to big sports event, niche sport event organizers should also note that sponsorship at their respective events may possibly be devalued (Miloch and Lambert, 2006). For example, it is hard for antique furniture company to benefit from sports sponsorship. On the contrary, automobile company or transportation firm which give important value to speed and technology can create positive

performance relatively to antique furniture company. Therefore, positive changes in firm’s value can be attributed to good fit between sports event and sponsoring

Future Research

Increasingly, however, sponsorships are being used strategically inside companies to motivate employee or facilitate a major structural change, such as a merger. Future research should identify the relationship between event sponsorship and employee, for example, employee’s personal identity, morale, job satisfaction. Mega event sponsorship’s effectiveness is still measured largely in terms of fans’ TV consumption. New media such as internet broadcasting and other traditional platforms, such as press and radio, play an important role for sports followers (Smythe, 2007; Farrelly, Greyser, 2007). More detailed and cautious analysis is required to assess the worth of sponsorship using sponsorship fit, brand equity and event characteristics identified as moderators in this study. For better research, data collection, and hypothesis testing should be considered with more elaborated variable definition and manipulation.

Conclusion

The concept of event sponsorship still holds good in establishing effective and efficient advertising strategy in today’s marketplace. In other words, sports sponsorship is one of the best ways to build a communication path toward consumers (Buchan, 2006). The present study attempts to investigate the potential effect of sports sponsorship on changes in value in terms of stock price by adding sponsors’ brand equity, sponsorship fit and event characteristics. Unfortunately, not every company sponsoring World Cup and Olympics enjoys significantly positive cumulative returns but the short-term financial performance can be enhanced by brand value. Product fit was identified as a potential driver that enhances short-term financial performance. Brand equity and image fit between event and sponsoring company play a key role in explaining the association between sponsorship and financial performance. The event characteristics such as event period, sports type and popularity may moderate in transferring sponsorship into increased financial outcome but result shows there is no impact of those factors.