Technology

All aboard for sponsorship

September 2007

Back in the 1960s and 70s, Gillette sponsored the premier one-day cricket tournament in the UK. Gillette had run with it quite successfully for around 10 years, when it decided to do some market research. So it went onto the streets, asking the public what they associated with the brand Gillette. When most of them said “cricket” rather than “razors”, it realised that the sponsorship had run its course.

Therein lies one of the problems of sponsorship. In trying to raise your own profile by connecting it with an event which is well known, you run the risk of your customers not remembering what you were trying to sell in the first place. So maybe there is such a thing as bad advertising after all.

In today’s competitive world of mortgage finance, there is no shortage of large institutions paying a lot of money to add their name to a high-profile event, although there are others who pay less for something not so overt. This raises the question of why sponsorship is taken out. Is it really to raise one’s profile, and ultimately sell more of one’s original product, thereby risking the Gillette syndrome? Is it a defensive measure to ensure you aren’t left out in the cold while your rivals blaze a sponsorship trail? Maybe it’s to give your marketing staff something to entertain their customers to, or it could be a way of ‘servicing the community’. Then again, could it be an expensive hobby of the CEO? Surely not!

Barclays Premier League

One of the higher-profile sponsorships is that of Barclays Bank, with football’s Premier League in England. It overtly sponsors just that, associating itself closely with the word Premier, and metaphorically leaving aside the rest of the divisions.

Barclays is here really saying – look, we are the best, the ones at the top of the league. We are not an also-ran, struggling to compete in the lower reaches of our game. It’s an expensive gamble, but one it has pursued before. Between 1987 and 1991, it sponsored the whole of the football league, all four divisions, but that was before the elite Premier Division broke off on its own. So it has form and is revisiting old ground, albeit now just the top tier of the stand.

What does Barclays get from it? Brand awareness – but hold on, doesn’t it already have that in spades? Barclays gets mentioned so many times a week in the media, and so the hope is that the customer base – both actual and potential – will remember the name more than its rivals, when next they come to apply for a mortgage, open a savings account or think of buying one of their other myriad of services.

So it’s subliminal, is it? Well maybe, because who can measure the success of sponsorship? I don’t hear marketing directors directly linking the success of their recent best-buy product to a sponsorship. There needs to be an overall plan of what the organisation is trying to achieve, and that, coupled with a marketing budget, can then lead to targeted sponsorships. For someone the size of Barclays, the Premier League will not be the only one. There are others in sport, the arts and the community, to try to give an all-round message, in keeping with the strategic focus. Sponsorship supports rather than leads.

Sports sponsorship

Rupert Murdoch once described football as a “battering ram” with which he wanted to take out his rivals in the media world, given its global appeal. Especially now, when the sport has rediscovered something of a family atmosphere, with all-seater stadia, it is not hard to understand why it would be used as a sponsorship base. It is no good choosing something with which the sponsor has nothing in common, or which does not carry some quality capable of making the intended audience make the key association. Football, then, would appear to have special ingredients in this respect, and it certainly has mass-market appeal, pretty essential if that is the game you are in.

Sport generally is the main arena in which the big stars of the financial markets try to compete, as it carries so much interest for so many members of the public. It is generally a leisure industry, so the buying public may well remember the name of their favourite sport, team, stadium, tournament or exponent fondly, and so if there is a direct link to an institution they know already, it is perhaps more likely they will use that institution when they are next exercising their buying behaviour in the appropriate market. For these reasons, we do not see too many names not already quite well established in their own right sponsoring something major, and this would also be why entities do not usually sponsor prisons, dictators or wars.

International sponsorship

With some big sporting events coming up like the Rugby Union World Cup, and further down the line the Olympic Games in the UK in 2012, it is not surprising that financial institutions are flexing their sponsorship muscles. There are important deals to be done, but not enough for everyone. It is early days yet for the Olympics, but you can bet people are already thinking of how to exploit potentially the best opportunity in sport in these islands in our lifetime. Lloyds TSB acted quickly to become its first Official Partner in a deal estimated at £80 million, apparently beating off competition from HSBC, Bank of America and Citigroup. It will be interesting to see how the road to London 2012 develops over the next few years.

There are 10 sponsors of this autumn’s Rugby Union World Cup in France, amongst them Visa and

Société Générale. This introduces another theme, that of internationalisation. This tournament will be watched by millions of people in several continents around the world. So while the sponsorship prices are high, so are the opportunities to show your wares on a global frontier.

The two names mentioned are certainly global players, and so it is they, along with non-financial giants such as Peugeot and Heineken, who have stumped up to bring them an association with one of the most popular sporting events in the calendar. The fact that it is only played every four years makes it even more special with its scarcity value. And whilst RU can be a bruising game, it is played and watched by people from different socio-economic groups, so the mass appeal is once again there to be seen.

HBOS has the following statement on its website: “Our approach to sponsorship activity is one of community focus and partnership.” A laudable ideal indeed, and in some ways a throwback to the mutual days of Halifax could be inferred from this, but as would be expected of the UK’s largest mortgage provider and a serious international banking group, they are also involved in some high-profile sporting events and teams. Its rivals, RBS, also have a wide brief in terms of sponsorship, ranging from the Williams Formula 1 team and Six Nations Rugby, to the Edinburgh Military tattoo and the Royal Highland show, revealing a mixture of size, type and rationale for their sponsorship ideals.

The world’s largest building society, Nationwide, has been active in sports sponsorship for some time. It sponsors the England football team and has added a leading sponsorship of the Rugby Union Home Nations too. As one of the main players in finance in the UK, it clearly feels it ought to have a decent footprint in some of the main sporting events here. However, despite its statement as being the world’s No.1 in its market, it is a UK entity, and so this is reflected by its choice, i.e. no need for internationalisation.

Local sponsorship

Within the UK, sponsorship can be either national or local, and again this decision will be influenced by the market presence of the institution. We have discussed above some large sponsorships, either national or international, but just as important to the sponsors themselves, can be small arrangements, often carried out in their local area. This can be just as effective for their strategic aspirations as the large deals mentioned earlier.

In the building society market, for example, only the top two, Nationwide and Britannia, could truly claim to have national coverage. Even Yorkshire Building Society at number three is not really a completely countrywide player. Therefore, sponsorship from amongst the other 50-odd societies is bound to be local, within the home patch, if anything. Some do not take out sponsorships at all, and those who do may say they are supporting local community interests, and not just trying to further their strategic growth plans.

Given their mutual status, some may say that such a philosophy fits in with this anyway, but it is hard to say categorically that this would be the sole, or even the major, reason for sponsoring something. These days, with the increasing burdens of regulation and compliance, it is harder than ever for a small market player to compete with giant rivals without some sort of profile projection, and so finding the time and resources to do so without a thought of trying to gain an edge of some sort is nigh on impossible.

Jeremy Hicks, head of communications at Chelsea Building Society, has an interesting viewpoint: “Sponsorship is an intrinsic part of our corporate social responsibility (CSR) programme, created after research we conducted. The findings indicated that the involvement in community activity and CSR was welcomed by customers and staff as it gave more information about

the business they dealt with or worked for. The general feedback was that if price is equal or compares well, then community support/CSR is a huge influence in decision-making.”

Jim King, communications manager of West Bromwich Building Society, strikes a not dissimilar chord: “The West Brom’s approach to sponsorship is closely allied to its commitment to the local community. This entails the society’s active

support for organisations and events which respond to defined community need. That may include long-standing support, as with the Outward Bound Trust, or the sponsorship of high-profile and popular fund-raising initiatives located across the society’s branch network.”

Niche sponsorship

Kaupthing Singer & Friedlander, the Icelandic-owned UK bank, has done some interesting things in the sponsorship field in the past, including a Grand National trial at Uttoxeter, and a high-profile annual watercolour competition in collaboration with the Sunday Times, the latter still going successfully after a long run.

Over the last two years, it has sponsored the UK Real Tennis National League, and the Ladies’ 2007 World Championship in the same sport. Being a specialist niche player, it wished to find something similar in that respect, i.e. definitely not a mass-market appeal event. Real tennis is a niche sport, with a particular cachet and is played by wealthier individuals and business entrepreneurs. Therefore, KSF gained an association with a sport played by people who are specifically in its target markets. Also, the game is played throughout the UK for a whole season, giving wide coverage, press exposure and opportunities to entertain clients.

In today’s market of corporate hospitality overkill, clients and business contacts like something different, and also often prefer to participate rather than just watch, and they were certainly able to do that with real tennis, being given the opportunity by KSF to play at such hallowed venues as Hampton Court, Lord’s and Queen’s Club. It is often such private circumstances that clients tend to remember, rather than another day at a Test Match or football game.

Sally Jones is the real tennis and rackets correspondent for the Times and Daily Telegraph and has seen the huge impact that carefully targeted sponsorship can have on minority sports. She says: “Thanks to their traditional, elite image and the large numbers of celebrities and high-profile City figures involved, both games have managed to attract several blue chip sponsors, including British Land, Lacoste, KBC Peel Hunt, and Kaupthing, Singer & Friedlander.

Sponsors seem to love the opportunity for memorable corporate entertaining with pro-ams and exhibitions at historic venues like Hampton Court where guests partner stars. Both games, particularly real tennis, are booming as a result. The influx of money boosting prize purses and appearance fees has attracted growing numbers of talented young players from all backgrounds to become professionals, raising playing standards and leading to a string of courts being built or refurbished. Carefully managed to keep the traditional ethos of courtesy and sportsmanship, sponsorship is revolutionising two of our most historic and fascinating games.”

While sport is clearly a major sponsorship focus, it is not the only one. Arts is another favourite, and while perhaps not so high-profile, can be effective in getting a marketing message across. However, as we go forward, I suspect its sponsorship coverage will continue to be overshadowed by sport, which continues to be the forum for the big deals. I see no let-up in the race towards the tape, and those with the inside track will continue to be the favourites.

Brian Donnelly is head of debt relations for Kaupthing Bank