Inside the future of sponsorship

Celebrating the 100th episode of the ‘Inside Sponsorship’ podcast

As a previous guest on the Inside Sponsorship podcast Sophie Morris, Director of Millharbour Marketing (now Sponsor View), was invited to contribute to the celebratory 100th episode, focusing on the Future of Sponsorship.

You can listen to the full Inside Sponsorship podcast here and a transcription of Sophie’s section of the interview is below:

What has been your favourite ever sponsorship campaign or piece of sponsorship creative?

One that I very much admire is Electric Ireland’s ‘Darkness into Light’ sponsorship of Pieta House, a suicide prevention charity in Ireland. Electric Ireland is an energy provider, with utilities being a low interest, but highly competitive sector that is largely driven by product & price. So Electric Ireland utilises sponsorship to drive brand differentiation and advocacy, to reduce churn and to engage with their customers about things they care about, not just their energy bills.

Suicide is a big problem in Ireland and one that comes with a lot of stigma. So the aim of the sponsorship campaign is to raise awareness, educate and raise funds for the free services that Pieta House provides.

Darkness into Light is a sponsored walk – it takes place overnight, so the participants start in darkness and walk until daylight. Not only is it the charity’s flagship annual fundraising and awareness event but the meaning behind that walking into light makes it so much more than a participation fundraising event and walking into light has a clear relevance to an energy company.

The sponsorship has made a really significant difference to Electric Ireland’s business, to staff and customers with really impressive brand metrics. As well as a huge difference to the charity in the awareness that Electric Ireland can give to it and the fundraising campaigns.

This is a multiple-award winning campaign, particularly at the ESA awards, that is integrated right across the business and answers a genuine business challenge in a way that supports the community they operate in and gives their staff something to feel truly proud of being part of.

They also adapted very well to the pandemic for what is a mass-participation event that couldn’t go ahead as it normally would. So they changed it to the Sunrise Appeal – asking people to share their sunrise moments on social media whether it was walking, running, cycling, swimming or just waking up with the sunrise to keep the important awareness and fundraising activities coming in.

This is a great example of a big utilities company using sponsorship to make a real impact to the community in the market they operate in.

You can read more about Electric Ireland’s award winning sponsorship here.

What new skills, or existing skills that will need significant development, do you think sponsorship professionals, on the rights holder’s side, will need in 5-10 years’ time?

For me, it’s strategy – understanding strategy in order to better understand and support what sponsors are trying to achieve.

On the relationship management side of the business, rights holders need to be able to move away from just delivery of the assets that sponsors have paid for to understanding the wider business strategy of the sponsor.

That can benefit the relationship in a number of ways – from asset selection based on relevance and ability to meet objectives – you need skills in longer-term strategic planning in order to really understand that and be able to support sponsors effectively.

Only by truly understanding your sponsor’s strategy can you put forward activation ideas that are relevant and likely to succeed. You might have a bank of great ideas, but are they going to work for that particular sponsor? Are they going to integrate with the rest of their marketing activity and are they going to move the dial in terms of KPIs?

Strategic understanding is also key in renewal proposals. Having understood the business even more during the first term, those with strategy building skills will be able to create more compelling propositions that answer directly to the sponsor’s wider goals and are more likely to be accepted. This allows rights holders to prove the effectiveness in the initial areas discussed which were perhaps marketing-related and expand to cover other business interests in employee-engagement, product-development, productivity, community and CSR agendas.

Having a greater strategic understanding leads to better service which leads to more satisfied sponsors and higher renewal intentions. It would also be a quite distinct competitive advantage.

You are also adding value to sponsors in areas that they would typically need to resource themselves – and so this increases the value of the sponsorship offering.

So, if I were advising a rights holder, I would be looking to upskill in understanding strategy, to increase chances of signing new sponsors and retaining current ones.

What is the biggest challenge facing the sponsorship industry in the next 5-10 years?

Sustainability. This is going to be the biggest challenge facing most, if not all, industries in the next 5-10 years.

Sustainability was the number one trend in European Sponsorship Association’s Annual Market trends report in January 2020 (pre-pandemic). This is ESA’s annual member research which asks what members think the top three trends will be, which we then collate into the top 10 trends. In 2020, as we had just turned into a new decade, the question was framed as ‘What top three trends will be key for the continued growth of the industry in the next 10 years?’.

ESA repeated what is normally annual research, just after the pandemic hit as it was clear that the trends would have changed – this time asking what the key trends would be for recovery – We repeated once more in October to gauge how the mood had changed again.

While the importance of Sustainability dipped in the immediate reaction to the lockdown in April last year, as we were all dealing with the impact of those lockdowns, it has not gone away. Along with other cause-related factors it is climbing back up the top ten trends, and it will be very interesting to see where it shows in next years report which will be due out in the New Year.

Sustainability will become an ‘essential’ not a ‘nice-to-have’ for all businesses. The Climate crisis is here and it’s real – every company will need to play its part.

If we look at sponsorship specific effects, Climate change will also bring further stoppages to events through weather related disruption. We have already seen the effect with the Australian Open Tennis last year being affected by wildfire smoke. We can expect more extreme weather events to affect particularly outdoor sports with flooding, storms, extreme heat and wildfires.

So from a sponsorship perspective – for rights holders, we need to build on what we have learnt in the last 18 months of the pandemic in rebalancing assets. Making sure we can still deliver on sponsorship objectives and obligations even if events don’t go ahead or they go-ahead in a different format. We need to look at assets that can be activated regardless of events taking place or not.

And we need to look at the impact that running our events has, working with suppliers to ensure that operations meet sustainability standards. F1 is a good example of this, on paper being motorsport and one that tours internationally for a lot of the year it doesn’t sound like something that could be very environmentally friendly but in November of last year F1 announced their sustainability plan to have a net-zero carbon footprint by 2030. That extends to how it powers its offices as well as its cars.

For sponsors, we need to think about the rights holders that they are partnering with and the impact that those events and partnerships create – whether that’s in travelling or in the hospitality that we enjoy at events. Reviewing current activation plans and scrutinising new ideas is key. Talk to suppliers about their sustainability policies and how everyone can play their part in sustainable events.

The recent trend of using NFTs in sport is a great example. Everyone is very excited about NFTs at the moment but you need to be aware of their environmental impact and the carbon footprint of minting NFTs and each subsequent transaction. What the commercial or marketing team might be putting high up on their agenda might directly contradict the same company’s sustainability agenda. And when you have whole supply chains looking at each others environmental credentials – you don’t want to irreparably damage relationships for a single marketing promotion.

And to put a frame of reference on that, Digiconomist’s estimate of a single Ethereum transaction is roughly equivalent to 74 000 VISA transactions which makes it an equivalent sustainability choice to avoiding flights. Memo Akten’s research of 18,000 NFTs found that the average carbon footprint was more than a month’s worth of electricity for a person living in the EU. In the art world there have been big artists are pulling out of NFT drops when they realise the impact it’s having. Without getting into the detail, Blockchains are looking at using alternative systems that don’t rely on such massive computing power – so the message here is to know what you’re getting into.

From a wider business perspective, many businesses are signing up to the drive to reduce carbon impacts to real net zero by the end of 2030. Industry organisations such as the Advertising Association in the UK are already asking members to sign up to this and it’s something that the European Sponsorship Association is also investigating.
This will be very much on the agenda for everyone for the next 5-10 years – that is the timescale we have to make any significant change.

What area do you consider to have the most potential for development in the sponsorship in industry?

The area I think has the most potential for development is Measurement.

Measurement is consistently in the top 3 sponsorship market trends, looking at the ESA trends report again – being in position 3 for the two years pre-pandemic, only dropping out of the top 10 in the report published in April 2020 in that ‘kneejerk’ reaction to the pandemic, but it came back into position 3 in October and was still there in January of this year. So, it’s important and yet we have research from the likes of the Frontier report for example that tell us only 18% of sponsors are very confident that they can measure business value return with 49% either not all confident or not measuring at all.

To me that quite clearly outlines an area for development, for both sponsors and rights holders actually.

The reasons why so many sponsors don’t measure or don’t measure business value of sponsorship could be because it’s thought to be difficult or confusing, or for a fear of bad results. It’s also easier to measure short-term tactical results than longer-term brand metrics that are going to answer those business value questions.

It’s quite strange that for many other marketing activities we are openly and actively trying to find what’s working and what’s not working. We test different messages, designs, channels. We test what time we publish content. We are actively looking for what’s wrong, in order to focus on what’s right.

But that doesn’t always seem to be the case in sponsorship and some of the vanity metrics – the big numbers – exposure, views and engagements – that make us look good, take priority.

But few can translate those vanity measures into C-suite language of what impact it’s actually making on the business

I hosted a series of measurement webinars for ESA recently and the main point from the sponsors’ webinar was the importance of setting objectives and the right objectives, which sounds obvious but it’s about having business level objectives, marketing objectives and then campaign objectives. I’ve judged a lot of sponsorship awards over the years and it’s still surprising how many submissions come in that only measure in terms of social media likes and views.

For Rights Holders, the growth of sponsorship depends on knowing how to improve the offering. If you don’t measure that, how can you know where and how to improve it? As with any other product, you need to know how it impacts your customers and take proactive steps to seek to improve, to keep customers loyal and to stay ahead of the competition.

Here, we’re talking about the offering, the service and the outcome it delivers for sponsors. You need to know where to act in order to improve. Where are the problems? Where are the areas where sponsors aren’t so satisfied? If rights holders want to be more innovative and analytical about understanding their sponsors, and how to improve their offering and service for both acquisition and retention, then that’s our area of expertise.

So for me it’s measurement that will be the key area for development or growth for both sponsors and rights holders.

If we fast forward 10 years, how would you describe what brands are looking for and what they want out of sponsorship?

Great brands are already using sponsorship to drive long-term brand growth but I think in 10 years we’ll see that being much more commonplace with more brands looking to own far more than advertising space in front of large audiences but to own meaning, consistency, and to drive that medium to long-term brand building, rather than the focus being on short-term tactical activation.

If we look at Field and Binnet’s ‘The long and the short of it’ research – as a benchmark we should be putting 60% investment into long-term brand building and 40% into short-term activation.

Sponsorship is well placed to deliver on longer-term brand objectives but rights holders need to shape their offering with this in mind, because that’s where the big ticket sponsorships will come from. Coming back to the point on skills needed – rights holders need to know how they can deliver to sponsors’ long-term business objectives.

Sponsorship being used for those wider business objectives will also be more common and brands will expect a higher level of service from rights holders to understand their objectives and facilitate the longer-term brand building activity. Without that support from the rights holders, sponsors have to put more resource in themselves which reduces the value of the offering.

It also comes down to measurement – if sponsorships are measured tactically, separately from marketing, separately from the business objectives, they face being cut if not as resource-efficient as advertising.

So I think we’ll see more sophisticated measurement of business value impact and greater C-level understanding of investing in long-term brand building.

Sponsors will need to gain more internal power to make this work – to be able to prove value – and influence that C-level – and position sponsorship internally as able to align and contribute to the core business challenges and objectives, not just generating short-term sales. Sponsors are likely to look to rights holders again to help them with that internal influencing.

A blue sky thinking question; we are still 10 years into the future, how do you describe how data is being used in sponsorship, on any side of the fence?

The obsession with data will not go away but I think the nature will change and data use will be about getting better insights not more insights.

We’ll use data to connect more closely to audiences not to treat them as ‘data cows’. Rights holders need to use the data they have and the data they can get to become the absolute experts on their audience both the fans and the sponsors.

For fan data, it will be about becoming the sole holder of the relationship and using your expertise to add value to sponsors, advising them on how best to engage with the fans.

The Big Tech backlash throws up interesting concepts though. Users will pay for services such as search engines rather than pay with their data as they do now. Who owns the data has the power, at the moment there is a huge data power imbalance, which consumers will increasingly seek to rebalance.

So you need to think about a world in which customers don’t want to share their data anymore. This will help both sponsors and rights holders to think hard about where the value in sponsorship is.

For example, what would you do if you lost all of your social media followers tomorrow? Where is your audience, that you’re basing certainly some of your sponsorship value on?

You might have less data in terms of quantity but more in terms of quality – from the data that you own yourself.

Those who hold trusted relationships with their audience will get more of that critical data, but to be trusted you need to use it wisely. Therefore sponsorship needs to be with partners where there are genuine shared objectives that the audience will welcome being a part of and having interactions with.

Rights holders can therefore increase the value of their offering by becoming the sole holders of the relationships with fans – don’t just sell your rights but the deep understanding of how to engage with them. This could mean bringing research and analysis, as well as creative capabilities in house or using agencies that work under the rights holder’s guidance. Hugely successful rights holders will be equally exceptional at understanding sponsors and fans and will be able to provide value to both through sponsorship.