Sep 09, 2009 at 03:34 PM
written by Michael Munson

Is over-commercialization killing sponsorship's cred?

When I worked for Ad Agency FCB San Francisco, it didn’t take me very long to realize what the ad business was all about, and how, generally speaking, the client was simply subsidizing four different businesses while kind of hoping the agency’s work would somehow impact its bottom line.

As I understood it…

1) The ad agency gets hired to produce creative (ads).

2) The agency or an outside media planner does the media planning and buying to distribute the ads for public consumption.

3) Broadcasters and media companies get paid to place or broadcast the ads. And finally,

4) a rating agency like Neilsen gets paid to find out how many people are possibly exposed to the media carrying the ad, a proxy for how many people might have consumed the ad and its message.

The ad agency’s performance is judged by winning awards for how cool their ads are, not delivering on client objectives (that usually means sales). The media planners and broadcasters are judged by how many people might have seen media content purchased, not necessarily how many people saw the ads (channel flipping, DVR, etc.), plus they usually get a commission every time they buy media. And the rating agency is just playing unbiased referee and keeping score for the ad agency, media buyers, and media companies. Client objectives? Well, if they really want to know if the needle was moved, they can check sales results before and after campaigns, and spend even more money doing focus groups and other market research. And how convenient that the agency ad creators have found it fit to travel to exotic locations throughout the globe to do client ad shoots. I’m not saying ad agency people don’t work hard. They do. It just seems to be more about justifying and reinforcing the agency way of doing things more than about using any communication means necessary to build and hold onto business for the client. I mean agencies aren’t hired to win awards for their creative coolness.

I always thought sponsorship was a better way to go simply because there seemed to be some efficacy in sponsoring things. Consumers noticed sponsors and felt good about them because they were felt to be supporting things because they cared about them. Plus, there were no photo shoots in Fiji needed to activate sponsorship investments.

But now, even the bloom seems to be coming off the sponsorship rose. In an eye-opening article in the Irish Times last week, former Budweiser sports marketing king maker, Tony Ponturo suggested sponsorship has lost its way. He suggests, and I couldn’t agree more, that the greed in sponsorship has taken a toll on its effectiveness.

The money that has poured into sports in particular has flooded leagues with riches. It has turned them from well-run organizations providing quality entertainment for a good value, into corporate giants themselves, with more leading not to stability, but want for even more. The greed has escalated prices and pushed the “real fans” out to the point they have become jaded and cynical about sponsors. And now the most popular sport in America is staring down the barrel of a labor dispute that could end up with what made the NFL successful, disappearing. Namely, the prospect of the richest teams buying up the best players without a league salary cap in 2010, and making MLB look like a model of competitive balance, looms.

Perhaps it is no surprise that according to research cited by Ponturo, sponsors used to get love for being the one to sponsor, but now they are looking like they just buy slots that someone else can have next week. This is a sure fire way to get people ignoring sponsors, just like regular advertising. The connection and commitment is what makes sponsorship unique. If that is gone, it may as well just be called advertising.

All the major properties are to blame, but to me, by far the biggest offender to beat up the golden goose of sponsorship is NASCAR. When I was with the agency 10 years ago, a full season NASCAR sponsorship was $6 million per year. That seemed like a lot then. Now it pushes $20 million. It has gotten so bad that sponsors try to sell off races because they simply can’t afford to be a car sponsor for a whole season. This hurts the sponsors and makes the sponsorship less valuable, obviously. But the real damage is being done week after week during the racing season, when fans see for themselves that new sponsors are being traded out left and right.

It is a testament to greed for NASCAR because its sponsorship pitches used to scream about how NASCAR fans are so loyal to sponsors because they know supporting the sponsor helped support the driver/car they rooted for during the season. Loyalty only goes so far, however. I don’t have the research in front of me, but I seriously doubt a fan is going to buy from Brand X as the season starts, and then start buying from Brand Y when a sponsor has sold off a few races to another sponsor that same year.

Stadium naming rights are another example of sponsorship losing its value in the minds of consumers. First it was Candlestick Park. Then it was 3Com Park. Then it was Monster Park. The citizens of San Francisco got so tired of being whored out to the next bidder that they passed a ballot measure banning the city (which owns the stadium) from calling it anything other than Candlestick Park, following the expiration of the Monster deal last year.

Sponsorship isn’t a bad thing. But given how people are feeling about it these days, sponsors are going to have to do a lot more with their sponsorships than simply pay a bunch of money for the right to associate with a cool property. Real commitments and benefits must be given to property audiences. Sure, you can give MLB a few more million so Albert Pujols can set the new salary record, or some NASCAR driver can buy 1000 square feet larger house. But the smart sponsors are going to stop giving more money to leagues and start giving more back to the audiences they are trying to turn into loyal customers.

Perhaps it is time for sponsorship folks to really look at who is getting what in the sponsorship economics equation, and make moves to make it more equitable for all parties involved, so that it actually works and regains its esteem. I mean, we don’t want another example where the brand is subsidizing a game where other parties benefit without question, and the brand is left wondering if it is working for them or not. Do we?


Mike can be reached by email at mike@sponsorpitch.com and on Twitter at @mjmunson. Also, don't forget to view all of Mike's previous posts.