McD's and American Airlines to Keep Spending
McDonald's and American Airlines executives came out yesterday and announced that they would keep sponsorship budgets flat for 2009. Not exactly a ringing endorsement for sponsorships, but given the events of the past week and the macro-environment we're in, perhaps a needed dose of some perspective.
It goes without saying that these are scary times for properties that rely on heavily on sports sponsorships. These announcements counter a study from IEG and Performance Research released yesterday revealing that over one half of companies will reduce sponsorship spending. Even those sponsors that are keeping spending flat, admit that their models are shifting to maximize the reach of their sponsorship dollar. Among the strategies they're taking include shifting dollars to new genres, focusing on deeper relationships with less properties, raising the hurdle rate for sponsorship ROI and putting greater emphasis on activation spending vs. rights fees.
A couple of interesting, but not surprising insights from the study:
-Consumers are holding sports sponsorships to a much higher standard, vs. arts or cause.
-Consumer opinions can be shifted by cutting sports sponsorships and increasing non-profit relationships.
-Financial Services are most likely to lose consumer confidence as a result of a sponsorship.
Here's the full study from Performance Research and IEG:
As sponsorship pros, we all know that sports sponsorships are about a lot more than catered skyboxes. However, this study clearly indicates that the public doesn't and ... you know what they say about perception, right? You may not agree with all of these, but here's a few ideas we're hearing on email, linkedin and twitter about how to create a more grounded and sensible evaluation of such relationships during these troubled times:
- Take another look at ROI and make sure you can justify the sponsorship as a legitimate marketing expense.
- Get ahead of this story and bring in the PR team ASAP!
- Renegotiate and/or shift benefits away from exec hospitality to other assets (at least temporarily).
- Stick to your guns! If you've covered your bases, don't let the critics put you at a competitive disadvantage.