Sponsorship - a Mid LIfe Crisis?

We are thick in the midst of sponsorship conference season. There’s an interesting debate brewing. Patrick Nally, one the most influentical figures in the growth of sports marketing, has suggested that sponsorship is entering a ‘mid life crisis’. His rationale is that the big bucks global media rights and tickets deals beloved of rights holders are increasingly redundant. To paraphrase - consumers know the rights have been bought at great expense. A pitch side billboard does nothing for me, nothing for the community, nothing for my daily working life, and certainly nothing for my propensity to purchase. It is irrelevant to me. The consumer will no longer pay a price premium just because a brand has decided to give $50m to UEFA.

Think about the private equity analogy again. When private equity professionals are buying businesses, they are looking for return over the next 4 years. The seller is regularly fairly aware of the value it currently holds. It is probably over-charging for it. The buyer will only pay the price if there are some extra areas, some newer streams of value they can see. Or if they can deliver value from the ‘regular’ stream more efficiently. That’s exactly where sponsorship sits at the end of 2009.

There is a way forward, because the newer sources of value do exist. Nally cites Coca-Cola as an example of a brand which as managed to emotionalise its FIFA and global Olympic connections in ways which makes sense. He is right. Sponsorship is a bridge to various stakeholder groups – consumers, trade partners, employees, government. All of these can be emotionalised to drive real, quantifiable value.

The current challenge is that the majority of the sponsorship industry has not grasped that the rules of the game have changed. All of sudden, rights owners cannot over-inflate the value of their traditional packages. I am sorry, but World Cup Final tickets are not ‘money can’t buy’ because I can buy them on seatwave. Those who are not prepared to challenge their operating model, and the ways they support their partners (not sponsors) in emotionalising their connection will be in trouble.

It’s less a case of mid-life crisis than a troubled late adolescence. Often one big event turns adolescent to adult. This often involves demonstrating that there is a ‘real world’ out there which is harder, tougher, and less tolerant than the heady teenage years. Let’s hope the recession is that one thing for the world of sponsorship, and the industry is able to respond.