PART ONE: Sponsorship: The Big Picture

Definition

Sponsorship is generally recognised as a business relationship between a provider of funds, resources or services and an individual, event or organisation which offers in return some rights and association that may be used for commercial advantage.

Why do companies sponsor?

Sponsorships are used to:

• sell and/or promote products and services to a particular audience.
• introduce and sample new products or services
• associate the company with a particular personality, image, lifestyle or event (target market)
• develop a link to a particular culture or sub culture (niche marketing)
• improve corporate image
• associate with winners
• communicate key corporate message to an audience
• connect with local community - allows involvement at the grass roots level
• builds relationships - host client entertainment or meet with important people (relationship marketing)
• a cost effective or self funding alternative to alternative and direct marketing
• increase positive media exposure

Generally, sponsors need to have a positive quantifiable effect on the sponsoring company's bottom line.

Donations

Sponsorships are often confused with donations. A donation is a gift of cash or contra with little or no expected return. Sponsorship is not a donation. Sponsorships are a business tool used by companies to achieve specific goals and objectives.

Advertising

Advertising is where a fee is paid for the right to place advertising and the company has total control ie all messages are scripted and approved and appear as a scheduled advertisement.

Sponsorship is often used as an extension to advertising and can involve a mix of media coverage, press releases, signage and corporate entertainment. Sponsorship is often seen by consumers as less commercially biased and therefore can be better accepted than pure advertising.

Generally, organisations believe that consumers are more receptive to sport sponsorship due to the natural excitement and positive mood associated with victory.

Growth

In 1987, 3700 companies world wide invested $1.75 billion in sports, which was a 500% increase from 1982. The value of sport sponsorship is now estimated at approximately $50 billion annually

It is estimated that sponsorship growth in Australia is about 20% per year in dollar terms.

The sponsorship value of the Sydney Olympics in 2000 was estimated at $750million