Exercising Your Brand

Sports marketing is big business these days and has emerged as a serious competitor to the more traditional advertising and media options. Heading towards the 2008 Beijing Olympics, it's fair to say sport is a hotbed of activity with dozens of brands vying for a slice of the action. But how should a sponsorship program work and what role does it play in a marketing schedule?

Matt Eaton reports. You only need to take a walk around the streets of Hong Kong to get a feel for how much the locals love their sport. Football and basketball courts and swimming centres are scattered all throughout the city and, more often than not are hubs of activity. Naturally marketers want a slice of this action.

The local sports sponsorship industry has been conservatively estimated at around $390 million. That figure, according to some, is currently growing at an annual rate of more than 10%. The first half of 2007 has seen Adidas, McDonald's, Nike, Samsung and Standard Chartered spend significantly more than the first half of 2006, which Nielsen Media attributes to sponsorship programs.

But despite this significant spend little is know about the effectiveness of the medium and its return on marketing investment. There is still no industry-wide and credible way to measure sports sponsorship. Nevertheless, it is a good time for the industry as marketers face increasing complexities about how to engage consumers. Today many sponsorship packages are worked on two very different levels. The first represents the bigger, multi-million dollar sponsorship deals of major sports codes, national teams and specific individuals. But of equal importance are the smaller, more community-based programs that major brands are now supporting.

Adidas, which has been very active on the Hong Kong sports scene both at the bigger corporate level and through community sporting events, says sports sponsorship now plays a major role in its overall marketing plan, with around 15% of its total marketing budget now ploughed into sponsorship deals.

Dave Thomas, Adidas marketing director, says while sports sponsorship may be a gamble for some, understanding your strengths and the reasons for entering into a sponsorship deal, will pay big dividends.

"Is it a gamble for non-sporting companies and I would say that the gamble has increased. You have to stick to your core sports, like we have done, and you have a reason to be there in the first place," Thomas says.

"When we sponsor the Soccer World Cup and the Olympics, we're not just jumping on a bandwagon, we've been sponsoring the World Cup for a long time and we go back to the 1930s with our sponsorship of the Olympic Games. History and credibility is what our brand does very well." Among Adidas' bigger sports marketing programs in Hong Kong, the sports apparel brand also is very active on the community level, which Thomas says plays an important role in its sponsorship programs. "At all levels it's really important. It says we're not just a brand that cares about the big stuff and the multi-million dollars deals, we believe in supporting sports at all levels and that goes right from the World Cup and the Olympics right down to something at a school level or club level in Hong Kong," he adds.

Another global brand active on the local front is banking group UBS, which has been a major sponsors of the Hong Kong Golf tournament and the Hong Kong Rugby Football Union as well as a number junior development and community programs. Like Adidas, UBS dedicates a "considerable chunk" of its marketing budget to sponsorship programs, which aside from sport also includes sponsoring arts and sailing programs.

Oliver Bertschinger, head of sponsorship at UBS Asia Pacific, says that while sports marketing used to be on the fringes, companies are now seeing the power and importance of sports marketing. "It's becoming fundamental to how companies market themselves, whether that's sports, arts, the environment or education, for all the big brands globally, sponsorship is a significant part of marketing spend, and it's growing," Bertschinger says.

"At UBS we think sponsorship works. It can deliver things that marketing alone can not deliver, it's a very engaging tool which can be very hard to achieve with any other marketing tools, but it's one element and alone it wouldn't work, so it need to be applied to in a coordinated way with all the other areas of what the business is doing, and that includes marketing."

Bertschinger says UBS' grass roots sponsorship programs are also becoming increasingly important as consumers want to see bigger brands supporting the local community. Seamus O'Brien, president of the World Sport Group, argues it's the "feel good factor" that drives many big brand towards these community-based programs.

"Obviously you've got your major flagship events that go on big media being television coverage, fan participation, then right at the bottom end of the scale you've got a lot of community, youth development grass roots stuff, which has a big feel good factor for many companies and fulfills what's increasingly a social and corporate responsibility, which they all feel they need to be involved with, even though it probably wouldn't add a dollar to their business," O'Brien says.

So what options exist for clients at a local level? Arthur Chan, planning manager at BatesAsia Hong Kong, says marketers are increasingly picking up on emerging trends, especially among the Hong Kong youth. He adds that as the advertising landscape gets more fragmented, sports is becoming an option for marketers and big brands. "It is the case, I believe, based on my observation, although some brands are still not as active in this channel as they should be," Chan says.

"Having said that, there are obviously other consumer hot-buttons which are also increasingly important and widely used as a marketing channel, for example music or collectables. As yet, these other hot-buttons or channels can be competing or complementing sports in their role of marketing to youth."

Chan says that the broadening of the definition of sports means a broadening of sports as a marketing channel to reach consumers. But instead of brands focusing specifically on sports event sponsorship, sports can be extended to include fashion shows and exhibitions, to computer gaming and extreme sports.

"Certain tribes of youth are very much into extreme sports, for example freestyle skateboarding, snowboarding, motocross, bungee jumping, skydiving, which cannot be done or experienced to the fullest in Hong Kong, due to the limited space."

Clients are increasingly turning to sports as a serious marketing tool, many agree that there is no consistent and credible way investments on sport sponsorship. While several evaluation firms exist, currently clients must rely heavily on their research to measure their investments. Analysing media coverage and event attendance can be used as a guide, but these tools give no indication about perceptions of the event or its sponsorship partner.

Dan Parr, senior account director at sports marketing agency Brand Rapport, says tracking spend is vital, but is often one of the most difficult things to achieve. He says the more intangible aspects of sports sponsorship such as how it affects brand perceptions and how consumers respond to the brand involvement, are almost impossible to measure.

"There are several evaluation firms out there that will tell you they have the best way of measuring it, but if you give the same sponsorship to five different companies you'll get five different answers," he says.

"That qualitative element is really what will make sponsorship work, but frustratingly it's the most difficult thing to measure. These are all intangibles that can't be measured, but really they are the fundamentals behind why companies get involved in sponsorship."

At UBS, Bertschinger says because sports reflects a significant investment, the company uses several outlets to measure its spend. "We put a lot of effort into measuring the effectives of our investment. What we do is we have a whole system of measurement tools in place depending on what it is that we're doing and what the investment is. It is basically based on market research, which can be pre and post research before the investment hits the market.

"We did that before the Hong Kong Open to find out what people thought about the Hong Kong Open, is it something the locals are proud. Then we do a post-analysis of the event."

He says that pre and post-event research is important and often used to compliment media tracking and PR activity. "It's important because we get incredibly important feedback about what they think about the UBS brand. You do see significant improvements when you do sponsorship and you get very qualitative feedback to improve what you do, I'm a firm believer that one key to success is to constantly measure and get into a dialogue with the people you entertain at these events."

Directly linking your brand with a game is not the only way to be involved with sport. Areas such as corporate hospitality, internal staff incentive programs, fashion and electronic gaming are now being used to supplement major sponsorship deals.

"Now companies are wanting to involve workforce their in sponsorship, make staff feel part of it and allow them to take some degree of ownership in it, because employees can be the greatest advocates in your business. It can be a very powerful motivating force," says Parr.

At UBS, the corporate hospitality is often as big as in-game involvement. "The reason why we do sponsorship is basically for business interests, sponsorship is a great opportunity to entertain existing clients and to prospect new clients," Bertschinger says.

"We do it for the business, we do it for the brand and we do it for our employees, which is an angle we are always considering when we do something, we do it for the morale and pride of our employees."

Seamus O'Brien says hospitality for key clients is now one of the fundamental driving reasons to take a sports sponsorship package. "Tickets and hospitality to big sporting events are becoming a major calling card for these companies to differentiate themselves from their competition. Clients see that now as a very key part of the overall sponsorship. It's a unique experience that they can offer to their consumers and clients. Creating that experience on a one-to-one basis, you can't beat it."

But O'Brien argues that not all sports sponsorships are without risk. There are many examples of where sponsorship programs can go wrong, especially if a sports is marred by controversy and drugs. But drugs in sport is not the only danger.

One strong example of where sports involvement can go wrong is the Beijing Olympics. Beijing officials and Olympic organisers are under huge amounts of pressure from several corners to clean up the environment and China's human rights record. But some argue that controversy is not an issue. "The mind of a sports fan is about what's happening today and tomorrow, yesterday is gone in sport. It's live and it's instant. Once it's done it's done.

"Some sports are potentially deemed dangerous, like motor sport, you have to consider if you want your brand associated with a dangerous sport because you know something could go wrong. If it happens you have to roll with the punches because you knew that risk going in," O'Brien says.

Dan Parr argues that major Olympic sponsors such as Samsung will have contingent plans in place to counter negative press about the Olympics. "The way that the environment and human rights have been brought to the foreground by a very small number of activist is really putting the heat on Olympic sponsors to react to that," he says. "But they will have, as part of their Olympic sponsorship, environment programs and education programs.

It's causing a few of big sponsors take a pretty strong strategic look and what they are going to do around the Olympic Games to try and react to these issues that are being raised," Parr says. But Parr argues that a key thing with sponsorships is loyalty and sticking with a team or event can be a useful strategy. Thomas agrees and says loyalty for Adidas has been a powerful tool.

"A local example I would give is South China football team, who we are proud sponsors of, at the beginning of the year they were facing relegation and really wasn't looking good for them, we decided to stick with them, we believed their fortunes would improve and it did. They won three out of the four cups and we we're very glad we stuck with them. Through the bad times you don't just drop a team, you stick with them." Despite the negative press and perceptions that can sometimes plague sports and its partners, it's clear that sports will continue to take a larger share of marketing dollars. But the real challenge is proving its effectiveness and contribution to the business.

"There's still a way to go before advertising spends is overtaken by sports marketing spend, but more and more companies are looking at ways to connect with consumer base and doing something that is engaging and gets people passionate is a far more effective of doing it than wall paper advertising," Parr says.