50% of Companies Plan to Reduce Sponsorship Spending. 2


It’s an attention grabbing headline, but not all bad. In fact – why not reverse it and say 49% of companies plan to keep sponsorship spending unchanged or increase it (there might be some don’t knows in there). Some sports will suffer more than others and some sports will gain. Depending on your sponsorship goals and stated objectives, some sponsorship still makes sense.

The results of 110 responses to a survey conducted by IEG and Performance Research showed that more than half of companies surveyed plan to cut 2009 sponsorship in the sports world, while almost as many are seeking to get out of current deals.

Fifty-one percent of companies surveyed said their sponsorship fees would be down from 2008, and another 36 percent said their budgets would remain little changed. Executives from McDonald’s Corp and American Airlines parent AMR Corp told Reuters on Monday that their companies would keep sponsorship budgets flat this year.

More ominously, 47 percent of companies surveyed said they were seeking to get out of current deals even though they were not up for renewal, according to the study.

But not all sports have lost their luster. In a separate study, IEG estimated corporate spending on college athletic programs, conferences and events is expected to total $572 million in 2009, up 2.8 percent from last year, better than the overall market’s projected 1.8 percent increase.

IEG credited the higher growth rate to lower rights fees and the ability to access young adult students and affluent graduates. It said companies are increasingly aligning with college athletics as an employee recruitment tool.

In the main IEG/Performance Research survey, when asked about spending on related promotions and rewards – a practice called “activation,” in which companies try to leverage sponsorships into stronger relationships and ultimately sales with consumers – 40 percent of respondents said they would cut such spending this year. Another 43 percent said activation spending would remain flat.

The average amount spent on activation related to rights fees slipped for the second straight year to $1.40 for every $1 spent on rights fees, according to the study. In 2008, the ratio was $1.50 to $1.

The lessons? Be flexible and understand the value you have to offer. Don’t think about the property you have to sell as a pure promotional vehicle or an excuse for corporate hospitality. Understand your potential sponsor’s goals and get creative. Think about broader business benefits including internal communications, corporate social responsibility (CSR) and personal development. Be more efficient with your activation; use social media and new technology to extend your reach.

  • ChicagoGuy

    Interesting article. It doesn't say why companies are reducing their spend and commitment though. Is it because sponsorship doesn't work? is it because they have no money and need to spend it on wages? Is it because -as I suspect – they don't want to be seen to be spending money on something the public perceives as being non-essential.

  • ChicagoGuy

    Interesting article. It doesn't say why companies are reducing their spend and commitment though. Is it because sponsorship doesn't work? is it because they have no money and need to spend it on wages? Is it because -as I suspect – they don't want to be seen to be spending money on something the public perceives as being non-essential.