Record Growth, Without Gold: Spending rises 11.8 percent in a non-Olympic year.
It’s boomtime in the North American corporate sponsorship industry. Spending rose 11.8 percent to $7.6 billion in 1999, according to industry newsletter IEG Sponsorship Report, Chicago.
And with the sponsorship cash cow that is the Olympics returning in 2000, IEG expects spending to jump 14 percent to $8.7 billion this year.
The migration of dot-com companies into mass-media advertising has fueled much of the spending increase, as has growing participation from financial services and other non-traditional companies, according to IEG.
“The most significant change that I have seen is the appearance of dot-coms and pharmaceutical companies cashing in on the power of motorsports sponsorships,” says Rick Calanni, account supervisor-marketing services at DVC, Morristown, NJ. “During the last year, we’ve seen Lycos, Carsdirect.com, Mall.com, and Pfizer Pharmaceuticals join the list of traditional NASCAR sponsors.”
Of course, one year’s boom is another year’s bust, and the industry might want to brace itself for a market shakeout by the end of 2000. “It will be interesting to see how the dot-coms play out, and how many of them will make it through the year intact,” says IEG managing editor Sean Brenner. In addition, “We’re seeing converging categories across the board. What will happen with [the sponsorships of] newly-formed media companies and cable companies?”
The number of North American companies that spent $10 million or more on sponsorships rose from 61 in 1998 to 67 in 1999, according to IEG. Newcomers to the elite list include Bank of America, which kicked off its Olympic sponsorship last fall with a national tour (November PROMO), and telecommunications company SBC Communications, which merged with Ameritech Corp.
Elsewhere, Philip Morris slipped from its position as the largest corporate sponsor with an estimated $160 million to $165 million in spending, according to IEG. Anheuser-Busch jumped into the top spot with an estimated $170 million to $175 million. General Motors ($125 million to $130 million), Coca-Cola Co., and PepsiCo Inc. (both $100 million to $105 million) round out the top five.
MORE FOR THE MONEY
As the cost of sponsorships – especially in the sports arena – continues to rise, corporate marketers are making sure they get their money’s worth. “The biggest change for us is taking our campaigns down to the grassroots, consumer level,” says Tony Ponturo, vp-corporate media and sports marketing for Anheuser-Busch, St. Louis. “There was a time when we’d purchase a property and not really do anything with it. Today, the cost is so much richer, if you don’t take full advantage of a sponsorship, you’re just wasting money.
“We’ve been more willing over the last few years to do multi-year deals if we see a good trend, consumer interest is high, and we can secure a good rate,” Ponturo says. “It helps our wholesalers if we can say, `This is what we’ll have in our arsenal for the next few years.’ ” It also helps keep the competition away from certain properties, he adds.
Anheuser-Busch last fall delved into tennis sponsorship with its Michelob Light brand backing the Pilot Pen Tennis tournament in New Haven, CT. The company was so pleased with the results it extended Michelob Light sponsorship of the event through 2002.
SINGING SENSATIONS
Sponsorship of concert tours and other non-sports entertainment properties is also on the rise, with companies moving beyond the standard “presented by” taglines to actually have a hand in planning and controlling the tours. San Francisco-based Levi Strauss & Co. worked with concert promoter SFX Entertainment last summer to select the acts and the venues for Levi’s Fuse ’99, a 45-city tour of up-and-coming acts. In 1998, the jeans maker had served as one of many sponsors for the well-known Lilith Fair, but decided that “owning the event and being able to shape it will maximize our exposure,” says Levi’s music sponsorship manager Joe Townsend.
– Sponsorship marketing rose 11.8 percent to $7.6 billion in 1999.
– Philip Morris fell from its spot as the largest corporate sponsor.
– An influx of cash-laden dot-coms is driving market growth and squeezing some traditional brands out of sponsorship positions.
– Sponsorship marketing is forecast to jump 14 percent to $8.7 billion in 2000.
