Sponsorships: It’s all about the ROI
For all we hear about technological change in the entertainment sector, nothing has changed more in the last 10 years than attitudes towards sponsorships. And that's made them a touchy issue, writes Dan McEwen.
Live entertainment and sponsorships have always been a great fit. So great in fact that IEG, a Chicago-based sponsorship consultancy, predicts that this year alone, an A-list of the world's most recognisable consumer brands will shell out just over US$50 billion – more than the entire budget of some Third World countries – for entertainment sponsorships.
Moreover, within the live entertainment spectrum, theme parks have proven particularly adroit at attracting sponsorship dollars. And it's not hard to see why. Because consumption is part of the fun at theme parks, they offer the ideal environment to launch, test or extend products or brands, a fact confirmed by the 2010 edition of IEG's annual Sponsorship Report. It cited "access to large numbers of consumers in an environment that offers time and opportunity for personal connections" as the number one reason why sponsors like theme parks.
Naturally, park operators agree.
"There's been a massive increase in promotions and offers in recent years so marketers had to find new ways to get the public's attention when promoting a product or brand," explains Dominik Seitz, spokesman for Germany's Europa- Park. "Europa-Park is an emotional setting where clients and customers are in a relaxed mood. Messages can be transferred much easier than in the customer's daily routine."
That's even truer for Merlin Entertainments, the world's second largest attraction operator with 46 million visiting its 88 attractions annually.
"We operate very high quality, high traffic, iconic attractions which offer unique opportunities for direct engagement with visitors," says Andy Davies, Merlin Entertainments' commercial director. He credits guests' increasing usage of social media for expanding their attractions' ability to engage guests face to face, "thus reaching both a greater number of people and intensifying the overall experience."
There's something else though, something new. Call it a sign of the times but today's sponsorships offer their clients a bonus beyond dollar value – credibility.
Aided and abetted by a punch-drunk global economy and endless revelations of corporate malfeasance, public trust in Big Business and Big Brands has plummeted to record lows. Yet, amid this pandemic of pessimism, Nielsen Research, the global pollsters, reports that consumers – especially the Twitter generation – consistently rate sponsorships as their most trusted form of purchased advertising.
So… the right demographics, the right environments and some 'street cred' to boot; with all that going for them, theme parks should have no problem reeling in sponsors, right? Wrong. In 2009, spending on entertainment sponsorships in North America declined for the first time. Three years later, it's just catching up. Nor can the big gains made in spending in Asia and South America hide the fact that the winds of change have been blowing across the sponsorship landscape for some time now, leaving little of the old status quo standing.
"Sponsorship is in the throws of moving from a branding tactic into a multi-channel sales effort," explains David Rachell, president of SponsorPark, an online matchmaking service for sponsors and attractions. "It's well-known that entertainment venues have the capacity of delivering large numbers of people for sampling and creating brand experiences. But, that's not all a sponsor is interested in. Sponsors are keen on integrating into the venue. The more seamless the sponsor experience with the venue experience, the stronger the possibility for brand connection with guests. We're seeing that sponsors are tightening up their sponsorship portfolio with fewer sponsors, but strengthening the relationships they do have through vertical integration."
Vertical integration? These are buzzwords that have become bywords among more savvy sponsors.
"A decade ago, many brands enjoyed static signage, sampling and brand association with Six Flags," recall David McKillips, senior vice-president of corporate alliances at Six Flags. "Today, brands are much more sophisticated when it comes to the experience expected with a sponsorship of a major entertainment property. Each partner has their own factors of success, which can range from the total number of in-park impressions to in-park sales of a specific product to the promotional value generated using the Six Flags parks in an in-market promotion."
It's this sophistication that's forcing operators to create what David Rachell describes as "opportunities that connect with all the channels for sponsors to use," especially those that can extend a sponsorship beyond the front gate. He urges park operators to base their relationships with sponsors not on price but on value; "how your venue offers unique opportunities that can be hard to duplicate and that allow the attraction to be part of the sponsor's genetic make-up." Do that, he says, and the revenues will follow.
That's a message Rachell says most of the major parks at least seem to have received loud and clear. At Six Flags for example, they built the industry's first formal media network inside a national theme park property. A truly multi-media network, it includes a closed-circuit television network, with more than 500 televisions featuring original content and advertising in ride lines, restaurants and retail shops.
"We've also added digital billboards and menu boards, scrolling signage, attraction integration and Cool Media – interactive static signage that mists and illuminates – all of which helps partners customise their messages to reach our millions of theme park goers," enthuses David McKillips, Six Flags' senior vice- president of corporate alliances. "We're working on programmes that will allow guests to watch Six Flags TV and then interact with on-air brand games or experiences, download it to their phone or post it to a social networking site, all while waiting for their next world-class roller coaster."
Note the use of the word partners rather than sponsors, another reflection of the new attitude among operators. But if the heat is on attractions to come up with more innovative ideas for achieving their partners' goals, there's even more pressure on them to prove those ideas are actually working. It seems clients are getting downright uppity about another term new to the sponsorship vernacular – "evaluation metrics."
Hands up those who can remember when attractions viewed sponsorships as a handout; a company pays for a sponsorship package with a defined set of benefits. "That paradigm has changed significantly," observes William Chipps, the senior author of the IEG Sponsorship Survey. "Now it's all about ROI. Companies are increasingly asking themselves the question, "We're spending five-or six-figures on this sponsorship. What kind of return are we getting? That's forced a growing number of companies to establish metrics and guidelines on how they will measure return."
Sure enough, IEG's surveys reveal that on the assumption that if you can't prove a sponsorship is working for your brand, it probably isn't, nearly 60 per cent of sponsors would like to see better measurement tools. Good for them, not so good for operators because right away there are two problems to solve.
First, there are no accepted units of measurement. For example, simply counting exposures, which works in advertising, just doesn't cut it anymore.
"The days of valuing exposure are over; the days of valuing 'engagement' will be with us for a long time to come," declares Jed Pearsall, president of Performance Research of Newport, Rhode Island, which bills itself as the world leader in consumer-based sponsorship evaluation.
Then, too, there's the question of who pays to get all this measuring done. Pearsall, writing in the February 2010 issue of the Journal of Sponsorship published by the European Sponsorship Association, pointed out that as recently as 2009, some 73 per cent of attraction operators claimed they couldn't afford to establish measurement standards. Pearsall argues they can't afford not to, if only because "agreeing on the appropriate metrics is essential if measurement is to become a tool for improving performance."
Over at IEG, William Chipps couldn't agree more. "Operators need to take an active role in making sure a sponsorship is successful. That includes taking an active role in the measurement process."
Mind you, Chipps and his colleagues also recommend that parks establish their own criteria and goals for selecting sponsorship candidates and here too, the choices should not be made strictly on the basis of who can write the biggest cheques. Jed Pearsall, for example, insists that the most valuable sponsor an attraction can have is the one that "adds to the value of the event for fans and attendees. Anything a sponsor does to increase enjoyment increases satisfaction and retention of those guests."
That's also the approach they take at Merlin parks, according to Andy Davies. "The sponsor must enhance the visitor experience and must complement our own brand and own activity. The challenge we present to our potential sponsorship partners is to do something that's unique to Merlin, or with a unique Merlin twist, not something visitors can find anywhere!"
"Identify the most important priority for your organisation," advises David McKillips at Six Flags, "and make that the focus of your efforts. Sponsorships can be a great asset to gain media or promotional exposure or even generate revenue for the value you are proposing, but they are a two-way street, so before you start the negotiation process, it's imperative to be candid about your priorities and your sponsor will respond likewise."
Now, for those who are tempted to dismiss all this talk of integrating and evaluating as taking up a whole lot of time and money – which it does by the way – you might want to consider this tidbit. Research shows that it is six times more expensive to secure a new sponsor than to keep an old one.