Sponsorship spending set to rise in US

01 February 2010

CHICAGO: Spending on sponsorship will increase in the US this year, after marketers cut back on this area of activity in 2009, IEG, the specialist consultancy, has predicted.

IEG presented its predictions at a "webinar" organised by the American Marketing Association, the industry body, which is covered in full by Geoffrey Precourt, Warc's US Editor, here.

According to the company, expenditure through this channel will rise by 3.4% in 2010, to $17.1 billion (€12.2bn; £10.1bn), as deals linked to the Olympics entice more brands to adopt this approach.

This expansion will follow on from a decline of 0.6% last year, to $16.5bn, as the economic downturn caused advertisers to rein in their sponsorship budgets for the first time in decades.

Dan Kowitz, vice president of IEG Sponsorship Consulting, said "after 30 years tracking, for the first time we're showing a slight decline in spending."

"A lot of sports deals are going away," he added, a trend that is understandable in the current financial climate, "when marketers are not likely to get into new and different kinds of sponsorship."

Procter & Gamble, the world's biggest advertiser, signed deals with the US Olympic teams and the NFL last year, but this development seemed to be running slightly counter to the overall trend.

At present, sporting events account for 68% of investment in this field, but this figure has declined by 90% compared with 20 years ago.

By contrast, funding for not-for-profit and cause-related initiatives has improved by 16% in the last three years, to a share of 9% overall.

This segment should grow by a further 6.1% in 2010, as corporations seek to improve popular perceptions at a time when many consumers have become increasingly mistrustful of big business.

Coca-Cola, the soft drinks giant, has proved particularly successful in tying its brand to this kind of programme, having recently forged an alliance with the World Wildlife Federation to encourage sustainable water use.

Kowitz suggested that cause-related sponsorship is "one of the most important subject matters if you're interested in growing product brands, driving sales, or grabbing affinity loyalty."

However, it also requires working with organisations boasting strong ethical credentials, in order to impart the requisite degree of "authenticity" to these efforts, he added.

To read Geoffrey Precout's coverage of the AMA's "webinar" on sponsorship, click here.

Data sourced from Warc