Hollis Sponsorship Bulletin

This summer’s big sports story was, undoubtedly, the London 2012 Olympic Games. But lurking in the background was a growing dispute about the way elite sport is currently funded.

With regard to the Olympics, the debate focused on whether brands like McDonalds and Coke should be allowed to associate themselves with such events. But running in parallel was a sustained attack on the alcohol industry by both the health lobby and the House of Commons Health Select Committee.

The assault began in early July, with the BMA arguing that the alcohol industry should be banned from sponsoring sport and music events to limit the promotion of its products to children and young adults. “Sponsorship,” said the BMA, “usually involves providing money to underwrite the event in return for having a logo prominently displayed or distributed on items such as caps and T-shirts and around the event venue. Children and adults become walking billboards when they wear these.”

The BMA’s intervention was in response to legislation being proposed by the Scottish Labour Party – which the BMA didn’t feel went far enough. But the debate intensified in late July when the House of Commons’ cross-party Health Committee also said tough measures could be required because the alcohol industry is still not doing enough to tackle the fact that there are around 6500 alcohol-related deaths a year in the UK.

While various issues were discussed, the most interesting comments came from committee chairman Stephen Dorrell, who said the industry was not being honest about the motivation for its advertising spend. In a damning observation, he said: “We don’t think the industry has a sufficiently well-developed sense of what it takes to trade responsibly.”

Dorrell’s point strikes right at the heart of the debate about alcohol advertising and sponsorship. While the industry argues that its marketing activity is purely about encouraging brand loyalty or brand switching, Dorrell’s committee shares the health lobby’s view that it also helps recruit new drinkers.

The Committee’s report couldn’t be clearer on this point, criticising the industry’s “implausible” argument that “advertising messages have no effect on public attitudes to alcohol or on consumption. Those involved in advertising alcoholic products should accept that their advertisements contain positive messages about their products and that these messages are supported by considerable economic power.”

The Portman Group, which represents the drinks industry on social responsibility issues, was “deeply disappointed” with the Committee’s conclusions. There are a couple of reasons for this. Firstly, it doesn’t believe that the science backs up Dorrell’s contention that there is a link between alcohol advertising and drinker recruitment. Secondly, it believes its members are working hard to tackle the problem identified by the health lobby – via various measures such as its responsible drinking campaign, the removal of alcohol branding from children’s replica sports kits and its unit reduction pledge, which will see a reduction in the alcohol content of leading brands, and the introduction of new lower alcohol products.

But what should sponsorship practitioners and rights holders maker of it all? After all, it’s not just the drinks industry that would be affected if the healthy lobby’s concerns translated into a sponsorship ban. For agencies, the knock-on effect of such an outcome would be the loss of key accounts – an awful thought in the midst of the current recession. Meanwhile at rights holders, it would mean the loss of revenue to hold events, pay wages and finance infrastructure developments.

Well there are two responses. The first is to make sure that they enforce best practice on their respective industries. By behaving proactively, they might encourage a more positive response from policy-makers, thus heading off a total ban.

To its credit, the European Sponsorship Association has started thinking along these lines. Conscious that there is also a threat to alcohol sponsorship at EU level, it has drawn up a set of guidelines for rights holders with regard to alcohol sponsorship.

There are too many measures to mention here, but the point of the guidelines is that they attempt to introduce a notion of best practice with regard to alcohol sponsorship. For example, rights holders are advised to “only allow sponsorship by alcohol companies where the audience is reasonably expected to be adults older than the legal purchase age” and to “encourage responsible consumption with their associated organisations, memberships, clubs, participants and supporters.” They should also “respect the choice of consumers not to drink alcohol and should never portray abstinence or moderation negatively.”

The second response is to start thinking about what life beyond alcohol sponsorship might look like. While there’s no guarantee that a ban (either total or partial) will come into force, prudent planning suggests that the industry should instigate a research-based assessment of alternative funding sources. Which brands might step into the breach if there is an alcohol ban? Which industrial categories have avoided sponsorship or been blocked from sponsorship because of the drinks sector’s pre-eminence?

Equally, the industry should start exploring whether relationships with the drinks industry can take other forms. Banning alcohol advertising and sponsorship won’t kill off all forms of commercial partnership (it is not for example a ban on stadia pouring rights or retail promotions). Some attempt should be made to see what kind of relationships would still be acceptable – and also whether the companies in question have other, non-alcohol, brands in their overall group portfolio. This is the kind of thing that the TV industry (via Thinkbox) or Radio (via RAB) would do – and have been doing for many years.

This kind of analysis is not just important for commercial reasons, but also because the sponsorship industry needs

to demonstrate its independence. It can’t allow itself to blindly follow vested interests. Nor can it turn a blind eye to the fact that there is widespread concern about alcohol abuse from a number of areas. Ireland, for example, is considering following the French with its own ban. And twelve of Australia’s national sporting organisations have just turned their backs on alcohol sponsorship by joining a government-funded programme.

None of this is to say that The Portman Group isn’t persuasive in some of its arguments, or that alcohol brands have not been good for sport. But a truly progressive sponsorship sector should be challenging its own presumptions and asking itself whether we are on the verge of an epochal shift in attitudes to alcohol. The Portman Group would like to see research in Loi Evin’s impact, so maybe ESA’s French contingent should consider how that might be done, adding thought leadership to the kind of post-ban commercial analysis advocated above.

What’s clear above all is that the sponsorship industry was smart enough to survive the loss of tobacco sponsorship. So it shouldn’t fear the upheaval caused by an alcohol ban. If anything, it might lead to a welcome shake-up in approach, led by dynamic agency thinking and a new wave of brands.

Alcohol Brands In Sports Sponsorship

The healthy lobby estimates drinks firms spend £800 million a year on marketing their products. Here are a few of the more high profile sponsors to be found in sport. Some also sponsor entertainment events, which could also be affected by a ban.

Budweiser: AB InBev’s lead brand is FIFA World Cup sponsor

Carling: Sponsor of Scottish FA and Scotland Team

Carlsberg: Euro 2012 sponsor and former Liverpool FC sponsor

Diageo: Sponsor of Ryder Cup via Johnnie Walker brand and Six Nations Rugby via Guinness

Heineken: Official Lager of London 2012, Rugby World Cup sponsor, sponsor of the Welsh rugby union team.

Marston’s: Official Beer of the England Cricket Team

Tennent’s: Celtic and Rangers sponsorship deal

What Car? has secured free newspaper Metro as Supermini Category Sponsor of the annual motoring awards – The What Car? Car of the Year Awards, to be held in London in January 2012.

Justin Lovric, Client Planning Manager and Director EcoVelocity, Metro commented “Our sponsorship of the 2011 What Car? Car of the Year Awards provided Metro with a fantastic presence in front of the most important and influential figures in the automotive industry to successfully launch EcoVelocity this year.” The deal was negotiated by Slingshot Sponsorship.

The Bulletin will not publish for the next two weeks.  Please continue to send in your news and comment to rosie@sponsorship-awards.co.uk  as we will produce a digest of information in late August.

The European Sponsorship Association (ESA) has voiced its disappointment at the recently released Health Committee Report on Alcohol. Self-regulation activity by rights holders has not been acknowledged by the report, it says, and therefore the report should not claim to give a complete picture of the alcohol sponsorship landscape.

ESA had submitted a paper to the Health Committee giving important background to the steps being taken by organisations involved in alcohol sponsorship with regard to responsible marketing activity. The submission demonstrated the considerable element of self-regulation being undertaken by the alcohol sponsorship industry (rights holders and sponsors alike).

A further concern of ESA’s is the fact that the principal focus of the report’s research and investigations was football sponsorship. By focussing predominantly on one sport, the report has failed to factor-in other sports and events, such as arts and culture, which also rely upon alcohol sponsorship.

According to the report, drinks brands spend up to £800 million per annum on advertising and sponsorship, considerably outspending the amount spent on alcohol awareness campaigns. The report has suggested that advertisers and sponsors should be required to fund a health education promotion.

The Committee has proposed that no event should be sponsored by an alcoholic product if more than ten percent of those attending are under 18 years of age. This proposition is rejected by ESA on two counts. Firstly, it feels that the ten percent threshold is wholly unworkable and unsupported by any evidence that this will have any positive effect on reducing alcohol-related harm.

ESA argues that imposing such a stringent test will be tantamount to a blanket ban on alcohol sponsorship, as it is inconceivable to accurately assess which events count less than ten percent of children amongst their audience. As a result, and in order to maintain the essential funding provided by their alcohol sponsors, clubs could seek to restrict access to anyone under the age of 18, thereby having a significant negative social impact.

The alcohol industry already works to a voluntary 25 percent rule, in accordance with the Portman Group Code of Practice, and ESA says that it has seen no evidence to suggest that this self-regulation guidance is not working.

Whilst recognising that the issue of alcohol-related harm is significant and serious, the association states that there is no evidence to support a causal link between alcohol sponsorship and alcohol-related harm. The key issues, ESA believes, should be education and sales/packaging/availability rather than sponsorship.

Whilst calls for restrictions and bans on alcohol sponsorship continue, ESA is keen to stress that any such ban would have a significant adverse cultural, social and economic impact and has submitted independent evidence to the Committee on this point.

So what exactly does it take for a sponsor to give up on a sports franchise? Well this year has given us a few meaty examples to chew over – culminating in Thierry Henry’s blatant handball for France vs the Republic of Ireland (which knocked the latter out of the FIFA World Cup).

The year kicked off with Kelloggs deciding to withdraw its support for swimming sensation Michael Phelps after he was caught smoking a cannabis pipe. We then saw ING quit the Renault Formula One team over the infamous instruction for Nelson Piquet Jr to crash his car. By contrast, we’ve seen rugby club Harlequins manage to avoid any serious fallout from the Bloodgate scandal. And now Gillette has decided to stand by Thierry Henry, who is one of the company’s top star endorsement properties.

At first sight, there’s no obvious unifying theme here. But let’s dig a little deeper and see what we can uncover. Let’s start with Kelloggs and Phelps. Here the message is that recreational drugs and family brands don’t mix. That point is further underlined by the way in which brands like H&M withdrew support from Kate Moss over her use of cocaine.

This taboo regarding recreational drugs doesn’t, however, extend to adult brands. It’s notable, for example, that Speedo, Omega, Visa, Mazda and Pure Sports all rallied round Phelps. Omega even went as far as to call it “a non-issue” – which was more feisty than the brand needed to be when you consider Phelps felt compelled to say sorry.

The ING F1 example is not so helpful in developing a viewpoint – since the company was already poised to quit the Renault team just a few races later (at the end of the 2009 season). Far more interesting would have been if the scandal had occurred just after ING signed up with the team. Such was the severity of the offence that ING would probably still have pulled out – but the decision to do so would unquestionably have been a much tougher call.

And what of the Harlequins and Henry stories? Well the message here seems to be that sponsors understand the pressures that make teams and stars cheat – and are willing to forgive them if they show sufficient levels of contrition (the one stand-out exception being performance-enhancing drugs). Harlequins were mortified to discover the extent of the bloodgate scandal while Henry has not flinched from facing the press. That was enough to mollify their sponsors.

Still, such observations don’t really get us to the nub of sponsor decision-making – because they assume the final judgment by the brand owner is partly based on ethics, as though sponsors are a kind of offended surrogate parent. 

In truth, the issue of morality is a distraction. Sometimes morality and commerce seem to go hand in hand in sports sponsorship. But the ultimate decision whether to stay or go is almost invariably commercial – with only the most extreme forms of behaviour likely to lead to withdrawal on moral grounds. Assuming the conduct in question is not criminal (eg match-fixing), companies make a calculated decision based on the likely impact on brand equity and sales – nothing more. For all of the talk about fairplay, cheating is not regarded as sufficiently serious unless it involves performance drugs. And the reason that this stands alone is because sponsors need to be seen to stand side by side with governing bodies as they wage war on drugs.

This shouldn’t surprise us. After all, brand custodians are answerable in the final analysis to their shareholders. It’s not for them to make a decision that is likely to harm ROI. 

Consider Thierry Henry once more. If Gillette had dropped the French captain, it would have pleased Ireland but cost Gillette the large and lucrative French market. That was never going to happen. Again, it might have been more interesting if roles had been reversed – and Gillette had found itself having to appease an angry French audience.

How sponsorship is being used to transform the images of traditional brands, turning consumer perceptions on their head, will be a lead theme at the European Sponsorship Association’s Insights Forum in London on the 13^th October.

Keynote speakers from the Royal Opera House and Deloitte will discuss how their award-winning Deloitte Ignite Festival has brought contemporary and unconventional entertainment to thousands of people who would not normally relate to an opera company. Both partners were keen to change traditional thinking about their organisations and focus together on a shared goal of widening the access to the arts.

The Insights forum, part of the annual ESA’s Knowledge programme, will be held at the offices of Osborne Clarke, One London Wall, London EC2Y 5EB. Prices start at £100 /€125 (plus VAT). To book a place contact ESA on +44 (0) 208 390 3311.

With the debate over the pros and cons of alcohol sponsorship rarely out of the industry and mainstream news, the European Sponsorship Association (ESA) continues to take an active role in consulting with and representing the industry at local and European government level. It has recently reported the findings of its large-scale survey of rights holders to the EC, and the industry is now awaiting to hear in the autumn from the Director General for Health and Consumers, who has been taking evidence and consulting on all sides of the debate.

The big question, of course, is whether the issues of alcohol sponsorship and binge drinking are inter-related, and whether the industry can survive calls for external regulation. Is it facing European-wide legislative control, as happened with tobacco marketing, or will responsible marketing, codes of practice and co-operation with local governments ensure its survival?

Last year, the beer sector contributed some US$565m to the total global sponsorship investment pot, ranking it the fourth highest sponsoring industry in terms of investment (source, TWSM). Indeed, the beer brand, Budweiser was ranked the fifth largest sponsor in sponsorship commitment, pouring a reported US$131,250,000 investment into its sponsored activities. This positioned it above brands including BP, Emirates, Sony and O2.

Unsurprisingly, with sponsorship investments of these proportions, the alcohol industry has been keen to protect its position and investments. At a time when latest figures show that 24% of adults in England are classified hazardous drinkers and the cost of alcohol related harm to the NHS is £2.7 million, brands have taken significant voluntary steps to promote responsible drinking, and in some instances, to use their sponsorships as a vehicle for conveying messages of sensible drinking.

For example, for any new football team sponsorship deals, alcohol branding on children’s replica shirts is now not allowed by the drinks body, The Portman Group. Indeed, some brands were a step ahead of the timing of such prohibitions, with Carling, sponsor of both Celtic and Rangers offering children’s replica shirts without branding before the restrictions were implemented.

Alcohol brands have also been active in joining with the UK Government on social sponsorship campaigns. For example, the UK Dept of Transport’s THINK! campaign joined with Bacardi Martini, to support the brand’s PR link, using Michael Schumacher as an ambassador, with a joint promotion of responsible drinking at Grand Prix.

Elsewhere, Carlsberg was seen to use its UEFA football sponsorship to convey a responsible drinking message: ‘Carlsberg supports fair play on and off the pitch. Please drink responsibly’ within stadia and on fan park cups. Tennants, the owners of the T in the Park music festival, gives half of its signage free to the Drinkaware Trust, as part of their social responsibility programme.

But will these voluntary steps be enough to stave off legislative intervention? The EC is looking very closely at the issue through its Alcohol and Health Forum, the objectives of which include the creation of an action plan to protect children and young people, investigation into scientific evidence, and to consider self-regulation as a means to increase responsible commercial alcohol communication and sales.

As part of ESA’s commitment to the Forum, and in conjunction with Comperio Research, its wide-reaching survey of European rights-holders was conducted to gain insight into practice and attitudes towards alcohol sponsorship. ESA was keen to discover the extent to which rights holders hold concerns over alcohol sponsorship, together with the extent of any measures, voluntary or otherwise, in place to regulate such activity and protect these important revenue streams.

The results clearly indicate that many rights holders have their own internal procedures to set the nature and extent of their partnerships with alcohol brands, and do not wish for additional legislative control. Many assess alcohol sponsorship on a case-by-case basis, with some banning it along the lines of unsuitability or the target age of their audience.

The majority of respondents indicated that they would prefer to self-regulate their partnerships under guidelines by an industry body, such as the European Sponsorship Association, rather than an external body unrelated to the marketing sector or through legislation.

Restrictions on alcohol sponsorship, or more critically, a blanket ban would see many rights-holders struggle to fill the void left by alcohol brands’ investments. Indeed, around half of the organisations surveyed, said they would be affected if legal restrictions were imposed upon alcohol sponsorships; significantly more for those with current alcohol sponsorship deals.

As Jennifer Davies, Development Director of the Philharmonia Orchestra puts it: “For UK arts organisations that are experiencing diminishing subsidy and a critical reliance on a limited pool of private donors, alcohol sponsorships can make the difference between a successful fundraising campaign, or one that does not cover its costs. And private fundraising is key to an arts organisation’s survival.”

So, what does the future hold for alcohol sponsorship? Can the drinks brands and the rights-holders who rely upon their support, steer a mutually responsible path to ensure its survival free of legislative control? Will the current approach of the EC, which is encouraging self-regulation to see if this helps address the problem, prevail, or will national governments decide to impose their own legislative restrictions?

The industry, in particular the rights holders, as well as the sponsors themselves, need to be vigilant in ensuring that alcohol sponsorships are professionally managed. Not only must they guarantee that no promotions are made to under 18 year olds and that all advertising, giveaways, sales and hospitality are managed to the highest level of control, but they must also take positive steps to promote responsible drinking. Abiding by voluntary codes of practice and imposing their own self-regulations, and by managing events so that there are no alcohol-related incidents, is the best way that the industry can demonstrate their awareness of the issue and their responsibility towards it.

Helen Day, Head of European Policy, ESA

[1] Statistics on Alcohol, England, 2009, The Health and Social Care Information Centre

For further information, or to find out more about ESA’s Policy Group, please contact ESA via office@sponsorship.org or telephone +44 (0) 208 390 3311, or contact Helen Day at helenday@sponsorship.org

Earlier this spring, Ofcom, the UK communications regulator, published a review of broadcast sponsorship having monitored over 60 broadcast sponsorship campaigns. Various television programmes, including Big Brother, The X Factor and The Alan Titchmarsh Show, were been found to have breached Ofcom’s sponsorship rules.

· What prompted the review?

An apparent increase in the amount of information about sponsors’ products/services included in some sponsorship credits. Most campaigns were found to be compliant, but a number of broadcasters of major programmes, with major sponsors, were considered to be in breach of Ofcom’s Broadcasting Code.

· So what does Ofcom’s Code say?

Rule 9.13 of the Code provides that:

“Sponsorship must be clearly separated from advertising. Sponsor credits must not contain advertising messages or calls to action. In particular, credits must not encourage the purchase or rental of the products or services of the sponsor or a third party.”

The reason for the prohibition is that the Television Without Frontiers Directive, from which the Code is derived, limits the amount of advertising a broadcaster can transmit and requires that advertising messages are kept separate from programmes.

· What is permitted?

References to the products and services of a sponsor in sponsor credits are permitted under the Code on the basis that they can help identify the sponsor or help create that link or association between the sponsor and the sponsored content.

Guidance issued by the European Commission on the interpretation of the Directive states that such references may only be made for the “sole purpose” of identifying the sponsor and making clear the link between the programme and the sponsor.

· Sponsorship credits or advertising – what’s the difference?

There is no clear dividing line between where sponsorship credits end, and advertising begins. Whether a sponsorship credit is actually advertising will depend on a number of factors. Ofcom will take into account factors such as:

- What is the primary focus of the credits – the sponsorship arrangement itself or the sponsor’s product or service?

- What information about the sponsor’s products/services is included in the credits? Does it go beyond simply helping to identify the sponsor?

- Is the viewer encouraged to contact the sponsor to make a purchase (as opposed to simply providing details of the sponsor’s website)?

· Where did the broadcasters go wrong?

From the responses given by broadcasters during Ofcom’s investigation, it seems that some broadcasters took the view that they had seen similar content being broadcast which had not resulted in regulatory intervention and had thus assumed that it was permitted. However, Ofcom has made clear that compliance decisions made by broadcasters should be based only on the Code, not on assumptions based on material previously broadcast.

· What did Ofcom consider unacceptable?

Some examples from the findings in the recent review will help in assessing whether current sponsorship credits are acceptable.

Virgin Media‘s sponsorship of Big Brother including the following voiceovers:

“Ellie and Ruth use their Virgin mobiles to get perks at V Festival without having to flash a roadie like usual”.

“Len’s fibre optic cable is just like his women, fast and easy”.

Reference to being able to get “perks at the V Festival” was considered to be a promotional reference to the benefits of being a Virgin Mobile customer and the use of promotional language (“fast and easy”) went beyond a brief description of Virgin’s business and amounted to advertising messages.

The credits for Carphone Warehouse‘s sponsorship of X Factor included the following messages:

“The new Nokia 5310 comes with music – exclusively on pay-as-you-go”

“We’ve got a broadband package to suit everyone”

Ofcom considered that these statements referred to positive attributes of Carphone Warehouse’s products, and as such went beyond simply helping to identify the sponsor, and were in fact advertising messages to promote particular products.

Benecol’s sponsorship credits of The Alan Titchmarsh Show included the following voiceover:

“some things you can’t control but at least you can control your cholesterol. Sponsored by Benecol”

and the caption

“at least you can control your cholesterol. Alan Titchmarsh show sponsored by Benecol”.

The credits also contained animated pack shots of the sponsor’s products, on which the printed claim “Proven to reduce cholesterol” was clearly visible. Ofcom’s view was that each of the claims that suggested the product was effective in lowering cholesterol, despite some being factual statements, in this context also amounted to advertising messages.

· What is the upshot of all this?

Although Ofcom has the power to impose significant fines on broadcasters, no fines have been imposed following the recent review. However, Ofcom intends to repeat its monitoring exercise of sponsorship campaigns this summer and has said that any credits found to be in breach of the Code may be considered for further regulatory action. As a result, sponsors and broadcasters may want to review current TV sponsorship credits to ensure that they do not contain advertising messages or references to products and services which go beyond what is permitted.

· Isn’t this the broadcasters’ problem?

While sponsors are not directly subject to the Code, the impact of the Ofcom review is clear: the content of many sponsorship credits will now have to change, something which both sponsors and broadcasters alike must address.

· What next?

Ofcom has said it intends to provide further guidance in due course on the interpretation of the rules on sponsorship, a move which will hopefully provide greater certainty on this issue. The Audiovisual Media Services Directive, set to be implemented by the end of 2009, will also be of interest to both broadcasters and sponsors. This is an issue worth keeping an eye out for over the coming months.

Stuart Grey and John Mayes are Associates in the Intellectual Property, Technology and Sports Group at the London office of international law firm K&L Gates LLP (www.klgates.com – +44 (0) 20 7648 9000).

This article is for information purposes only and does not contain or convey legal advice. The information in this article should not be used or relied upon with regard to any particular facts or circumstances without first consulting a lawyer.

To suggest that sports sponsorship is just a corporate jolly is like thinking that marriage is all about a white wedding.  Both assumptions merely scratch the surface and, although an important aspect to some people, neither tells the whole story.

Corporate entertainment at sporting events has come in for some criticism lately, especially when taxpayers think their investments are being wasted on what they see as unnecessary extravagance. And it’s true to say that budgets are being scrutinised on entertainment expenditure – as they are on all marketing activities – in the midst of these poor economic conditions.

But, in the same way as advertising will continue, sponsorship, in its totality, will also continue – and this includes corporate hospitality. 

To understand the reasons for this, consumers (or, rather, taxpayers) need to understand the importance of marketing and why sponsorship has become such a powerful marketing tool.

In an age of greater consumer choice and media proliferation, it is important that brands engage with consumers and create meaningful relationships.  The way in which O2 do this through their partnership with AEG at The O2 is a prime example of a brand which understands that it must nurture its consumers and make them love the brand.  O2 customers get access to a number of exclusive opportunities at the venue such as priority ticketing and queuing – opportunities they don’t get with any other mobile network.  Once the connection has been made, it is carried on into other areas in which the consumer shows an interest.  O2’s research shows that this approach is working very well and it’s an approach that the brand takes into each of its sponsorships – the England rugby team being a prime example.

Sponsorship is increasingly chosen because, in addition to consumer engagement, it offers brands a number of other marketing opportunities.  For example, sponsorship can promote brand awareness, provide sales promotion options, engage with employees, promote social and environmental credentials, create extensive media coverage, promote brand messages – the list goes on.

For businesses wanting to promote themselves and their products to other businesses (B2B), sponsorship which includes a corporate hospitality element provides an effective platform.  Making the right connections can be difficult in today’s non-stop technology-driven workplace.  An invitation to a sporting or arts event which research has proven is of interest to the recipient is much more likely to achieve success than a request for a business meeting.  And a meaningful relationship is much more likely to be built in a relaxed, informal atmosphere away from the office environment.  Hence the popularity, growth and success of corporate entertainment.

Quite rightly, taxpayers want to feel confident that there is some accountability for such entertainment – and they are not the only ones.  For some time now, businesses have recognised that return on their investment (ROI) needs to be calculated to ensure that budgets are being well spent in this area.

A leading stock-broking firm believes that entertaining clients in its box at Old Trafford is vitally important and a highly cost-effective component of their marketing and public relations activities. The expenditure is highly targeted and focused. They know exactly upon whom they are spending their money and they assess the success of every event, believing there is probably no other medium about which they can say that. They conclude that while avoiding excess and extravagance, they see entertaining in the right environment as likely to be the most successful way of building lasting relationships.

The European Sponsorship Association (ESA) is committed to promoting best practice within the sponsorship industry.  As part of this commitment it provides guidance to its members on how best to ensure Return on Investment (ROI) when making sponsorship investments.  ESA encourages its members to be fully accountable in meeting marketing objectives through sponsorship.

As regards corporate hospitality, there is no recognised standard measurement as every company has different objectives.  But there is a fairly universal measurement used by the majority of sponsoring companies today by which expenditure is matched against business return to ensure value for money.

Such measurements will normally include an internal application process for tickets to an event through which invitees are named and ranked in existing or potential business terms.  Some companies ask employees to state how much additional business can be expected as a result of the invitation.  Feedback questionnaires following an event are commonplace, together with on-going monitoring of the relationship.  One FIFA World Cup sponsor does not allow employees to ask business guests to the event if positive results have not been forthcoming from previous invitations.

In other words, and as in all aspects of business activity, corporate hospitality has to be accountable and seen as value for money. It needs to have a ‘business case’ for the expenditure and a disciplined approach to post-event evaluation.

There are also instances where additional income is not the objective, at least not the immediate, short-term objective.  An example could be a situation where a company has an image problem – maybe an involvement in a scandal of some sort.  The company may wish to entertain certain representatives from the media with the aim of putting across its version of events. Another example could have a very simple objective of wishing to introduce the new managing director to key clients. Neither of these illustrations have a monetary objective but they can nonetheless be an extremely good use of money. 

Taxpayers can be more relaxed over companies in which they have vested interests and which engage in sponsorships, knowing that there is some accountability being applied.  More than can be said for some business practices of late.  

For further information, contact the ESA Office on +44 (0) 208 390 3311 or via

office@sponsorship.org. To find out more about ESA, visit  www.sponsorship.org

The decision to hire external resources to assist with delivering successful sponsorship programmes should be treated with no less rigour than any other service. 

For many, however, there is some apprehension about how to make the best selection as, like many other marketing services, quality suppliers can only be accurately measured based on results for a specific brand, often long after the agency selection process has been completed. 

Whilst past history may be an indicator, as with financial services, it is not necessarily a predictor of future success.  How then do you structure a selection process to maximise the chance that you will pick the right partner?

ESA has consulted with a number of marketing-related associations, including the Incorporated Society of British Advertisers and the Chartered Institute of Marketing.  Having created a draft process, ESA then requested input from a number of members to ensure that the final guidelines were tailored specifically to the needs and practices of the sponsorship industry.  It has therefore identified several steps that can be taken to avoid the worst pitfalls and increase the likelihood of a favourable outcome.

Whilst at first glance the agency selection process may seem long and resource-intensive, adopting a systematic approach to selecting external support will pay dividends in the long term.  That said, the extent to which the process is implemented in full will be a function of the value and priority put on the required service delivery.  Where the service requirements are high value with significant business impact, this process will enable the sponsor to have the best possible outcomes.  Of course, where the service requirement is limited in nature, it is possible to adopt a pragmatic approach to implementing the process. 

A full guidelines document is available for download from the ESA website www.sponsorship.org .  This covers the business case for employing external resources, identifying needs and gaining buy-in from all stakeholders before writing the brief and establishing agency selection criteria.  It then goes on to discuss methods for researching the market and selection methodologies.    Key considerations for running successful pitches are addressed including:

·        Number of candidates

·        Paying for pitches

·        Incumbent agencies

·        Preferred suppliers

·        Timetables

·        Meetings and minute taking

·        Access to members of the Decision Making Unit

·        Pitch day

·        Online procurement

·        Final negotiations

·        Contracts

Finally, there are some thoughts on how to manage the post-selection period, including informing unsuccessful parties and issuing press releases. 

Above all, parties should retain a sense of perspective.  Most clients choose the firm with whom they feel the best emotional fit and therefore it is critical that the selection process leaves enough time for key personnel on both sides to get to know each other. Ultimately, these relationships may prove invaluable at a later