Are you ready for change? You had better be. It is here to stay!! Change is all around us and happening at lightning speed. Our sponsorship industry is no exception. Those who fail to recognize the importance of change will die from their reluctance to make change. We need to embrace change and move with it. The real winners will be those who lead change.
With the first quarter of 2018 pretty much behind us, I looked at what I find to be the five biggest developing or ongoing change factors affecting the sponsorship industry day to day.
- The new world ensures that a sponsorship agreement is no longer between just the sponsor and the property. It is a three-way deal now. It has to be. It is called the Trinity of Sponsorship. Today, the ROI must be for the sponsors—they need to benefit from a business perspective. And the property needs to generate revenue to operate and build compelling programs and products for their donors/customers/fans. Last but definitely not least, the fan/donor/customer has to believe in both the sponsor and the property, and feel that the deal is authentic, real, and provides value to them as the donor/fan/customer. Without this three-way approval, deals will crumble.
- Our historic properties and sponsors are changing. There are new kids in the field and they play differently. Those who thought e-sports were for the geeks and techno heads are wrong. E-Sports as a property is eating your lunch. They have online and real-life audiences beyond any expectations—and sponsors have recognized it. The IOC has had to adjust how it engages sponsorship and sponsors. McDonalds is gone; Intel is in. Airbnb is investing heavily in sponsorship—more so than the traditional accommodation providers ever did. Understand there is a whole new group of players in sponsorship and you had better take notice!
- It is not just the players that are changing. So are the programs and organizations. The smart brands and properties understand that products have life cycles. Programs have life cycles. If you cannot innovate and create, you will get lost in the dust. The Canadian Breast Cancer Foundation, curator of the CIBC Run for the Cure, is gone. They have been eaten up by the Canadian Cancer Society. Here are two insightful boards which saw that the future could not and should not have both organizations. They did the right thing and brought them together. It took guts, but it was the right thing to do. Is your event experiencing declining participation and revenue? Perhaps it is time to stop trying to put lipstick on a pig, kill the event, and create a new one. I love the quote “Continuous improvement of the candle did not give us electricity.”
- Sponsors are much more cautious today about where they are invest their sponsorship dollars. Just because your team is winning, your charity is making a difference in the lives of others, or you have an outstanding arts production or terrific festival does not mean you get money. Brands now need to ensure the alignment is there. Is the investment authentic or are you pink/green washing? Because today, because of the Trinity of Sponsorship, if it is not authentic or the fan/donors don’t like the brand relationship, they will demolish it. Brands don’t and can’t live with that. They need more due diligence. They need to be more cautious and take less risk. If it is not authentic and specifically designed for the sponsor’s needs, it won’t happen. This is a big change from just five years ago when money flowed more freely and “authentic” typically was not in the checklist for making a sponsorship.
- There is a clear shift from rights fee dollars to activation dollars. Sponsors know their ROI is coming from the activation of their investments. They also know that, without the associated rights to a property, they typically cannot activate well to achieve maximum ROI. So the brands are working with properties to shrink rights fee dollars and increase activation dollars. But this has to work for all three elements of the Trinity of Sponsorship, so the activations have to provide real value to the fans/clients/donors and the activations have to benefit the property by increasing traffic to the event or product.
Remember, if your senior leadership, front-line staff, and board room executives cannot be part of change for the better, they need to be replaced. If they don’t change, they must be replaced by those who can lead change or your organization will die a slow and painful death.
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