Ben Cronin, Global Lead of Network Client Solutions, Publicis Media Sport & Entertainment, explains why financial brands are rethinking their sponsorship game plan.
The news that Investec is withdrawing from its long-term partnership with English Test Cricket brings yet another high-profile sports sponsorship opportunity back into the marketplace. It’s also a further signal that the financial services sector is rethinking its approach to sports sponsorship.
The finance industries have been rich pickings for some time in sponsorship sales and you don’t have to look that far back to a time when the title sponsors of almost all the major sporting properties in the UK were sponsored by brands in this sector.
Rugby and cricket especially have been beneficiaries of the competition between brands, seeing incomes from sponsorship increase as brands have vied for a slice of attention within the minds of their customers in sports where those customers have a higher than average interest.
The various rights-holders have understandably taken full advantage, splitting rights packages across their competitions and properties (although I have in the past wondered how many of Deutsche Bank’s guests at Lord’s forget who they’re there with as they sit opposite the JP Morgan Media Centre during an Investec Test Match).
But it appears now that the paradigm shift has really begun to take hold. But why? There’s clearly more than one single influence.
Banking and the Bribery Act
A repositioning of the RBS and NatWest brands in the UK has been a trigger point in this latest cricket news. Barclays’ downsized partnership with the Premier League reflected an inability of the parties being to find acceptable renewal terms, leading to new partnership model for the Premier League. But there’s something else too, hinted at in the reasons finance brands have traditionally embarked on big ticket sponsorships.
Historically, the stated objectives of sponsor brands have shared much of the same language. They talk about using sports platforms to strengthen brand awareness, demonstrate shared values, and connect the interests their customers care about and stakeholder engagement.
But it’s the coded language wrapped up in these last elements and the biting impact of the Bribery Act 2010 (which actually took effect in 2011) and, more latterly, the guidance from the Financial Conduct Authority on inducements specifically to financial advisors that, for me, has played a significant role.
Speak to any senior employee in the finance sector and it’s clear that after an initial period of adjustment in understanding the impact of the guidance and where it should apply, we are now in a time where employees are very conscious of their responsibilities towards compliance and at a corporate level this is being borne out.
The rationale behind a sponsorship decision has rarely been the sole preserve of the marketing department. The rubber stamp provided by decision-makers sitting outside marketing has regularly leaned on a premise that those decision-makers as well as many of their colleagues, employees and customers had seen (at least anecdotal) benefit from the large levels of corporate hospitality these deals have typically included.
But in this new era the rubber stamp is not so easily given. Fewer stakeholders are accepting or being offered hospitality at the same level they used to. The importance of corporate entertaining in the overall assessment of a sponsorship has thus reduced, bringing the importance of the other marketing benefits further to the fore. And it is in these more traditional marketing aspects such as brand positioning and visibility, where the prominence of competitor brands is naturally more acutely felt and as evidenced by Investec’s decision to withdraw from the Test match arena now that Natwest will also be there.
Letting Investec go
The ECB will surely have done its maths in working out the risk of the letting Investec go. Depending on how payments were split it may even be guardedly satisfied that, in a market of generally continuing growth, a flat per annum fee can seem pretty low once in the sunset years of such a long-term deal. They will certainly be encouraged by the position of other international cricket teams with the major teams in Australia, India, South Africa and Pakistan all attracting a much greater share of partners from retail / FMCG.
Nevertheless, to my mind the impact is much wider. Rights holders selling to financial brands can no longer be confident of C‑Suite approval on the basis of the many years of positive experience these gentlemen (mostly) have enjoyed.
There is still life in the financial services market, as the re-signing of Natwest by ECB last year and Old Mutual Wealth and Standard Life respectively, stepping into the Rugby Autumn Internationals and British and Irish Lions headline spots have shown. But gone are the days when the sector fought tooth and nail against itself in order to get the headline deal that the brand could then show off in person to its myriad of stakeholders.
Some in the sponsorship industry will lament those times, not least because of the additional importance it places on building strong rationale for the non-hospitality elements of a sponsorship deal. But in reality they are reducing in number and I, for one, welcome any trend that increases the rigour with which rights holders demonstrate and prove their value to sponsoring brands.
And whilst this may see a depression in perceived value from the finance sector itself, where one sector declines another inevitably rises.