Managerial mindsets and the symbiotic relationship ... - CiteSeerX

Managerial mindsets and the symbiotic relationship between sponsorship and advertising B. Zafer Erdogan Research Assistant, Department of Marketing, Dumlupinar University, Kutahya, Turkey Philip J. Kitchen Senior Lecturer and Director of the Research Centre for Corporate and Marketing Communications, Department of Marketing, Strathclyde University, Glasgow, UK Both advertising and sponsorship are key areas of marketing communications activity, though the latter has acted as a somewhat “Cinderella” subject. In the heightened and increasing consumeroriented marketing communications world of the 1990s this paper asks whether these two marketing communications methods exist in an uneasy alliance or strategic symbiosis. Given the press (both practitioner and academic) coverage concerning integrated marketing communications, it may seem selfevident that the latter alternative is preferred, but a rationale behind this preferment is advanced. Notably, the shared conventions of the two communications activities constitute the text of their interactions. This sharing, or as we have termed it, a symbiotic relationship, leads in turn to the what can be described as the unity of a marketing communications culture, or its objective (managerial) mind.

Marketing Intelligence & Planning 16/6 [1998] 369–374 © MCB University Press [ISSN 0263-4503]

Introduction As indicated by numerous authors (Belch and Belch, 1995; Kitchen and Schultz, 1997; Kitchen and Wheeler, 1997; Schultz et al., 1994; Shimp, 1997; Smyth, 1996) marketing strategies and tactics are undergoing change as a result of advancements in technology, increasing media clutter and cost, globalization of markets, and the trend towards avoidance of mass marketing activities with a move to more targeted communications. While advertising remains the most important communication medium for companies such as Kelloggs, Nestle, and Coca-Cola and other fast moving consumer goods firms, the dramatic impactual changes have not only severely necessitated and increased the importance of alternative promotional strategies and tactics other than traditional marketing communication techniques (i.e. advertising, sales promotions), but also required integration of all the marketing communications elements in maintaining and building competitive advantages in the late 1990s. Even though sponsorship has been used by companies for decades, its importance in the marketing communications (marcoms) mix has substantively increased along with direct and database marketing and the explosive but questionable rise of interactive medias. Increasing usage of sponsorship activities has resulted from the aforementioned reasons, as well as new regulations which put tighter controls on advertising together with rapidly rising costs, new diversive promotional activities for industries marketing social cost products like alcohol and tobacco (Quester, 1997), and socio-economic changes such as increasing critical consumer interests in sports, arts and leisure activities (Meenaghan, 1991). Even though increasing usage of sponsorship has resulted in proliferation of academic output (Crimmins and Horn, 1996; Hastings, 1984; Head, 1981; Hoek et al., 1997; Meenaghan, 1991, 1994; Nebenzahl and Jaffe, 1991; Quester, 1997; Stipp and Schiavone, 1996; Thwaites, 1995) there is still an element of ambiguity concerning the role of sponsorship, its definable characteristics, how it works, and the nature of its interactions with

other marcom elements. According to Schultz et al. (1994) citing previous studies, consumers tend to perceive any marcoms activity as “advertising”. This apperception may be correct in academic circles who adopt the argument that sponsorship is yet “another form of advertising” (Head, 1981). Indeed, naming mass media-related marketing communications activity as “advertising” has persisted to a degree both in the academic and practitioner literature. For example, Head (1981) argued that “it [is] logical, permissible, and advantageous to regard sponsorship as a form of advertising that qualifies for corporate tax relief in the United Kingdom”. One possible reason for this type of ambiguity is that sponsored activities, especially sport sponsorships, get extensive broadcast coverage which in turn may cause some to think that sponsorship is another form of advertising – not promotion – as if advertising is not a form of promotion. Actually, this seemingly persistent ambiguity was the driving force for this paper to be written – to attempt to distinguish what sponsorship is, its interactions with other marcom elements (especially advertising), and to explore the issue represented in the metaphorical allusion concerning uneasy alliance or strategic symbiosis.

Sponsorship and its objectives Meenaghan (1991) defined sponsorship from a marcom perspective by stating that “sponsorship is an investment, in cash or kind, in an activity, in return for access to the exploitable commercial potential associated with this activity”. From this definition, we can conclude that sponsorship is an independent marketing communication activity which ultimately attempts to impact a firm’s bottom line positively. As a result of this, a claim stating that sponsorship should be considered as an independent marketing communication activity, which has shared goals with the traditional marketing communications elements and achieves these objectives in an indirect manner as general public relations and marketing public relations (MPR) do,

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B. Zafer Erdogen and Philip J. Kitchen Managerial mindsets and the symbiotic relationships between sponsorship and advertising Marketing Intelligence & Planning 16/6 [1998] 369–374

would doubtless wring strong support from academia and practitioners. As defined, sponsorship is the practice of promoting a company’s interests and its brands by tying them with a specific and meaningfully related event, organisation, or charitable cause. Given its flexible suitability as either a national, or an international method of communications, sponsorship presents a major worldwide industry in this decade. In the USA, sponsorship expenditure was estimated to total $1.85 billion in 1990. By 1993, it was estimated at $3.7 billion (Sponsorship Research International, 1994). In addition to this figure, International Event Group, a well-known sponsorship consulting firm, estimated well over a $500 million increase in one year with expenditures surpassing $4.25 billion on sponsorship right fees in the USA in 1994. In the UK context, expenditures on sponsorship have constantly been rising, as well. Figure 1 depicts the estimates. In 1970, sponsorship expenditure was estimated to account for only £4 million (Buckley, 1980). Despite economic turbulence in the next decade, expenditures increased almost ninefold and reached £35 million by 1980 (Mintel, 1990). In 1982, it was estimated to triple in two years and reached £100 million (Douglas, 1982). After five years, in 1987, it was estimated to total £220 million and expenditures exceeded £400 million in 1993, representing a hundredfold increase in 23 years (Mintel, 1993). The latest estimate by Mintel (1997) shows that sponsorship expenditures have exceeded £491, almost half-a-billion pounds. These estimations show that sponsorship is an increasing practice in the UK and in the USA. Sponsorship enables companies to avoid media clutter in a cost-effective manner, better respond to consumers’ changing media habits resulting from socio-economiccultural change, gain stakeholder approval,

including shareholders, employees, consumers, and society at large (Gardner and Shuman, 1987; Shimp, 1997); and lastly, to target communication and promotional efforts to today’s sophisticated and hence, media sceptical consumers without simultaneously irritating them by continued bombardment of advertising alone. Head (1981) argued that sponsorship is basically a mutually beneficial business agreement between sponsor and sponsored to achieve defined objectives. Kitchen’s (1993) research with fast-moving consumer goods (FMCG) firms revealed that companies are sponsoring events, clubs or organisations for a variety of different reasons. Table I depicts objectives of managers for employing sponsorship communications. Table I indicates that sponsorship is an independent marketing communication activity, which can offer unique but simultaneously interrelated objectives contiguous with traditional marketing communications elements such as advertising. Sponsorship activities achieve marcom objectives in an indirect manner as do corporate and marketing public relations.

How sponsorship works What sponsorship does is that it attempts to improve brand or company perceptions by flanking individual beliefs about the company or brand and connecting them to an event or organisation that is highly valued by target consumers. By forging this connection, sponsorship makes use of balance theory which states that when a belief may be unbalanced and unstable about two objects, the human mind unconsciously tries to link the

Table I Objectives of sponsorship Objectives

Figure 1 Sponsorship expenditures in the UK Sponsorship Expenditures in the UK 500

300 200 100 Expenditure 1970

1980

1982

1987 Years

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1993

0 1996

Million £

400

Press coverage/exposure/ opportunity TV coverage/exposure/ opportunity Promote brand awareness Promote corporate image Radio coverage/exposure/ opportunity Increase sales Enhance community relations Entertain clients Benefit employees Match competition Fad/fashion Source: Kitchen (1993)

Agreement (%)

Rank

84.6

1

78.5 78.4 77.0

2 3 4

72.3 63.1 55.4 43.1 36.9 30.8 26.2

5 6 7 8 9 10 11

lowly valued object (product) with the highly valued object (event). As a result of this process, sponsorship creates, in the minds of consumers, a link between the company or brand and an event or organisation that targets consumers’ value highly. Crimmins and Horn’s (1996) formula aiming to assess the persuasive impact of sponsorship on consumers is shown in Figure 2. In the formula, there are four variables involved in the calculation: 1 the strength of the link; 2 the duration of the link; 3 gratitude felt by consumers because of the link; and 4 perception change in the minds of consumers because of the link created by the sponsorship.


The strength of the link between a brand and an event or organisation cannot be captured by simple awareness of the link. In order to gain advantage over competitors, the link must be the one only the brand or company enjoys, not its competitors. The strength of the link is best measured by exclusive awareness formulated below: Strength = Desired – Ambush of the link link link The strength of the link is equal to the percent of the target who recognise the link between the sponsoring brand and the event – desired link, minus the highest percent who mistakenly believe there is a link between non-sponsoring competitors and the event – ambush link, the practice whereby non-sponsoring companies attempt to divert some of the audience’s attention to themselves as if they were also sponsors (Meenaghan, 1994). Of course, the larger the gap, the stronger the link. Crimmins and Horn (1996) claimed that a successful link as a level of target awareness of the sponsorship should be at least 15 per cent and exclusive awareness should be at least 10 per cent higher than the nearest competitor. Why is it that some of companies fail to link their name to sponsored events? They fail because they do not support the event with

Figure 2 Persuasive impact equation

Persuasive Impact

=

strength of the link

X

duration of the link

Source: Crimmins and Horn (1996)

X

gratitude felt due to the link

+

perceptual change due to the link

adequate advertising, public relations, pointof-purchase and other promotional activities. In other words, they do not adequately integrate marketing communications activities around the sponsored event. By paying the right fees to become an official sponsor of an event, an organisation or a cause, a brand only gets a permission to the club’s (i.e. Manchester United) symbols to link itself to the club. But, this right does not allow the sponsor to advertising time while Manchester United are playing a game. Advertising time must be bought separately from the network carrying the game. It is argued that two or three times the cost of a sponsorship should be spent in promoting it, if not, it is not worth spending money for the right fees for an event, a cause or an organisation (Heffler, 1994; Meenaghan, 1994). The second element of the link is the duration. No matter how strong the link in the consumer’s mind, it is perishable through course of time (Crimmins and Horn, 1996). In order to protect the link from quickly fading from consumers’ minds, companies should powerfully support the link. The reason for the short-term link might be the short-term marketing practices. Sponsoring companies could, for example, erroneously devote their marketing communications resources either very late or for a very short period of time over the sponsored event at the peak period of the event. This approach to sponsorship communications not only causes companies to waste resources, but also to miss opportunities to differentiate themselves from the crowd. Research findings show that spectators were at least as impressed with Olympic sponsors three months before the Games as they were during the height of the Games (Crimmins and Horn, 1996). Sponsorship creates gratitude in the consumers’ mind. Performance Research (1994) found that 48 per cent of NASCAR (National Association for Stock Car Auto Racing) fans indicated that they would buy a sponsor’s product over a closely priced competitor’s. A total of 42 per cent said that they have switched when a company became a sponsor. In the Crimmins and Horn’s (1996) study spectators indicated that they try to buy a company’s product if the company supports the Olympics. These findings indicate that consumers do feel gratitude in the form of some degree of intended buyer behaviour to sponsoring companies. It is very likely that this gratitude would be higher in groups which are active participants, live spectators of the event or fans of the sponsored club, charity or organisation. The findings also show that sponsorship communications are able to foster the ultimate goal, sales.

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The link created between a brand and an event or organisation can lead to positive perceptual change toward the brand. In order to improve brand perception, sponsors should be explicit as to what is the meaning of their sponsorship (Crimmins and Horn, 1996). At the end of the day, consumers must be able to draw connections between the brand and the sponsored property. The meaning of the link between a brand and an event is not always direct. In cases where no direct connection exists, the company must tell consumers what meaning should be drawn from the sponsorship by advertising and other marketing communications elements. Even if there seems to be a direct connection, sponsors should reinforce and flourish the natural interpretation. Heffler (1994) suggested that when an organisation is considering supporting an event, economic viability of the sponsorship should be considered. Moreover, the event or organisation should not only be consistent with the brand image, overall marketing plans, other marketing communications programs, but it should also benefit these. It should offer a strong possibility of reaching desired target audience(s) and preferably be geographically juxtaposed. Lastly, if the event or organisation has been sponsored before, there is a risk of being perceived as “me-tooistic”, and thus potential confusion of sponsor’s identity must be very carefully considered. If managers want sponsorship communications to realise their full potential and enable firms to gain a competitive edge against their competitors both in the national and in the international arena, they should not only properly plan, and carry out sponsorship communications with clear objectives in mind, but also back and integrate them with other marcom activities, particularly with advertising. A new tool of marketing communications activity, sponsorship communications, has been explored. Now, it is time to present the interaction between advertising and sponsorship.

Discussion: uneasy alliance or strategic symbiosis? As pointed out, confusion may exist among the members of target audiences or publics about perceiving sponsorship as advertising even though there are distinctive differences. Although some forms of sponsorship might share similar goals to advertising, i.e. increasing brand or company awareness, and promoting of positive messages about the product or company, it is argued that sponsorship is a means of persuasion which is fundamentally

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different from traditional advertising (Abratt et al., 1987; Crimmins and Horn, 1996; Hastings, 1984; Wilmshurst, 1993). Both forms of marketing communications are able to deliver messages to mass audiences but persuasion in the sponsorship context is indirect and implicit, on the other hand advertisement messages are direct and explicit. Messages, sent by companies, are controlled to a greater extent in the case of advertising than in the case of sponsorship even though sponsorships are being designed to offer more precise, less cluttered ways for marketers to promote products and services through sampling, demonstration, contests, and many interactive, educational, and family activities (Fitzgerald, 1997). Companies, in the case of advertising, have full control over what to include, how and when to deliver messages, and this ability makes advertising messages precise and tangible; however, in the case of sponsorship, the same companies almost have no control which in turn may make sponsorship messages imprecise and intangible. In the case of sponsorship, expenditures represent the cost of an association fee together with the likelihood of planning, managing, budgeting and implementing related promotional activities, which, in the case of advertising, means purchase of air time, creativity, production costs, and the like. Advertising is meant to advance business goals, but sponsorship has the ability to contribute to the fulfilment of a broad range of objectives at both corporate and brand level (Crowley, 1991; Stipp and Schiavone, 1996). They are not substitutes for each other, nor the same activity, but they are to be used in conjunction with one another in order to maximise benefit from each activity. Sponsorship communications complement advertising messages in order to break through step media clutter or side-step perceptual filters in a comparatively inexpensive fashion, and in certain cases, sponsorship communications may be able to negate industry regulations. For instance, in many countries, tobacco and liquor companies cannot advertise on television by law. It is obvious that Marlboro’s and other tobacco companies’ involvement in Formula One (F1) Grand Prix car racing events do not only support the event, but also aim for substantive media exposure. Viewers, for example of Formula 1 Grand Prix, will instantly notice that there is almost no space on cars which is not covered with the sponsor’s logo or name, and billboards along tracks or roads are emblazoned with sponsor advertising messages, in some cases almost concealing the arena. Since media patrons want to cover this important event, companies are in essence


getting access to relatively inexpensive mass media exposure; of course they have to pay for billboards, but it is a fraction of what they would have to pay for prime time television advertising space even if this were available. By the same token, advertisements enormously enhance the persuasive impact of sponsorship communications. As presented, sponsorship communications create a link between sponsoring companies and sponsored events, clubs, or organisations. There are four factors effecting the persuasive impact of the sponsorship on consumers (strength of, duration of, gratitude felt, and perceptual change). These four factors are all backed by marcoms activities, especially with advertising. Advertising campaigns enhance persuasive sponsorship impact. The strength of the link might be best boosted by running exclusive advertising campaigns before, during and after the event, so as to enhance link duration. Advertising campaigns may also advance the level of gratitude felt by consumers, create and increase positive perceptions towards companies and their products and services. According to Crimmins and Horn (1996), among the sponsoring companies of the Olympics that also run advertising on the events, 64 per cent succeeded in creating the link. On the other hand, of the official Olympic sponsors which did not run advertising, only 4 per cent succeeded in creating the link. But, now we come to the crux of the argument, whether in fact an uneasy alliance or strategic symbiosis is desirable or necessitous? The business world has witnessed an explosion of so-called strategic alliances in the late 1980s and early 1990s as a result of external competitive pressures such as globalization of economies, and constantly advancing technology. In the Merriam-Webster’s Collegiate Dictionary, tenth edition (1997), the term alliance is defined as “association(s) to further the common interests of the members.” In a business context Yoshino and Rangan (1995) argue that a strategic alliance links specific aspects of two or more companies in order to enhance the effectiveness of competitive strategies of participating companies by providing for the mutually beneficial exchange of technologies, skills, or products based on each company. Even though much of the strategic alliances occurred among companies in the past, company managers have recently been allying activities within firms. In essence, the drive toward integrated marketing communications can be termed a form of alliance or as the allied form of marketing communication activities. From this line of thinking the interaction between

sponsorship and advertising can be viewed as an alliance since these two important forms of marketing communication activities enhance one another’s benefits, circumvent limitations, and lead to more efficient and effective communication results. The word “uneasy” however can suggest awkward, uneasy, uncomfortable – and indeed many firms may have ventured into the sponsorship arena with these somewhat negative apprehensions. Our suspicion, founded through numerous research phases with large UK companies, is that the alliance varies from firm to firm, and from sponsorship to sponsorship. Sometimes, a sponsorship activity may stand alone, at other times the sponsorship is linked to a wide variety of related and strategically necessary promotional activities. However, research by Kitchen (1993, 1997) has detected a move from an “uneasy” to a “strategic” alliance, strategic being comprehended from marketing and communication objectives, then tactically implemented either in a singular or comprehensively integrated fashion. Collins English Dictionary, third edition (1991), defines symbiosis as “a close association of two animal, or plant species that are dependent on one another.” After modifying this definition for business purposes, a strategic symbiosis may be stated as “a close association of two or more business – marketing communication – activities that are dependent on one another”. If there is to be a strategically symbiotic interaction between sponsorship and advertising, each would be called a symbiont. Pursuing symbiosis a stage further, it is evident that commonality of meaning is an essential requirement for effective communication. If we compare sponsorship and advertising from an integrated marcoms perspective it seems unlikely, if not impossible, for two partners in strategically oriented communications to interact with one another without the benefit of shared conventions, and following Seung (1982), because their shared conventions constitute the text of their interactions. This sharing, or as we have termed it, a symbiotic relationship, leads in turn to what can be described (again following Seung, 1982) as the unity of a marketing communications culture, or its objective [managerial] mind. Such a “mind” seems to be inexorably moving to an integrated perspective or approach.

Conclusion In sum, the interaction between sponsorship and advertising can be regarded in the

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heightened marcoms ambience of the late twentieth century as a strategic rather than uneasy alliance. Likewise, and from the same contextual perspective, the interactions form strategic symbiosis with sponsorship being an indirect, but powerful, form of persuasion which potentially can overcome difficulties faced by advertising and other direct forms of persuasion activities, while simultaneously operating in conjunction with advertising and other marcoms as the strengthening force(s) undergirding and overarching the sponsorship communications. The forms of communications activities enable persuasion in a complementary manner and will lead to more effective marcoms outcomes. Strategic symbiosis is needed in the near future in order to get company messages across to consumers in meaningful and cost-effective ways.

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