By Alan Mitchell
It was an unhappy end to an otherwise perfect event. Right until the very last moment everything had gone swimmingly for BT's "Global Challenge" round the world yacht race. Yet in the last few days of the last leg, a huge shadow had suddenly been cast across BT's planned merger with MCI, placing a question mark over BT's entire globalization strategy - and therefore, the logic behind its sponsorship deal. And, to cap it all, while the board was frantically deliberating the future of the MCI link one of its main architects, deputy chief executive Dr. Alan Rudge, was marooned somewhere in the Atlantic, on a becalmed yacht.
Yet, while this drama was unfolding, a somewhat edgy Richard Slogrove, director of global marketing at BT, was sitting in the Southampton quayside finishing line extolling the virtues of the Global Challenge. Pound for pound, the investment had delivered three and a half times more media coverage than advertising, and that, he was at pains to point out, was just the beginning.
High politics of M&A aside, Slogrove is right. Sponsorship works. But only recently have leading companies begun to glimpse just how powerful it really can be. To borrow a phrase from a famous ad campaign, sponsorship reaches the parts conventional advertising cannot - in myriad ways. Participating in a sponsored event offers a much deeper experience than any ad, and can only be good for a brand. As Slogrove remarks, when BT Global Challenge yachts enter the harbour, "I have seen grown men cry. If you can touch people emotionally like that, why give it up?"
Good programmes also help connect with the "right people". Well organized hospitality events create an opportunity to wine and dine people you wouldn't otherwise get the chance to speak to - politicians, regulators, chief executives, potential suppliers and distributors - thereby opening doors and dialogue that conventional media simply cannot.
At the same time, a well chosen sponsorship allows companies to showcase their products. For BT the Global Challenge provides a chance to demonstrate its ability to communicate with the tiniest dot in the remotest spot of the vastest ocean. And then of course, there's publicity. In addition to delivering value-for-money coverage sponsorship reaches where advertising doesn't - into editorial.
Most importantly, however, it does all these things at once. Its true power is only unleashed when it meshes into an integrated marketing system in its own right. That is the essence of truly great marketing ideas: they generate self-reinforcing systems which lock in each essential component by applying a "win-win-win" logic that drives the system as a whole - rather like a Chinese puzzle that uses each piece to help keep the other pieces in place.
From the 1960s onwards mass advertising worked in this systematic way. Its win-win-win logic worked as follows. Consumers were hungry for new products and advertising helped companies meet this need. Through their advertisements for New! Improved! Products, marketing companies could guarantee sales levels which justified heavy investments in R&D, factories and distribution. This in turn generated economies of scale which enabled them to offer consumers more, better products, at lower prices - while delivering improved profitability. At the same time, their advertising monies subsidized the growth of new media such as TV, thus giving consumers wider, cheaper access to news and entertainment, which, in turn, delivered ever bigger and better audiences. Truly, every player - producer, intermediary and consumer - benefited.
Sponsorship works in a similar way, "adding value" to all those who touch it. For the organizers of sporting and artistic events sponsorship money can mean the difference between Go or No go. For the media it creates News - and therefore readers, and therefore revenue. For consumers, sponsorship subsidizes both first - and second-hand opportunities to participate in enriching experiences. Indeed, in a sense, companies almost make this experience a part of their total product offering: it's part of what consumers "buy". And finally, of course, it delivers the public profile, the contacts, the relationships, the opened doors, the warm associations - and the sales - that companies so desperately seek.
Today, for all manner of reasons - market saturation, media inflation and fragmentation, diseconomies of scale - many marketers are discovering that the virtuous spiral created by the advertising system can turn into a vicious circle. What was once a source of added value can become an added cost. In stark contrast, the pieces of the sponsorship jigsaw puzzle are only now beginning to fit together.