Did Canada Hit the Sponsorship Summit in 2016 and What can the World Learn from The Great White North?January 30, 2018 7:31 pm
The release of the results of the 11th annual Canadian Sponsorship Landscape Study (CSLS) just a few weeks ago has led to many questions and comments coming back to Elisa [Beselt] and I, the co-authors of the study. Notably, most of these comments came from outside of Canada’s borders, many from the US and a few from overseas. The main theme of these inquires: what is happening in Canada that we can learn from?
Within this theme, the topic which, by far, received the most comments and questions is related to one of the key overall observations from the results, as follows
And what is it about this slide that has gotten so much attention globally?
Well, quite simply the results show unprecedented growth in sponsorship spend overall in Canada in the 2016 year. As both activation and rights fees spend ‘spiked’, this led to the highest overall investment level – nearly CDN$3 billion – we have observed since the study started more than a decade ago. We’ve seen big spikes before in rights fees spend (such as in 2013) but that was coupled with a decreased in activation investment, for an overall more modest growth. But, not in 2016.
Of course, the CSLS is not perfect data. It relies on industry responses, snowball sampling and estimations based on the data provided. However, with 11 years of data and consistent questions, we are very confident in the trends shown over time relative to previous years. So, even if we have a margin of error, relative to years gone by, 2016 was a “mountain of a year” in sponsorship in Canada. The best we’ve seen yet.
Now, let’s take a second to compare these results to what is happening in other parts of the world. These data points are from IEG’s work (2017).
- Sponsorship grew globally by 4.5% in 2016 over 2015.
- For North America, the number was 4.2%.
- For Europe, 4.6%
- For the Asia-Pacific region, 5.7%
- For Central/South America region, 2.3%
The only country that IEG reported having a higher growth rate than what we found for Canada was India at 19%, but that is in the context of massive, rapidly developing country.
This leads to the simple question “why?”. Yes, what precisely is happening in Canada to drive such exciting results for the sponsorship industry?
Here’s my take or effort to answer the ‘why’ question.
There are many possible reasons/factors but X that are most relevant for me.
1. The strength of non-sport properties in Canada and their impact on overall sponsorship investment. In 2016, the results of the CSLS estimated that just over 57% of sponsorship rights fees were in sport (36.5% in professional sport and 20.6% in Olympic/grassroots/amateur sport). This represents a number much lower than what others estimate is the percentage of sponsorship in sport in other countries. IEG, for instance, in their 2017 report, note that 70% of sponsorship in North America is in sport. The strength of properties in non-sport areas such as music, arts, education, fairs, causes, and other annual events in Canada is evident.
2. The fact that activation had nowhere to go but up! Yes, this may not be the most exciting or powerful factor but relatively it may be a key source of the growth. Activation levels in Canada have been historically much lower than those in the United States (and other countries) based on results from other studies. This was no different in 2016 (much lower) except that activation levels jumped for the 3rdstraight year (since 2013) impacting positively the overall spend and the growth rate over 2015.
3. Recovery can look good! Yes, 2014 and 2015 were not great years for sponsorship in Canada. Although rights fees continued to go up, we stressed in our CSLS presentations and reports that this was not to be taken as a sign of improvement since it was coupled with a decrease in sophistication with less activation, less evaluation and poor servicing results. So, simply put, after two not-so-great years, 2016 looks very good!
4. Nielsen (2016) tell us that marketing budgets in Canada are decreasing or flat in most cases, with more dollars moving to digital aspects. This point plus the CSLS findings suggest two important things: (i) that sponsorship is working as measured by the spend behaviours of sponsors (i.e., more dollars going towards sponsorship despite a flat/shrinking pie overall), and (ii) that sponsorship is aligned with the more sophisticated approach (that the Nielsen report suggests) which is leading advertisers in Canada to move dollars to more ‘digital’ activities.
5. Activation (finally) showing some signs of being “more like the rest of the world”. Other studies in the US, France, Australia and others have shown much higher levels of the ‘activation ratio’ than in Canada. In fact, in some cases, activation ratios in other developed countries are reported to be 3 or 4 times higher than they are in Canada. In 2016, Canadian sponsors and properties (as well as their agencies) reported a much improved (albeit still behind the rest of the world) level of sophistication and volume in their activation programs, helping to spark the growth of sponsorship spending overall.
6. Notably, within this growth in activation spend, we are seeing better activation, more business-like objectives, strong experiential-based activation, and a focus on branded content throughout sponsorship programs. All of this is known to drive better programs, improved returns, and more satisfied partners.
7. 2016 results indicate a growth in the largest (title) sponsorship spend by Canadian sponsors. As this typically would represent the largest program or most important property within a sponsor’s portfolio, by extension, one could argue that Canadian sponsors are seeing value in their sponsorship investments and, in turn, agreeing to increase their spending limits (top end) on sponsorship.
8. The “professional sport renaissance” is something we’ve talked about in CSLS results since 2014 (see figure below). But, it is important and continues to be. There has been a huge shift in Canada in the level of sponsorship sophistication of major professional sport properties in moving from rink boards, TV spots and signage to add digital activations, experiential opportunities and deeper associations to drive image transfer and brand associations.
9. The figure above also indicates another major trend that we first discussed in 2008 and that continues nearly a decade later. That is “festivalization”, where sponsorship in Canada started to embrace a much more interactive, targeted and integrated approach with festivals joining the sport categories as the top 3 (every year since 2010) areas of sponsor spend.
10. Finally, to round out my top 10 reasons, is the observation from the 11th annual CSLS that evaluation has rebounded to levels not seen in a decade. Yes, Canadian sponsorship stakeholders (sponsors, properties, agencies) have learned and are reinvesting more of their sponsorship revenues into evaluation, as a means to provide evidence of success and rationale for renewal and/or increased investment.
So, what can we learn from Canada for the rest of the world? Well, at the very least there are a few things we can suggest based on the findings above. I’ll make the recommendations simple here and encourage you to join us in Whistler in August 2018 at SponsorshipX where we plan to present the results from our first ever global study on sponsorship, the Global Sponsorship Landscape Study (GSLS).
- Support the development of non-sport properties and encourage them to build sponsorable programs. Canada has a high percentage of its sponsorship in non-sport properties.
- Activation, activation, activation. Activate better. Create innovative activations. Make your sponsors activate. Properties need to invest in their partners’ activations. Need we say more?
- Agencies and Properties need to service their sponsors and sponsorship contracts.
- Remind brands that sponsorship works in the era of digital marketing and hard-to-reach consumers target market segments.
- Educate your sponsorship stakeholders about ‘branded content’. It is the thing that is working best according to Canadian sponsorship professionals.
- Properties (and agencies): don’t undervalue your title/largest sponsorship. If Canada’s results show anything, this is where an industry can grow and grow fast.
- Teach your pro sport sector to be more sophisticated. If they are still worrying about signage only, it is time to learn from Canada’s NHL, CFL, NBA, NLL and MLS clubs!
- Festivalize…no matter what the property, try to create an atmosphere like a music festival. We know this but some may not be doing it.
Hope to see you at sponsorshipX this coming August in Whistler, British Columbia where we will present the findings of the inaugural Global Sponsorship Landscape Study.
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This post was written by Dr. Norm O'Reilly