How long should the sponsorship last? Is a few months enough to make such a complex instrument work, or do you need longer exposure cycles? In fact, that of sponsorship is a special case of Life Cycle, which needs special timing and pace. Let us try to answer an important question today: after how much and for how long is sponsorship profitable?
Fans and enthusiasts will not have missed these days the announcement of the end of two important partnerships for the Formula 1 Scuderia Ferrari, the one with the cryptocurrency Velas and the one with the processor manufacturer Qualcomm, which is present under the Snapdragon brand.
The news of the departure of Velas by Maranello comes at the end of a troubled period for the cryptocurrency market and follows other thick farewells, from the less talked-about one of Fantom to the much better known one of FTX. We are likely facing a physiological moment in the life of an industry, that of Web 3.0, which is still in search of its stability and which presents a spotty and jumpy situation in which extraordinarily solid companies are flanked by some with less solid foundations.
On the non-renewal of Snapdragon, on the other hand, it is the Scuderia itself that says that both parties agreed that they did not want to continue on the path they had traveled together after the first year of the contract. A consensual goodbye, in short, and respectful of the 12-month contract signed in early 2022.
The duration of sports sponsorship
Net of the reasons for, predictability of, and relevance of termination or non-renewal of a sponsorship contract, the issue of sponsorship duration is central to anyone involved in sports marketing.
As mentioned several times in this blog, sports sponsorship is a three-dimensional object and very profound in its psychological, behavioural and motivational implications. One of the main differences with other marketing mix and communication tools lies precisely in special time management.
If we interpret the sponsorship of a brand of a particular sport property as a product-in marketing terms-it is, in short, interesting to analyse and understand what the very special PLC (Product Life Cycle) of sponsorship is and what the implications, in terms of time, are on its practical applications.
Product Life Cycle and Product Life
Without wishing to go into lengthy theoretical discussions that are beyond the scope of these pages, typically the life cycle of a product is divided into four stages plus one, as shown in the diagram below.
The graph puts in abscissa, on the X-axis, the elapsed time since product conception and in ordinate, on the Y-axis, the economic result in terms of sales. The curve, or locus of points, drawn from each moment in a product’s life creates precisely the Product Life Cycle.
In the typical trend, a development phase, i.e., ideation and study, is followed by an introduction phase, a growth phase, a maturity phase, and finally a decline phase. This is a very physiological trend, typical to the vast majority of goods and services that we are familiar with, with the maturity stage being the most important moment of economic return.
The product life cycle of sports sponsorship
Studies and field experience tell us that the shape of the PLC curve is significantly different when we analyze the sports sponsorship product, as can be seen from the schematization rendered below.
There are basically two reasons for this difference:
- A fifth stage is inserted between the maturity and growth stages, which we call sedimentation here, and which adds a growth profile to the curve.
- Due to the characteristics of the sports market and the different kind of meaning that sports possesses in the life of the spectator consumer, the period of decline is replaced by a maintenance phase that, although presenting an initial decline in effectiveness, then stabilizes over the years.
The sedimentation phase
After the growth phase, which typically occurs during the first year of the sponsorship agreement, sponsorship does not immediately enter the maturity phase. Indeed, it is at this time that one of the most interesting phenomena in sports marketing occurs, namely that of the value overlap in the consumer’s mind between the positive values of the sports property and those of the brand.
While in the growth phase the effectiveness of sponsorship is mainly related to brand awareness phenomena, in the sedimentation phase the effectiveness of the tool has to do with a purely psychological phenomenon, namely the overlapping of the positive perception derived from sports with that of the brand. This phenomenon, which typically occurs during the second year of a partnership’s duration, causes an extraordinarily effective repositioning in the consumer’s mind, in a totally autonomous and non-heterodirected manner.
Let’s take the example of Formula 1 sponsorship of a new Hi-Tech brand. The first year of the contract is very useful to put the brand in the eyes of millions of consumers. The very high global visibility of Formula 1 raises the brand awareness of the product disproportionately, just as the repetition of the brand on multiple races throughout the year ensures excellent target coverage and repetition of brand visibility.
However, it is only from the second year that consumers will begin to attribute to the new hi-tech brand the characteristics of speed, performance, prestige and effectiveness taken from the Formula 1 value system. This sedimentation phase, in which precisely the values of F1 settle on the perceived brand, is lengthy and again benefits from repeated exposure, enriching the brand with new features from time to time.
The final maintenance
A successful sponsorship program actually experiences no real decline.
In the minds and hearts of fans of a sport, if one has been there long enough (theory says that there are 5 years for this to occur), the bond between sponsor and sports property remains indelible even when the contract between the parties has been withdrawn.
This is the case with major sponsorships in motorsport, such as those between McLaren and Marlboro, between Repsol and Honda HRC, between Canon and Williams, and many other excellent examples. But it is also the case with sponsorships outside motorsport, such as the historic ones between Sharp and Manchester United, between JVC and Arsenal, and between Pirelli and L’inter Milano.
While it is clear that this is another reason why sports sponsorship is an excellent marketing tool, it is equally true and evident that in order for this to occur, the tool must be given time to express itself fully and be able to unleash its full effectiveness.
The timing of sponsorship and effectiveness
That of the timing of sponsorship is an issue we have found ourselves harping on on several occasions, as it is absolutely peculiar. This is true both when it comes to timing in and out of the partnership program.
Unlike other tools in fact, sponsorship is not completely “plug and play,” but requires a learning curve of introduction and application that can be mitigated with the
advice from a sports marketing agency that specializes in the area of
. Contacts, applications, activations, logistics, management and measurement of sponsorship are in fact extremely specific and very particular aspects in sports, a world that moves on completely autonomous geographies and time horizons: learning them and handling them in a timely manner can be tricky if not properly supported, especially in the beginning.
Conversely, at the end of the program, as seen, sponsorship can offer opportunities, benefits, and resources that extend far beyond the time duration of the agreement. In short, good partnerships can continue to be profitable even when you have stopped paying for them, extending memory and effectiveness through the emotional and psychological components of sport.
Managing these times well to pair them appropriately with other business phases and taking advantage of the many opportunities that arise in between is as much an art as it is a science, but here, too, lie the many advantages of a tool that is showing itself to be increasingly effective and full of opportunities for companies and industry groups of all types and sizes.