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Outlook for sponsorship growth in 2008 looks strong

Although past performance isn't always an indicator of future performance, with respect to the sponsorship industry, that actually isn't quite true.

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Research recently published by The World Sponsorship Monitor, produced by Sports Marketing Surveys, charts a pretty consistent trend in the global growth of sponsorship over the last five years.

From a statistically relevant sample of 1,196 new sponsorship deals analysed in 2007, a whopping 84% was sports related, 6% arts and culture, 5% broadcast and 5% "other" (which principally accounted for big naming rights deals on stadiums, which would inflate sports to 89% of all new deals if counted in this way).

All top 10 sponsorship deals were sports related and it's only until you get to the 27th largest new deal of 2007 that you find it's a broadcast sponsorship.

So what does this snapshot of the global sponsorship industry actually say about how brand marketers use sponsorship?

Clearly, there's a cautious approach in investing in "tried and tested" platforms such as sports where there's a clearly defined audience and customer segment and the sponsor is confident of attracting a high level of media (for that read broadcast) coverage. And of course, you've guessed it -- sponsors are soccer mad!

The vast majority of sponsorship deals around the world range from $150,000-$500,000 -- which is where the rights holder faces intense competition for the brand owner's share of brand marketing and communication budget. Often, the rights holder will have to demonstrate that the main sponsorship activity is underpinned by a community or grass-roots platform.

A good example is FINA, the world governing body for swimming and other aquatic events. Its key sponsor is Speedo, which has a complex web of sponsorship investments in 194 territories across the globe; all of these investments are underpinned by a commitment to grass roots support for swimming at the amateur and junior levels of the sport. This is absolutely critical to Speedo's business model and interestingly has been the strategy for building the brand for the last 80 years.

In the UK, the London 2012 Olympics has given a major boost to the sponsorship market in terms of pushing value to new heights. But, given the recent cuts in sports and arts support announced by the British government this month, sponsorship of the London 2012 Olympic Games may actually cause long-term damage to the sustainability of non-Olympic properties that depend on sponsorship for their existence.

But it's not all doom and gloom, report the researchers. Outside of the top 10 list is a raft of other sponsorship deals being signed in the Middle East, India, and China.

In fact, there's something of a trend emerging where Chinese brand owners are stepping into the shoes of domestic US sponsors in their own backyard.

For example, the Petro China Lubricant Company recently sponsored Yao Ming, the 7'6" basketball star of the NBA Houston Rockets. And Yili Holding Co (China's biggest dairy group) became the first Chinese company to sponsor the MLB New York Yankees.

Whether these Chinese brands become household names outside of their home country is a moot point -- but given the vast numbers of domestic Chinese consumers interested in these televised sports, it doesn't really matter!

What's also interesting to note is the long term nature of sponsorship -- on average deals in 2007 will last 2.67 years. This reflects a level of confidence among brand owners seeking to invest in sponsorship despite the current turmoil in global markets.

Against this background, music sponsorship is slowly beginning to emerge as a powerful force in brand marketing. Live music and music festivals have come of age and Tuborg's deal as the "official beer of Live Nation" has given the brand a platform to compete against its better known rivals, by acquiring exclusive pouring rights at the Download Festival, O2 Wireless Festival, Global Gathering, Escape in the Park and Hard Rock's Calling.

But it isn't just beer brands that can benefit from an association with music.

Western Union -- with five times as many locations as McDonald's, Starbucks, Burger King and Wal-Mart put together -- achieved a substantial return on sponsorship investment with the MOBO Awards and the campaign has been shortlisted for Arts Sponsorship of the Year and International Sponsorship of the Year at the forthcoming Hollis Sponsorship Awards 08.

Looking ahead to this August, it's likely that Olympic records won't be the only ones being broken in Beijing, it looks like it's going to be a bumper year for sponsorship too.

Ardi Kolah is a brand marketing and sponsorship consultant, author and speaker. His new book, 'Sponsorship Works: A Brand Marketer's Casebook', is available from SportBusiness. Ardi is also a director of MOBO. He can be contacted on mobile +44(0)77100 77941 and email ardi@kolah.com.

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