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MKTG Insights: Sponsorship Of the People, By the People, For the People

MKTG Insights: Sponsorship Of the People, By the People, For the People

Earlier this week, President Barack Obama delivered the State of the Union address to members of Congress and the American people in which multiple policy ideas were proposed - ideas ranging from free community college to increased access to the internet in rural areas. Regardless of their political ideology, many Americans will respond to these proposals with a simple yet fundamental question when presented with ideas to push their country forward: "how will we pay for it?" A similar dynamic will take place in Canada later this year as the country heads to the polls in the 2015 Federal election and is presented with various perspectives on how to build a better country: "How will we pay for it?" 

From better schools to cleaner air, the majority of citizens support improvements to community infrastructure. However, if tax increases are required to fund these initiatives, support may start to waver. As governments face budget cuts and calls for conservative spending, a new answer to the "how will we pay for it?" question is emerging with greater regularity: corporate sponsorship.

According to the CEPSM (Centre of Excellence for Public Sector Marketing), 63.4% of municipalities engage in efforts relating to sponsorship and naming rights, that is - circumstances where private brands support the public sector in exchange for marketing benefit. While there is a consumer expectation and acceptance of a sponsorship presence in our sports stadiums and at our music festivals, sponsorship in our municipalities is a greater point of contention. In Windsor, Ontario a children's playground in a city park is sponsored by Saturn. While critics have called it an over-the-top attempt to influence children, advocates suggest it brings much-needed funding into public parks and should be scaled to include other sponsors. This same debate is taking place across municipalities all across the developed world.

As public opinion continues to evolve on this issue, we summarize the arguments for and against municipal sponsorship from the perspective of all stakeholders: sponsors, municipal-based properties, and Canadian consumers themselves.

Stakeholder Summary:

Best-Practice: "What You Do is Less Important Than How You Do It"

In an area as nuanced as corporate sponsorship of the public-sector, brands must proceed with caution and invest in due diligence prior to making investment decisions. However, for brands that choose to make municipal-based sponsorship a key pillar of their portfolio, there are a number of key strategic considerations to help guide the development of a portfolio:

1. Support Relevant Property Genres / Themes:

Sponsors should seek investment opportunities in areas that are natural extensions to their current portfolio. In an area with potential for consumer backlash, supporting causes where the sponsoring brand is seen as credible and authentic may help to mitigate risk. In December 2014, TD Bank became an official sponsor of Bixi, Toronto's bicycle-sharing program. Under the broader themes of convenience and the environment, areas that TD has invested in for many years, the Bixi program can link logically to the brand strategy and existing sponsorship portfolio.

2. Not All Categories Are Created Equal:

Category and property segment can greatly impact marketplace sentiment towards corporate sponsorship in municipalities.  Brands that are perceived to make products that are harmful to either people or the environment (energy, alcohol, fast food, etc.) may face heightened protest in efforts to support the public sector. Particular sensitivities exist on the property side as well, where any activity in schools targeting youth come under significant scrutiny. In October 2014, Vancouver's school board rejected $500,000 in funding from Chevron's "Fuel Your School" program in which money is raised for much-needed classroom supplies despite facing a $20 million deficit. However, a less controversial category, Electronics Retail, has a marketplace "permission" to sponsor schools, as evidenced through Future Shop's Tech Lab program which helps subsidize computer labs in schools. Sponsors should leverage research for concept testing to discover and anticipate sentiment and go beyond quick-hitting PR moves that can be seen as self-serving.

3. Become a Solutions Provider

Sponsors who identify opportunities to  invest in an area of need and provide solutions for local communities, versus simply attempting to drive brand awareness through slapping their name or logo on a public facility, are likely earn greater attribution and appreciation from consumers. Upon launching their Skateboarding brand (Nike SB), Nike has collaborated with local governments to build both permanent and pop-up skate parks that provide skateboarders with infrastructure. A similar strategy was leveraged by MKTG clients Scotiabank and Canadian Tire when they donated $250,000 to keep community hockey rinks open in the GTA last Winter. Sponsors who can activate around a "pain point" and storytell around improving the quality of life in communities in the absence of public funding or access will reap the greatest benefits of municipal-based sponsorship.

Are Branded Cities Inevitable? 

As municipalities continue to explore alternative revenue streams, sponsors will continue to be faced with investment opportunities to insert their brand into the day-to-day lives of students, commuters, patients, and everyday citizens. Both sponsors and properties will likely be faced with tough questions regarding identifying where the "line" is (if there is a line at all) with respect to ensuring certain public institutions remain unbranded. But does that line exist?

In cities like Boston and Chicago, lawmakers have dabbled with securing sponsorship for public transportation. Would transit riders in Toronto embrace naming rights sponsorship of certain subway stations or lines? Could consumers truly expect a "Tim Horton's Yonge/University Line" or a "Telus Station"?

At a press conference to announce the aforementioned TD-Bixi partnership, newly elected Toronto Mayor John Tory told the media that he will be pursuing similar partnerships and is not opposed to an increased corporate presence in transit stations. The Toronto Transit Commission generated approximately $25 million in advertising revenue in 2014. Sponsorship of stations and lines would likely drive significant incremental earnings. However, whether or not these types of partnerships materialize will depend on the what all stakeholders determine to be the cost of sponsorship.

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