How Startups Can Play Both Sponsor and Property
5 Minute Read
• Entrepreneurial Studies is the third most popular major among millennials, giving rise to numerous startup companies
• Startup companies can look to sponsorship as a point of differentiation or speak to a targeted audience in an effort to grow their business
• Larger and more established brands have also sponsored startups in a similar way as they would a professional sports property
More and more recent graduates are looking towards startup organizations as they enter the workplace. According to Forbes, entrepreneurial Studies is the third most popular major for millennials, signalling an increasing desire to either create a new venture or work for a less established company. In pop culture, shows like Dragons’ Den and Shark Tank have promoted the startup culture, while entreprenuers like Mark Zuckerberg have provided a very public example of entrepreneurial success. With the increasing popularity of startups, MKTG examines how startups turn to sponsorship to help grow their ventures, and how the startup industry has also become a sponsorsable property in itself.
Startups Acting as a Sponsor
Sponsorship is often associated with tier-1 brands that have significant marketing resources. However, sponsorship can be leveraged by brands of a variety of sizes as the benefit of gaining a transference of equity can apply to companies of all sizes.
Reach a Targeted Audience– Startups need to carefully consider their marketing investments and ensure they reach an audience that is receptive to their product. By identifying a property that attracts similar consumers, startups can reach a targeted group of consumers. Game Without Pain is a startup company in Toronto that focuses on the health and fitness of eSport competitors. To speak to a receptive audience, they had a brand presence at Toronto’s EGLX video game convention. By being present at an event that is likely to attract their target market of video game enthusiasts, they were to engage directly with their target consumer.
Provides a Point of Differentiation- The startup industry in Canada continues to grow as 2015 was a ten year high for venture capital investment. Over $2.25 billion was invested across 536 deals in the country. In the United States, the venture capital is even greater as there was $58.8 billion invested. This signals a high amount of competition in the startup industry with several companies competing for financial resources and market position. Sponsorship is an effective tool to help differentiate a brand from its competitors. Through associating with an established property, a startup can gain legitimacy. Sponsorship can also help startups gain market share on more established companies. Sponsorship can help tell a story and differentiate itself from category leaders. As the startup industry grows, it will be even more important for companies to identify what sets them apart.
Access to a Platform to Gain Awareness– One challenge for startups is they are largely unknown in their early stages. The public is not aware of the brand and this can be challenging as consumers may have previously established brand preferences. Startups need to work quickly on building their brand and communicate their identity to consumers. One way to accomplish this is through sponsorship. By associating with like-minded properties, a consumer can draw the comparison between a startup's brand values and that of the property's. Startup health insurance company Oscar did this when they secured sponsorship of last year's Dallas Marathon. The company was looking to enter the Texas market and used sponsorship of the Dallas Marathon to introduce itself to a new group of consumers.
Startups Acting as a Property
The startup community is highly associated with entrepreneurship, innovation, and hard work. A number of brands have invested to demonstrate their support for the industry and gain access to these brand attributes. From apps to technology conferences, startups are an emerging property genre that allows corporate partners to demonstrate that they are future-focused. Investment opportunities include:
Brands Partnering with Peer-to-Peer Apps- Popular peer-to-peer apps, such as Uber and Airbnb have a large user base. Uber has over 10 million users and in a survey done by theGlobal Web Index, it was discovered that the majority of riders are between 16-34 years old. This demographic is attractive to established brands who are continually trying to reach a younger audience. Uber and other peer-to-peer apps have found ways to further monetize their app by offering brands a chance to connect with their users. In the past Uber has partnered with brands such as Air Miles, EA Sports, and Intact (MKTG Client). Airbnb has also partnered with RBC to give RBC customers double reward points when booking with Airbnb. These creative partnerships allow the peer-to-peer apps to play the role of the property and give other brands a new avenue to reach potential consumers.
Sponsorship of Startup Incubators- With the rise of startups, many universities and other institutions are investing in incubators to help facilitate the process of creating a startup. Incubators typically offer office space, equipment, and access to mentors among other assets to startups. With incubators offering a variety of assets, brands have the opportunity to lend their resources and at the same time be associated with the startup culture. Toronto’s Ryerson University has an on-campus incubator called the Digital Media Zone (DMZ) with has over 25 partners. Major partners include as Rogers, MasterCard, and Telus – who, through their partnership, areable to show their support of the startup community.
Investing through Sports Teams- Recently, multiple sports teams including the Los Angeles Dodgers, Philadelphia 76ers, Jacksonville Jaguars have all started their own startup programs offering assistance to young companies. These new programs create a new sponsorable asset the team can offer to existing sponsors interested in showing their support to startups. The Dodgers created the Dodger Accelerator program, allowing startups from all over the world to participate. Currently entering its second year, the program has partners including Intel and IBM. The Dodger accelerator program gives tech brands a more authentic entry point into sport sponsorship.
The startup industry is highly competitive and sponsorship can offer startups a way to differentiate themselves among competitors. However, as major brands look to gain positive association, startups can also act as a property. As both a sponsor and a property, startups represent a unique area in sponsorship marketing.