Pop quiz: How much do North American brands spend yearly on sponsorships?
If you guessed $20B, take the rest of the day off.
According to IEG's 30th annual year-end sponsorship industry report, companies spent $20.6B in 2014 on sponsorships and that number is projected to increase to $21.4B in 2015.
But the question is, why do brands spend that much? Here are five reasons why sponsorships are worth the billions:
1. Niche it Up!' Let's just say your soft drink company is losing market share of the male, cricket enthusiasts in India, what do should you do? Duh, become the title sponsor of the Indian Premier League, allowing you exclusive access to this niche consumer group. By partnering with a brand that shares the same target audience, you are able to increase reach in a potentially challenging demographic target. This will allow your brand to create a meaningful connection with a relevant audience.
2. Two Words'?¦Live Entertainment ' In this day and age, consumers have limited patience to watch their favorite TV shows with commercials, let alone read an entire top ten list (hence the reason for this top 5 list). Live sports, entertainment and events are one of the last frontiers to engage with a captive audience, therefore serving as an important platform for your brand to advertise on.
3. Riding the Coattails - Let's face it. Consumers might not always be thinking about your brand. Here is the chance for your brand to align itself with an entity that might be cool or patriotic or stylish or young. There are a plethora of sponsorship types ' sports, entertainment, cause, arts, festivals, associations and membership organizations ' which allow you the freedom to choose a sponsorship that fits seamlessly into you integrated marketing strategy and aligns with your brand essence. Finding the right partner that helps build brand credibility and is in alignment with your brand values is a win-win.
4. Let's Go Team! ' While not the primary reason for inking a sponsorship deal, the importance of how sponsorships boost company morale should not be forgotten. Sponsorships allow you to give employees access to meet their favorite athletes, to host a private concert, or even bring a really sweet branded bouncy house to the office.
5. The Schmoozing Affect ' Some business is done outside of the boardroom. The environment created by sponsorships is perfect for you to engage both your current and potential customers, leading to additional sales opportunities for you over a stadium hot dog.
Do you invest in sponsorships? Leave a comment below with how sponsorships have helped grow your brand.