‘Spownership’: how brands are owning up to sponsorship
Following the extraordinary achievement of Felix Baumgartner and the amazing Red Bull Stratos event, this is a good time to consider some of the wider developments in the sponsorship sector: how the boundaries between sponsorship and ownership are starting to blur, and what the effects of this trend might be. It's a model that I have recently christened as "spownership."
In the traditional model, the rights holders for an event or competition sell sponsorship rights to brands, who then activate their sponsorship through a range of activities. The perception of this process is simply one of payment in exchange for a corporate name on shirts or billboards, but as I've said before, it works best when customers, clients or the general public get some sort of added value from the partnership.
With the Red Bull model, the brand takes direct ownership of properties. The Stratos event is one of many 'spownerships' that the company has developed using this pioneering approach, and follows the success of the Red Bull Formula One Team and Red Bull Crashed Ice. A record 8 million views on YouTube is proof that it works.
Setting the pace
So what's the difference between buying sponsorship rights for a set period, and owning them outright? First of all – as Red Bull shows – there's the opportunity to achieve a perfect fit with your brand. Secondly, you retain complete control. You decide who the players or teams should be. You pick the dates that suit you, rather than fitting in with what's available. You can control every element of the brand message, from choosing who else you want to be associated with the project, right down to using your corporate colours. You get a lot more visibility, because your name is on the sponsorship itself, not just a badge on the merchandise. And you get to decide how and when your activations will happen, without the need to negotiate or request permission.
Owning a sponsorship property is a statement that you are prepared to be proactive and dynamic with your brand, and differentiating yourself from competitors with a more traditional view is valuable in itself. The downside is that you carry all the financial risk, but that can be offset by selling on some of the rights to co-sponsors, and revenue from tickets and corporate hospitality.
Making your mark
For the past three years, VAAV has run the very successful Optima Open, as part of the ATP Champions Tour. As the event owner, Optima can specify every detail, and as a direct result the tournament has become one of the top competitions on the Tour.
Similar advantages can be gained by entering an event under your own flag, instead of attaching your brand to an existing team. A few years back I was closely involved with ABN AMRO's two boat entry in the Volvo Ocean Race. Rather than negotiating a conventional sponsorship deal, the bank went ahead and built two boats of its own, and ended up winning the race.
The Optima Open and the ABN AMRO racing yachts show what can be gained when brands become rights owners, but what happens when something goes wrong? Even then there are advantages, because being in control means deciding what the response should be, dealing directly with all the other major players, and solving the crisis according to your own strategy.
Risk and reward
Becoming a rights owner moves you further up the sponsorship food chain. In terms of public exposure, it can put you out on a limb, and that isn't always a comfortable place to be. But if you want to control the destiny of your brand, building your own boat or taking a man to the edge of space may turn out to be the future.