Sponsorship Loses Steam, But Continues To Outpace Ad Growth
Describing the effect of the global economic crisis on sponsorship spending as a "wet blanket," GroupM's IEG unit released results of its annual year-end review and forecast, nonetheless calling for spending on sponsorships to expand 4.1% in 2012 to $18.87 billion in North America. IEG calls that rate of growth underwhelming because it is not as much as the industry had originally projected.
For 2011, the survey estimates that North American sponsorship spending rose 5.5%, down 0.4 points from the 5.9% that was originally expected for last year's growth.
"Corporate marketers appear to be holding off on bigger votes of confidence pending the outcome of solutions to national debt problems and the U.S. presidential election," the research and publishing firm said, adding that the "global spending picture is slightly brighter" than in North America.
IEG estimated that spending in emerging markets such as Brazil and India are offsetting tighter markets in Europe, and projected that global spending grew 5.1% to $48.60 billion in 2011, just below IEG’s original forecast of 5.2%.
For 2012, worldwide spending is projected to expand 4.9% to $51.00 billion.
On the bright side, sponsorship spending in North America will expand slightly faster than "traditional advertising," according to estimates from GroupM's media spending forecasts.
Among North American sponsorship categories, IEG projects that sports and entertainment has and will continue to grow faster than other forms of event sponsorship, noting that this "is typical when marketers turn conservative during economic turmoil."
For 2012, IEG said "risk-averse sponsors" are likely to be drawn to "packages that bundle media exposure and offer activation platforms including retail, digital and on-site marketing."
Sports sponsorship spending grew 6.2% in 2011, and is projected to expand 4.6% percent in 2011 -- making it the fastest-growing sector, just ahead of entertainment.
Entertainment, which includes concert tours, theme parks, and branded entertainment sponsorships, grew 6.0% in 2011 and is projected to expand 4.0% in 2012.
"Overall, the sports sector will account for 69% of North American sponsorship spending this year, a one point increase from 2011," the IEG report estimates. "The festivals, fairs and annual events sector will see its share of spending dip from five to four percent in 2012, while all other sectors retain the same share they had in 2011."