February 10, 2016

Recently on BBC World News, Anthem’s Regional Managing Director, Steve McGinnes was interviewed on the topic of Asian brands sponsoring major sporting events.

With recent Asian sponsors at the Australian Open (sponsored by Korean automaker, Kia) and the Singapore Open (sponsored by Japan’s Sumitomo Mitsui Bank), we wonder, what’s in it for these companies to spend millions of dollars on sponsoring high profile sporting events?

Steve highlights 3 factors Asian brands should consider when sponsoring a major sporting event:

  1. Return on investment (ROI)
  2. Luxury vs. customer-forward innovations
  3. Controversies/brand risks

Steve points out that tracking ROI is often difficult when sponsoring events, and commonly not tracked at all. Even after evaluating earned revenue from sponsored sporting events, some companies have found no return, or negative returns. So instead of determining return with dollar signs, companies include brand awareness as a form of return on investment.

Televised sporting events like the previously mentioned Australian Open, is viewed by millions of people throughout the competition around the world. This is intriguing for small brands looking to gain exposure, but is also a way for larger brands, like Kia, to show dominance in their industry. However, there is a long journey between awareness to purchase — Steve simply puts it this way: “Just because you know about something doesn’t mean you like it”.

A slowdown in the global economy has also affected corporate enthusiasm toward sports sponsorships. Steve points out; sports sponsorships are oftentimes the first thing to get discarded when companies face a financial crisis, as these sponsorships are considered as a luxury. Asian brands are now less likely to indulge in sports sponsorships, and instead are focusing on putting that money toward customer service, in-store experience, packaging, and product innovation.

Everything is sweetened by risk, right? Not necessarily. It is really difficult for a brand to determine whether a sporting event will turn controversial, which could in turn be controversial for a brand’s reputation. Many controversies revolving around sports sponsorships can damage a brand, including events exposed to:

  • Corruption issues
  • Match fixing
  • Drugs

When determining a sporting event to sponsor, brands want other brands to reflect their equities and their messages. With the increased use of social media, the above-mentioned risks can tarnish the appeal of sports sponsorships very quickly. Brands must carefully evaluate their risk potential before sponsoring an event at all.

However, there are indeed sports with high viewership, with great potential for sponsors in Asia. Steve mentions online video gaming, badminton, table tennis, and even drone racing as incredible options for Asian sports sponsorship opportunities.

To watch the entire interview, visit: BBC World News – SGK’s Steve McGinnes on Sports Sponsorship in Asia