ESP forecasts higher growth in sponsorship spending in 2018
By Simon Ward
Global sponsorship expenditure will grow nearly 5 per cent in 2018, with significant gains in the Europe and Asia-Pacific regions compensating for more sluggish increases in the Americas and other markets, according to a new report.
In its annual analysis of the industry, ESP Properties, a subsidiary agency of global advertising and PR giant WPP, predicted that sponsorship spending in North America will rise by 4.5 per cent to $24.2 billion this year.
Meanwhile, the worldwide outlay is forecast to climb by 4.9 per cent to $65.8 billion, with the biggest increases in Asia-Pacific (5.7 per cent) and Europe (5.1 per cent).
Less growth is anticipated in Central and South America (3.3 per cent) and all other countries (3.5 per cent).
ESP calculates that global sponsorship spending rose by 4.3 per cent to $62.7 billion in 2017, of which North America accounted for $23.1 billion, up 3.6 per cent.
This compared with forecast increases of 4.5 per cent worldwide and 4.1 per cent in North America.
ESP said this week that its caveat that “caution on the part of brand and corporate marketers could grow into concern as the year progresses, thus limiting their willingness to commit additional dollars to partnerships” had indeed proved to be the case, given the lower-than-expected growth.
It also cited efforts by major players in the beverage industry, the largest spending category, including soft drink and beer brands PepsiCo, Cola-Cola, Anheuser-Busch InBev and Miller Coors, to reduce expenditure, and similar cutbacks by packaged goods companies.
|Total Sponsorship Spending|
|North America ($bn)||20.6||21.4||22.3||23.1||24.2|
|Source: ESP Properties|
Looking ahead to 2018, ESP said: “Despite lingering concerns over national and geopolitical matters, improving sales outlooks and overall economic indicators indicate higher corporate confidence heading into 2018, which should see brands more willing to spend on marketing, advertising and sponsorship.
Sport accounted for $16.26 billion of North American sponsorship spend last year, and is expected to enjoy the highest increase of all six property types, of 4.9 per cent, in 2018, up from 3.6 per cent in the last 12 months, with its overall share of the market remaining at 70 per cent.
The other categories are: entertainment (projected share of 10 per cent); causes (9 per cent); arts (4 per cent); festivals (4 per cent), fairs and annual events (4 per cent); and associations and membership organisations (3 per cent).
With regard to other markets, ESP said: “While still strong, APAC growth is expected to be slightly lower than it was in 2017 as the once rapidly expanding marketplace begins to mature.”
|Global Sponsorship Spending By Region|
|Region||2016 Spending ($bn)||2017 Spending ($bn)||Increase from 2016 (%)||2018 Spending Projected ($bn)||Increase from 2017 Projected (%)|
|Central & South America||4.4||4.5||3.4||4.6||3.3|
|All Other Countries||2.6||2.7||3.3||2.8||3.5|
|Source: ESP Properties|
In a survey conducted for the report, ESP found that, among sponsorship decision-makers, 33 per cent expect to increase spending in 2018, 20 per cent expect to decrease, and 47 per cent expect no change.
When asked about their plans for this year, 68 per cent of sponsors said they will be in the market for new deals, with 32 per cent not. This compares with three-quarters of respondents who said they would be considering new sponsorships in last year's survey.
One of the more notable findings was that 58 per cent of sponsors surveyed said they were looking to drop a deal prior to its renewal, up from 45 per cent 12 months ago.
ESP said this could be explained by dissatisfaction among sponsors at rights-holders failing to keep up with changing priorities in terms of the benefits they offer their partners.
It added: "Properties may still be focused on benefits such as on-site signage - which fell from second to sixth this year among survey respondents when asked to identify the most valuable sponsorship benefits - instead of presence in rights-holders' digital, social and mobile media - which rose from sixth to second."
The benefit considered most valuable was category exclusivity, with 55 per cent backing.
The survey was conducted online in December 2017 and received 100 responses.
Image courtesy of ESP Properties