Sponsorship Spending Growth Expected to Slow As Marketers Eye Newer Media and Marketing Options

Chicago, IL (PRWEB) January 11, 2014

IEG’s 29th annual year-end industry review and forecast shows a contraction in the flow of marketers’ dollars into sports, entertainment, cause, cultural and other partnerships.

Although sponsorship is still seeing steady growth, corporate interest in other marketing alternatives, particularly digital (including social and mobile) media, has dampened enthusiasm for significantly increasing sponsorship spending.

Spending by North American companies is projected to rise just 4.3 percent in 2014. The amount spent is projected to be $20.6 billion. In the year just ended, North American spending grew 4.5 percent, well below the 5.5 percent growth IEG forecast last January.

“Instead of viewing 'new media' as competition, sponsorship properties would be wise to emphasize their role as catalysts in driving interest, engagement and enthusiasm for their partners’ digital, social and mobile platforms through their nearly unparalleled ability to provide relevant content,” said Jim Andrews, IEG senior vice president, content.

“As more marketers discover the ability to drive positive ROI by integrating digital and sponsorship efforts, the effect should be stronger growth for both segments.”

Continuing a trend noted in IEG’s 2013 forecast, sponsorship continues to be a “tale of two cities” in which spending on larger and more prestigious properties remains robust, while increases in funding directed toward smaller rights holders—especially those outside the sports and entertainment segments—are expected to be below two percent in most cases.

Some of this divergence can be attributed to sponsors’ desire to play it safe and stay in familiar territory that requires less initiative and is less likely to raise questions.

But it is also true that a growing number of sponsors are looking to establish partnerships that create incremental value for both parties through efforts such as developing content, collaborating on activation and creating new products. Because of that, smaller properties that continue to rely on the one-dimensional and transactional model of sponsorship—which simply exchanges cash or in-kind commitments for a series of rights and benefits—are and will remain at a disadvantage.

The growth rate for sponsorship spending is expected to exceed outlays for traditional advertising in North America. According to the worldwide media and marketing forecast produced by IEG parent company GroupM—the global media investment management operation of WPP Group plc.—North American ad spending will grow just 2.8 percent, as large increases in digital spending (nearly 10 percent growth in the U.S.) will be offset by a continued decline in newspaper spending (down two percent in the U.S.) and slow growth in ad dollars for TV (2.6 percent), radio (one percent) and magazine (one percent).

Spending on other forms of marketing—including public relations, direct marketing and promotions—is expected to grow 4.4 percent in 2014, according to the GroupM report.

Globally, IEG forecasts 4.1 percent sponsorship spending growth over 2013, to $55.3 billion. Worldwide spending increased 3.9 percent in 2013, below the 4.2 percent projected.

Excluding North American spending, sponsors from all other parts of the world spent $33.4 billion in 2013. That number should increase by 3.9 percent to $34.7 billion this year.

Economic conditions in Europe should keep the region at the low end of the growth spectrum, as spending by European companies is projected to grow by 2.1 percent in 2014.

The Asia Pacific region, which continues to see strong interest in sponsorship across nearly all countries, leads all other geographies with a forecast growth rate of 5.6 percent. Central and South America, host to this year’s FIFA World Cup and the 2016 Olympic Games in Brazil, should see five percent growth.

Comparing sponsorship spending to GroupM’s forecast for media and other marketing expenditures globally, advertising is projected to see the largest growth, 4.6 percent, compared to 4.4 percent for marketing/promotions and 4.1 percent for sponsorship.

About IEG, LLC

IEG leads the way in sponsorship intelligence. With over 30 years providing insights, evaluation, and guidance, our teams bring unparalleled perspective and proven methodology to every challenge.

We partner with top brands and properties to create fresh strategies, evaluate opportunities and maximize results. Our clients rise above competitors, meaningfully engage audiences and achieve lasting impact.

A unit of WPP’s GroupM, IEG is connected to specialty sibling communications companies in media, digital and activation. GroupM is the leading global media investment management operation that also serves as parent company to WPP media agencies including Maxus, MEC, MediaCom, and Mindshare.

For more information about IEG and the sponsorship industry, please visit http://www.sponsorship.com or call 800/834-4850 (outside the U.S. and Canada, 312/944-1727).