Coca-Cola and Sponsorship Best Practice

Sponsorship is an often misunderstood and underestimated marketing communication channel. This article takes a look at sponsorship, the complexity of using sponsorship effectively as part of a marketing communications strategy, and examines Coco-Cola’s use of sponsorship to uncover the methods they use to generate a return on investment.

Sponsorship as a Marketing Tool

Sponsorship builds brand awareness among particular target audiences and implies an association between the sponsor and the object so that the characteristics or values of the object are projected on to the sponsor (Fill 2009). The use of sponsorship is increasing and it is becoming a more significant aspect of the marketing mix. “Over the past two decades, sponsorship-linked marketing growth has outstripped advertising growth by several percentage points, with the 2007 figure for sponsorship topping $37 billion worldwide (IEG 2007)”. In addition the public are less skeptical of sponsorship deals than advertising.

Meenaghan (1998) suggests that a sponsor’s role changes over time from donor to investor and finally as impresario. This evolution reflects the perception that sponsorship starts as an altruistic decision by a company but ultimately becomes another investment on which they expect a return. According to Thwaites (1994) the role of corporate sponsorships is to increase awareness and enhance the company’s image, whereas product sponsorships are intended to increase market share and develop media coverage. In order to maximise the benefits of sponsorship, it should be used as an element of integrated marketing communications (IMC) and not in a standalone capacity.

Types of Sponsorship

Sports sponsorship has “attracted the most attention and money”. This is because it attracts large audiences (both live and through mass media), and allows for segmentation of target audiences. Programme sponsorship has “grown from £81.2 million in 2000 to £176 million in 2006… partly because of a relaxation in the regulations”. Growth in arts sponsorship has slowed recently, after being very popular in the 1980s and 90s.

Other forms of sponsorship include supporting the local community, small scale schemes and ‘ambush marketing’. This is when “an organisation deliberately seeks an association with a particular event but does so without paying sponsorship fees” (Fill 2009). Paddy Power has used this on many occasions, most notably during the 2012 Olympics. On billboards in London, they boasted about being the ‘Official Sponsor of the Largest Athletics Event in London’ despite not being associated with the Olympics. This allowed them to reap the brand awareness benefits of being an official sponsor, and brought them extra publicity through the subsequent news stories.

paddy-power-ambush-marketing

Sponsorship ‘Fit’

The degree of fit between a sponsor and an object is one of the fundamental principles when discussing sponsorships – “the vast majority of empirical research has found that higher fit is related to higher sponsor recall or recognition accuracy” (Cornwell, Weeks, and Roy 2005). It has been suggested that fit within sponsorships can be evaluated using dimensions such as “sponsor relevance to the object, functional similarities, target audience similarities, and image similarities” (Gwinner 1997; Rifon et al. 2004; Speed and Thompson 2000)”.

The studies conducted by Olson (2011) found 7 bases on which sponsorship fit can be measured. He found if the sponsor brand is used by participants of the object (e.g. Nike golf clubs) and the audience is similar for the sponsor and object, then fit will be high.

Articulation

This is a method used to increase the perception that a certain sponsor is a good fit for a sponsorship object. Coppetti et al (2009) found that “articulation of the sponsorship leads to improved evaluations, more favourable brand attitudes and increased image transfer”. In the study, their articulation strategy involved changing the advertising slogan to better suit the context of the events. They also found that incongruent sponsorships can be improved through audience participation. This indicates articulation of a sponsorship agreement can increase the likelihood of success.

Other research has found that some incongruency increases attention and results in higher sponsor recognition (Olson, Thjømøe 2009). Dae-Hee et al (2010) agree, noting that image transfer between an incongruent sponsor and object can actually be more significant.  This suggests that a sponsor-object relationship need not be a perfect fit to be successful.

Coca-Cola’s Sponsorship Strategy

Coca-Cola is a an outstanding example of using sponsorship as an effective marketing communications tool. They have demonstrated this through the sheer length of time that they have sponsored some of the biggest sporting events in the world. For example they have a continuous agreement with the Olympic Games which has been unbroken since it started in 1928. They have a similar continuous agreement with the FIFA World Cup, which has been ongoing since 1978, and they have been linked to world’s fairs and national exhibitions since 1905. They also have a host of other very well known sponsorships such as American Idol, Apple iTunes, BET Network, NASCAR, NBA, and NCAA.

coco-cola

Coca-Cola takes a ‘Think Global, Act Local’ approach to their promotional activities. This results in the company sponsoring many small, regional sports teams and cultural events all around the world. One of the best examples of this is the ‘Form and Fusion Awards’ which originated in a secondary school in Ballincollig, a small town in Cork. In its second year, the competition more than doubled due to the help provided by Coca-Cola, and they were able to hold the final at the same venue as the 1993 Eurovision Song Contest attracting an audience of 2,500 people.

With regards to Coca-Cola’s Olympic sponsorship, the partnership goes far deeper than simply juxtaposing the Coca-Cola and Olympic logos in return for investment. They have a strong history of investing their resources to create events that bring the spirit of the Olympics to cities around the world. In addition, they also work closely with “National Olympic Committees to support athletes and teams in approximately 190 countries and became a charter member of the TOP Programme in 1986 under the exclusive product category of non-alcoholic beverages” (Olympic.org).

Coca-Cola introduced the Beatbox structure into Olympic Park to establish a strong presence. There is no explicit branding on the Beatbox; instead it is simply designed in red and white. Claudia Navarro, global Olympic marketing director explains that they think “it will be difficult to miss that it is the Coca-Cola pavilion and we trust that it’s going to be so special and unique that there’s definitely going to be word of mouth around it.”

Coca-Cola-Beatbox-by-Pernilla-Asif_4

These examples demonstrate how Coca-Cola is a global leader in the use and innovation of sponsorship techniques to execute their marketing plan successfully.

Why it’s Effective

To evaluate the effectiveness of Coca-Cola’s sponsorship, we can compare it to their goals. According to Business2000, Coca-Cola’s marketing objectives are as follows:

  • To connect with teens in an interesting and fun way.
  • To create unforgettable teen moments linked to ‘Coca-Cola’.
  • To ensure ‘Coca-Cola’ is viewed as making everyday life more interesting and fun.
  • To communicate the dynamic and leading attributes of the brand.
  • To be seen as a national sponsor at a local level and global sponsor on an international level.

According to IEG, Coca-Cola spends $330 million on entertainment and sports programs across all its brands, making it the most powerful sponsor in the U.S. (Sungho et al 2011). Having such a large sponsorship presence ensures that the brand is seen as the market leader on a global level. Sports sponsorship also helps to link Coca-Cola to the unforgettable moments that happen at the event. They are continuously seeking new objects that link their brand to events that are relevant to their target markets. The “sponsorship of the football championship have been motivated partly by the attraction of large and specific target audiences with whom a degree of fit is considered to exist” (Fill 2009).

Through the Form and Fusion Awards, Coca-Cola connects with their target market on a very local level. In addition this type of sponsorship is seen much more as donation than a commercial marketing activity and is very effective at improving the brand image for the company.

On a global level, Coca-Cola is one of 11 Worldwide Olympic Partners, which is the top tier of sponsorship. “The Olympics is one of the most expensive [events to sponsor], but it’s also the one that probably you get the least from.” comments Phil Rumbold, (then Cadbury UK’s marketing director). Sungho et al (2011) conducted a study into the effectiveness of Olympic sponsorship on consumer brand choice in the soft drinks market. They found that Coca-Cola’s sponsorship of the Olympics actually results in an increase in sales on a short term basis during the event. The long term sales effect was not statistically significant; however this isn’t a main objective of Coca-Cola’s sponsorship.

During the 2012 London Olympic Games, Coca-Cola’s index rating increased due to their sponsorship of the event despite questions being raised of the suitability of the partnership (Parsons 2012). Coca-Cola uses sponsorship to place its brand at the centre of the biggest sports events in the world. In this way, they can use their power as a brand to encourage participation in sports at all levels while also promoting the consumption of their product in a responsible and moderate way.

Coca-Cola is committed to providing social value through its sponsorships such as the one with the Olympic Games. In conjunction with Demos, they are attempting to develop a new model of evaluation for sponsorship deals. According to Jamie Eadie, Coca-Cola’s Olympic Portfolio Director, this new model will help all businesses to “quantify the broader social value of their sponsorship activity” (Marketing Magazine, 2012). It appears that for Coca-Cola, the effectiveness of their sponsorship strategy is not measured on the bottom line, but rather on a much broader level that includes the positive social impact it makes and the brand associations that it brings.

Through its sponsorship of the Olympic Games, Coca-Cola achieves its objectives in particular connecting with teens in a fun and interesting way and to be seen as both a global and local brand. The wide variety of other events that they sponsor ensures that they cover all of their objectives to a high degree and in this way using sponsorship is highly effective.

Analysis of Suitability

Using the IPR framework developed by Poon & Prendergast (2006), we can establish the degree of fit between Coca-Cola and the many objects it sponsors. This will give us an indication of the suitability of the sponsorships to the brand, but we must remember that fit and suitability are not fully positively correlated – a perfect fit does not mean the relationship is perfectly suitable. In fact, as mentioned earlier, it has been argued that mild incongruency can work in the sponsor’s favour as it helps to retain the audience’s attention.

sponsorship-suitability-coco-cola

As we can see from the graph above, Coca-Cola picks sponsorships that have varying degrees of functional and image similarities with their brand. Having said that, in general their largest sponsorships are with events that reflect their brand – Coca-Cola is viewed as making every day more interesting and fun.

The Olympics and the World Cup reflect their brand image; however there is essentially no function-based similarity between them. American Idol and the Form & Fusion Awards score more highly for function based similarity due to the integration of Coca-Cola within the television show for the former, and because Coca-Cola could control what beverages were served at the event in the case of the latter. In addition, these events also reflect the brands values and, in the case of American Idol, it also reflects the ‘American-ness’ of the Coca-Cola brand.

The localised sporting events that Coca-Cola sponsors score very low on image based similarity due to the complete incongruence of the perceptions of each – one is a global, commercial soft drinks manufacturer and the other is likely to be a volunteer-based event, with no ‘brand values’ to speak of. It scores more highly on the function dimension due to the fact Coca-Cola can provide all of the energy drinks requirements for the event through the ‘Powerade’ brand.

Coca-Cola has articulated its fit with the London Olympics by creating a link between the brand, youth culture, music and sport. Claudia Navarro explains “we’re using a creative construct that uses music to draw upon youth and get them closer to sport, get them talking about sport. That is a difference between London and previous games but the value and the ambition of youth and sport remain the same.”

However, Coca-Cola has faced questions regarding their suitability as sponsors of the Olympics. To many, Coca-Cola results in obesity and health problems, whereas the Olympics promote sport and healthy living. Coca-Cola is clear in its message though and they use this as an opportunity to convey their central aims of Olympic sponsorship, to encourage participation in sport and exercise among young people. Claudia Navarro has a very different opinion on this – “we actually enable athletes from around the world to make their dreams come true – basically thanks to the sponsors, you have the Olympic Games”.

But that is not the only reason why Coca-Cola is actually a suitable sponsor. The company are the longest running sponsors of the Olympics, a total of 84 years, long “before there was any talk of whether this is good or bad. [They’ve] had this solid commitment to youth and sport for 84 years, people don’t realise that” (The Sponsors 2012).

Claudia Navarro sums up the suitability of the two when she says “I love the Olympic Games and I think the fit with brand Coca-Cola – which is all about togetherness and happiness – couldn’t be better. So for me it’s an absolute no brainer.”

Sources

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Coppetti, C, Wentzel, D, Tomczak, T, & Henkel, S (2009), ‘Improving incongruent sponsorships through articulation of the sponsorship and audience participation’, Journal Of Marketing Communications, 15, 1, pp. 17-34

Cornwell, TB, Maignan I., (1998), “An International Review of Sponsorship Research,” Journal of Advertising, 27 (1), 1–21.

Cornwell, TB, Clinton S. Weeks, and Donald P. Roy (2005), “Sponsorship-linked Marketing: Opening the Black Box,” Journal of Advertising, 34 (2), 21–42.

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Websites

http://www.business2000.ie/pdf/pdf_5/coca-cola_5th_ed.pdf

http://www.coca-colacompany.com/stories/coca-cola-sponsorships

http://www.marketingmagazine.co.uk/news/1142406/London-2012-future-sports-sponsorship/

mashable.com/2012/10/18/space-jump-red-bull-analysis/

http://www.olympic.org/sponsors/coca-cola