Helping the community out makes good business sense

It is estimated that Irish companies will give about €60 million in sponsorship this year, which reflects a global trend towards increasedexpenditure in this area, writes Colm Ward

The Special Olympics, due to begin here in June, will be the biggest sporting event in the world next year. Over 7,000 athletes from 166 countries will compete in the games, which are expected to cost over €34 million.

This is a major event for the Irish business community too - the €15.23 million in sponsorship that has been raised sets a new record for a sporting event in the State.

Bank of Ireland, the main sponsor, is providing €2.86 million towards the organisation of the games and a further €1.27 million to promote the event throughout the State.

The decision to get involved was based on the bank's policy of sponsoring events that complement its brand image rather than merely generating publicity.

"I don't want to see our logo plastered on everything. We want people to see that what we do makes a difference," says Ms Lisa Brown, sponsorship manager with Bank of Ireland. "The key requirement for us is to get out there and communicate with the public."

She believes it is important that the bank's sponsorship portfolio covers a broad area and encompasses a range of issues that matter to people. "People are increasingly concerned that companies are seen to give back to the community," she says. So, while events such as the All Ireland Football Championship, which the bank also sponsors, might attract a very large, diverse audience, sponsoring smaller events such as the National Ploughing Championships allows the bank to target a more specific audience - in this case, the agricultural community.

Sponsorship extends beyond simply donating money to a cause - it also involves making the bank's expertise available to its partners. As well as providing financial support, it also encourages its staff to get involved in organising events in their local area and every Special Olympics host town now has a bank representative on its committee.

In seeking out partnerships, Ms Brown looks for organisations or causes that she feels have something in common with the bank's corporate image. "The value we would have in partnership arrangements is empathy," she says.

This view is shared by Mr Jim Kelly, sponsorship manager with AIB, who describes sponsorship as a "conduit" to enable the bank communicate with its customers. "Our sponsorship in here is seen totally as a tool for developing the brand," he says. This policy means that AIB only engages in sponsorship that is compatible with its own brand image as "dependable, engaging and pioneering".

AIB's policy on sports sponsorship has been to focus on the grassroots level, as evidenced by its involvement with the GAA and rugby club championships. "Our strategy is totally community focused," says Mr Kelly.

Events such as the club championships allow the bank to make a connection with people by tapping into their passion for sport.

"For us [the aim] is to make an emotional connection with the customer and the community and also to give employees a chance to get involved with their community," he says. In addition to its corporate sponsorship, AIB also donates money directly to local communities under the Better Ireland initiative. This allocates funding for community projects that help children affected by drug and alcohol abuse, homelessness and lack of access to education through poverty.

By asking staff throughout its branch network to select these three main areas, the bank was able to better identify the needs of the local communities.

This "corporate giving" is a way of encouraging customer loyalty by building good relationships between the bank and local communities. The advantage of this, says Mr Kelly, is that it is the local bank manager who is seen to allocate funding rather than an unknown figure in head office. Its importance is reflected in the fact that the bank has spent over €2 million in this area in the past year, which is more than it spent on corporate sponsorships.

The sponsorship sector is becoming increasingly sophisticated as many companies become familiar with its intricacies, according to Mr John Trainor of Amarach Consulting. For the past four years, his company has conducted an annual survey of the industry. It estimates that Irish companies will contribute about €60 million in sponsorship this year, reflecting a global trend towards increased expenditure.

According to the most recent report, released at the beginning of this year, companies' spending on sponsorship worldwide has almost tripled since the beginning of the 1990s, climbing from $7 billion in 1990 to $19.2 billion in 1999.

For many corporations, sponsorship is an important element in their overall marketing strategy, which also includes advertising and public relations. On average, it accounts for 15 per cent of companies' total marketing budgets globally, with some companies predicting it will rise to 40 per cent in coming years, says Mr Trainor.

Attitudes in Ireland have matured considerably in the past number of years and many organisations are no longer content to just throw money into sponsorship in the vague hope that it will somehow boost their image.

Instead, the large corporate sponsors, such as AIB, Bank of Ireland, Guinness UDV, Eircom and ESB are targeting specific audiences for their message: "Sponsorship is more successful when a brand is very clear on who their audience is and who they are trying to get to," says Mr Trainor.

He does not believe that the economic slowdown will have a large effect on the willingness of companies to get involved in sponsorship. It might, however, see a refocusing of priorities as they reduce their expenditure on corporate hospitality and concentrate instead on consumers. "\ need to determine whether their activity is actually reaching the consumer," he says.

If companies can evaluate their sponsorship activity and prove to management that it is producing results, he sees no reason why the sector should suffer.

According to the Amarach report, which was based on interviews with sponsorship managers in Irish companies, sport attracts more sponsorship than any other sector, followed by charities, the arts and education.