Sponsorship is million pound game

Like it or not, Eircell's one million customers will pay for its vaunted sponsorship of the Who Wants to be a Millionaire? series on RTE television.

But the State's largest mobile phone operator, which is believed to have committed about £7 million to the two-year initiative, argues that the money is well spent. The firm's sales, marketing and advertising budget is expected to rise to about £27 million this year, up from £21 million in 1999.

This significant figure is seen as crucial to the company's overall investment in its business. Eircell has committed some £2 million a week to the development of its network and it will spend £50 million this year on handsets, according to a spokeswoman.

When asked whether Eircell customers would prefer cheaper phone calls to expensive sponsorships, she says: "At the end of the day we also have to invest in the brand . . . If we stand still, we're only going to lose customers."

Potential participants in the quiz - which the company hopes will attract strong interest - will apply by calling a dedicated phone line operated by Eircell. The firm will charge a premium rate for the calls and hopes to recoup some of its investment in this manner.

Of course Gay Byrne's reincarnation as quiz-master offers obvious "feel good" opportunities for branding specialists.

No surprise then that Eircell, a subsidiary of Eircom, faced competition from other potential sponsors when it was approached by Tyrone Productions.

A Dunnes Stores' spokesman declined to comment on a suggestion that the supermarket chain had considered sponsoring the series. The National Lottery is believed to have developed a plan to sponsor the programme by means of a tie-in with its scratch card games.

And Eircell's rival Esat Digifone confirmed that it was among the companies who entered dialogue with the production firm owned by Riverdance founder Ms Moya Doherty and her husband Mr John McColgan.

"Ultimately, it didn't represent good value for us," says Digifone's marketing and communications manager, Ms Edel O'Leary.

Yet Digifone, which has yet to report a profit, also sees sponsorship as crucial to the development of its business. Among other ventures, the company is associated with the Cork hurling and gaelic football teams and the Jordan Formula One racing group, although Ms O'Leary declined to reveal the sum spent on these initiatives.

It is clear, nevertheless, that more and more large-scale sponsorship deals between broadcasters, sports organisations and companies eager to develop "awareness" of their brands are emerging.

For RTE, sponsorship represents a considerable revenue opportunity, which is exploited by its commercial division. The broadcaster does not accept sponsorship on its editorial or news output, but an increasing number of sports and general presentations appear with corporate insignia.

However, the share of sponsorship revenue - set to rise with the Eircell deal - is still relatively small. A person familiar with the situation says the broadcaster generated £40 million from television and radio advertising in the first five months of the year. This compares with £1.5 million earned through sponsored programmes.

Even before its latest deal, Eircell was one the larger sponsors of RTE programmes. The company is said to be spending some £200,000 on its sponsorship of the broadcaster's coverage of the Formula One motor racing series this year.

Other large sponsors include mortgage lender Irish Life, which is thought to have spent £150,000 on its sponsorship of the ER medical drama series in the first five months of the year. The food group Nestle is said to have spent £108,000 on its sponsorship of the Midweek Movie series in the same period.

While the broadcaster is prohibited from accepting advertising for alcoholic spirits, a spirits producer, Gilbeys, sponsors the Friends comedy series.

According to consulting firm Sponsorship Strategies, a division of the Amarach group, the sponsorship element of all Irish corporate spending will reach £45 million this year, up from about £40 million in 1999.

This increase - distinct from general marketing budgets and advertising costs - reflects a European trend. The consultants estimate that companies in the region spent some $5.6 billion (€5.8 billion) in 1998, up 11 per cent on the previous year.

A director of sponsorship strategies, Mr John Trainor, claims consumers view sponsorship arrangements favourably when compared with advertising.

Mr Trainor describes it as a "barge" concept, compared to the "speed boat" of advertising, which is aimed at a more immediate response from consumers.

The finances of engaging in sponsorship may also prove compelling. One well-placed person says Eircom's high-profile sponsorship of the Met Eireann weather forecast on RTE television costs the company about £350,000 annually - the comparable cost of the equivalent advertising space would be about £1.5 million.

The telecoms firm - whose share price has languished below its flotation rate for much of the past year - is believed to be spending about £3 million on sponsorship this year.

"There are more and more bigger sponsorship deals because people feel that you get better value for building a brand than you do for advertising," says its spokesman. "It's all about people feeling positive towards the brand."

When asked whether Eircom's shareholders would prefer to see a more positive share performance or sponsorships, its spokesman insisted that sponsorship could not be divorced from the development of the business underpinning its share price.

Companies like to portray sponsorship - aimed at a long-term favourable response from consumers - as "giving something back" to the public. Thus it is important for large firms with significant brands to establish the right "mix" with the right event, body or broadcast.

Eircom, for example, is investing about £100,000 in its sponsorship of the Special Olympics movement this year. Yet there are larger deals. The company's £6 million sponsorship, over 10 years, of the Republic of Ireland soccer team and its £11 million investment in the proposed FAI stadium near the Citywest complex in west Dublin are cases in hand. It is believed that telecoms firm NTL, Guinness, the ESB and Coca-Cola expressed interest in sponsoring the project.

As with the millionaire quiz sponsored by Eircom's subsidiary, the undoubted populist appeal of the national soccer team - despite its variable fortunes - would have been a significant factor in determining the FAI's price.

A similar point can be made about Guinness's lucrative sponsorship of the All-Ireland hurling series, although the drinks company is also a significant supporter of "minority" interests such as the annual jazz and opera festivals in Cork and Wexford.

While certain observers have questioned the merits of a sporting organisation such as the GAA taking sponsorship from a brewer, the arrangement is said to be worth about £2 million annually to the body. Bank of Ireland is thought to have committed a similar amount in its sponsorship of the All-Ireland football series. Guinness has no plans to reduce its annual sponsorship budget of £7 million as part of its latest rationalisation programme, says a spokesman.