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February 13, 2009

Saving cash through cancelling sponsorship deals could be damaging

Brands that are considering cutting their sponsorship programmes to save costs may do more damage than good and risk a radical shift in customer loyalty, as fans accuse them of ‘letting the side down’, according to a report by marcomms agency Brand Reputation.

The London-based agency, which specialises in building trust in consumer brands, warns that the potential for damage to the brand is greater now than it ever has been due to consumer dialogue online in forums, chat rooms, social networks and blogs. Consequently it is advising brands to undertake consumer research before withdrawing sponsorship to assess the potential impact on the brand.

“There is particular potential for damage to the brand if it withdraws from youth or community level sports, teams or events, as they often need the revenue from sponsorship the most and will most likely struggle to find a replacement sponsor in the current climate.

“Withdrawal at this level also has the potential to cause long-term damage to the sport itself as it may hinder the development of younger players and their ability to make it to the top of their game,” said Brand Reputation managing director Graeme Crossley.

“Amateur sports will suffer more as increasingly professional sports (particularly football) are run as businesses and tend to have additional revenue streams,” he continued. “Sponsorship may be the only form of revenue for amateur sports and brands seen to be ‘leaving amateur sides in the lurch’ may find their reputation suffers more as a result.”

Crossley claimed that consumer loyalty to the particular sport will always be greater than loyalty to the sponsoring brand and believes that consumers who are the most passionate/loyal fans will switch brand loyalty, where it is quite easy with no real barriers to doing so, if a brand is perceived to be ‘letting a sport/team/event down’ by withdrawing sponsorship.

“The level of risk associated with withdrawing varies. but if the brand is continuing to make large profits, and these are publicised, at the same time as withdrawing sponsorship support, then the potential damage increases,” Crossley explained. “Brands need to realise that consumers are more aware then ever of how top brands are performing and will expect those making a profit to continue supporting the community.”

For more information visit www.brandrep.co.uk

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