9th Annual Canadian Sponsorship Landscape Study

9th ANNUAL CANADIAN SPONSORSHIP LANDSCAPE STUDYNORM O’REILLY OHIO UNIVERSITY & TROJANONEELISA BESELT & ADAM DEGRASSE TROJANONE

Research Partners

2

CSLSAbout, History & Method

9th Annual Results Findings & Trends

Sponsorship in 2015Key Lessons from the 9th CSLS

THIS REPORT

3

Canadian Sponsorship Landscape StudyABOUT, HISTORY & METHOD

METHOD

4

DesignPerspectives, Industry

ProcessOnline, Partners, Streamline

AnalysisTrends, Comparative

OriginsIndustry Need, Share

CSF, Vancouver

SMCC Annual Conference, Toronto

CSF, Halifax

HISTORY

5

2007

CSF, Toronto

2008 2009 2010 2011

2013 2014

CSFX, Ottawa

Festivals & Events Ontario, Toronto

2012

CSF, Quebec City CSF, Montreal

SMCC Annual Conference, Toronto

CSF, Montreal

SMCC Annual Conference, Toronto

SMCC West, Calgary

Infopresse: RDF Commandite, Montreal

CSF, Saskatoon

CSTA Sport Event Congress, Ottawa

SMCC Annual Conference, Toronto

SMCC West, Calgary

Infopresse: RDF Commandite, Montreal

Canadian Association of Fairs & Exhibitions, Ottawa

2015

CSFX, Edmonton

SMCC Annual Conference, Toronto

6

9th Annual ResultsFINDINGS, TRENDS & WHAT’S NEXT

Historical CSLS Survey Respondents

RESPONDENTS

7

0

100

200

300

400

500

600

2007 2008 2009 2010 2011 2012 2013 2014 2015

117132152

238218

294

145167

247

31334852

73123

6561

86

3445748111614267109

171

Num

ber o

f Res

pond

ents

SponsorsAgenciesProperties

Note: Survey is open until June 30th, 2015. Visit www.sponsorshiplandscape.ca to enter responses.

2015 Profile182 Responses

34 Sponsors117 Properties31 Agencies

90% English10% French [*↓]

RESPONDENTS

8

Respondent Profile

14.6%

22.0%

29.3%

14.6%

19.5%

CEO/President

VP, Marketing/Sponsorship

Other

Coordinator, Marketing/

Sponsorship

Director/Manager,Marketing/ Sponsorship

Head Office Location

14.6% 14.6%

43.9%

7.3%

9.8%

Note: Other includes events, and sales directors/managers, as well as development officers, member services, etc.

9

Sponsorsn = 34 (29 ENGLISH; 5 FRENCH)

$681,342average largest sponsorship of

resopndent

Investment mix:

83.3% Cash16.7% Value In-kind

49.0% For-Profit51.0% Not-For-Profit

Average # of Sponsorships: 84.4 (range 1 to 1,000)

Range in size from 10 staff to 45,000 employees.

Average of 5 staff spend more than 25% of time on

sponsorship

SPONSOR SUMMARY

10

2015 Sponsor

Respondents(n = 34)

Investment mix:

49.5% For-Profit50.5% Not-For-Profit

Average # of sponsorships:

35.5 (range 1 to 200)

Average # of FT Sponsorship employees:

4.25 (range 1 to 10)

Investment mix:

85.1% Cash14.9% Value In-kind

$891,505 average activation spend

(range $0 to $2.8MM)

Largest sponsorship property:

69% Pro sport

23% Olympic/Amateur

8% Festivals, Fairs, Events

Average company budget:

$987MM$2.17MM

Average rights fee spend($20MM highest)

Investment reach:

1.0% International24.4% Canada

6.6% Multi-Province18.1% Provincial22.0% Regional

27.8% Local

MARKETING COMMUNICATIONS BUDGET

11

BudgetMarketing

As a % of overall marketing communications budget

Sponsorship

20132012201120102009200820072006

16.7%15.5%22.5%15.4%

22.3% 29.6%

21.9%23.1%

25.4%

2014

Approximately 1 in every 4 marketing communications dollars are spent on sponsorship.

GEOGRAPHICAL FOCUS

12

International 1.0% National 24.4% Multi-Provincial 6.6%

Local 27.8%Regional 22.0%Provincial 18.1%

LARGEST INVESTMENT

13

0%

10%

20%

30%

40%

50%

2007 2008 2009 2010 2011 2012 2013 2014

Perc

ent I

nves

tmen

t

Pro Sport Amateur Sport Festivals, fairs, annual events

CauseEntertainment

69.0%

23.0%

8.0%

Historical Property Category of Sponsor’s Largest Investment

14

Propertiesn = 117 (110 ENGLISH; 7 FRENCH)

PROPERTY SUMMARY

15

Total rights fee range from

$10K to $21M

$681,342average largest sponsorship of

resopndent

Investment mix:83.3% Cash

16.7% Value In-kind

49.0% For-Profit51.0% Not-For-Profit

Range in size from 10 staff

to 45,000 employees. $1,442,650

average activation spend

2015 Property

Respondents(n = 117)

Property reach:26.8% International

26.8% Canada2.4% Multi-Province

24.4% Provincial14.6% Regional

4.9% Local

$236,000 average activation spend per property

Average # of sponsors:

20.3 (range 2 to 75)Revenue mix:77.9% Cash

23.1% Value In-kind

88.9% For-Profit11.1% Not-For-Profit

Sponsorship revenue average:$2.4MM

(range $5,000 to $25MM)

$441,800average largest sponsorship

(max. was $6MM)

Average annual budgets:

$1.04B(2.3% from sponsorship)

Average # of FT sponsorship employees:

4.85 (range 0 to 100)

Volunteer workforce:Male 36% vs. Female 64%

11.6%of properties believe their

sponsors are very satisfied with their ROI

REVENUE TYPE

Cash vs. VIK Sponsorship Revenue

16

0%

20%

40%

60%

80%

100%

2006 2007 2008 2009 2010 2011 2012 2013 2014

22.1%23.6%30.8%33.6%32.3%34.8%33.0%39.0%30.0%

77.9%76.4%69.2%66.4%67.7%65.2%67.0%

61.0%70.0%

Perc

ent o

f Res

pond

ents

Cash VIK

CATEGORY OF PROPERTIES’ LARGEST SPONSOR

17

15.9% Finance

6.8% Public Administration

20.5% Retail Trade

6.8% Manufacturing

20.5% Communications

9.1% Services

$(22.1% in 2013)

(12.9% in 2013)

(12.3% in 2013)(6.5% in 2013)

(11.5% in 2013) (3.1% in 2013)

18

Agenciesn = 31 (25 ENGLISH; 6 FRENCH)

AGENCY SUMMARY

19

$681,342average largest sponsorship of

resopndent

Range in size from 10 staff

to 45,000 employees. $1,442,650

average activation spend

Average of 5 staff spend more than 25% of time on

sponsorship

2015 Agency

Respondents(n = 31)

75% of sponsorship divisions fall

under Marketing & Communications

13.8 average # of sponsorships worked

on in 2014

Sponsorship billings:

58.5% For-Profit41.5% Not-for-profit

Source of billings:

Sponsors 27.2% Properties 67.5% Agencies 5.3%

Largest sponsorship client:17% Sponsor

83% Properties$585,000

average sponsorship billings

Sponsorship billings account for52%

of total billings

Sponsorship billing by gender targets:

27% Female31% Male

42% Non-specific

Area of billings:

Causes 21.2%Olympic Sport 18.6%

Pro sport 16.1%Festivals 12.6%

Entertainment 10.2%

Historical Sponsorship Billings as Percentage of Total Billings

AGENCY BILLINGS BREAKDOWN

20

0%

20%

40%

60%

80%

2006 2007 2008 2009 2010 2011 2012 2013 2014

45.8% 47.1%

55.9%52.5% 52.8% 54.2%

68.8%62.3%

52.0%

Perc

ent I

nves

tmen

t

AGENCY BILLINGS SOURCE

21

Source of Billings (2014)

5.3%

67.5%

27.2%

Agencies

Sponsors

Properties

4.5%

59.5%

36.0%

Source of Billings (2013)

Agencies

Sponsors

Properties

Area of Agency Billings (Properties)

AGENCY BILLINGS

22

0%

9%

18%

26%

35%

2006 2007 2008 2009 2010 2011 2012 2013 2014

Perc

ent I

nves

tmen

t

Pro Sport Amateur Sport Festivals, fairs, annual events

CauseEntertainment Others?Arts

?

23

Activation & EvaluationRESULTS

ACTIVATION RATIO

24

2006 2007 2008 2009 2010 2011 2012 2014

40¢

50¢

60¢

70¢

80¢

43¢46¢

2013

71¢76¢

62¢57¢

75¢

62¢

41¢

Activ

atio

n (C

ents

on

Dolla

r)

Historical Activation Ratio (Canada & US)

$1.70 $1.90 $1.50 $1.40 $1.40 $1.60 $1.70 $1.70 $1.70US (IEG):

ACTIVATION TACTICS

25

0%

5%

10%

15%

20%

2010 2011 2012 2013 2014

Perc

ent o

f Act

ivatio

n Sp

end

Historical Sponsor Activation Spend by Tactic

Advertising Branded content

Social mediaProduct sampling

PR

Hosting/hospitality

EVALUATION

26

2006 2007 2008 2009 2010 2011 2012 2014

2.0%

4.0%

6.0%

8.0%

2013

Perc

ent S

pend

on

Evalu

atio

n

7.8%

4.5%

6.0%

4.1%

2.6%2.3% 2.7%

3.0%

1.1%

Historical Sponsorship Evaluation

PRE-EVALUATION

27

20%

40%

60%

80%

Perc

enta

ge o

f Eva

luatio

n

68%

Percentage of Evaluation Budget on Pre-Evaluation

2006 2007 2008 2009 2010 2011 2012 20142013

13%3%

1%

15%

80%

Note: The question wasn’t included until 2009.

0%

14%

28%

42%

56%

70%

Perc

ent o

f Res

pond

ents

ROI SATISFACTION

28

Not at all satisfied

SomewhatDissatisfied

Neither satisfied nor dissatisfied

Somewhat satisfied

Very satisfied

38.5%46.2%

62.8%

0.0%4.7%

18.6%7.0%

11.6%

0.0%0.0%

Sponsors

Properties (perception of their sponsor’s satisfaction)

Note: 1 in 10 respondents indicate they do not know their satisfaction with ROI from sponsorship.

Sponsor Satisfaction with Sponsorship ROI

Sponsorship in 2015KEY LESSONS FROM THE 9TH ANNUAL CSLS

29

The industry halted its growth - both in fees and in activation. This is not suprising given the large growth in 2013. However, this comes in conjunction with “smarter” spending.

1. THE INDUSTRY CALIBRATES

30

CANADIAN INDUSTRY SIZE

31

Expected Change for 2015

$

Industry SizeIndustry Spending-6.7%

$

2013 $1.77B2014 $1.66B

2012 $1.57B2011 $1.59B

2010 $1.55B2009 $1.43B

2008 $1.39B2007 $1.22B

2006 $1.11B

20.0%73.3%6.7%

from 2013-6.7% from 2013

+49.6% from 2006

TOTAL INDUSTRY SPENDING

32

0

1.0

2.0

3.0

2006 2007 2008 2009 2010 2011 2012 2013 2014

$1.59$1.78

$2.38$2.52 $2.51 $2.50

$2.75 $2.85

$2.34

Amou

nt ($

Billi

ons)

Historical Total Spend Trends ($B)

Rights Fees

Activation Spend

Total Industry Spend

$1.66 (↓)

$0.68 (↓)

(↓)

0%

10%

20%

30%

2006 2007 2008 2009 2010 2011 2012 2013 2014

Perc

ent I

nves

tmen

tSPONSORSHIP MIX

33

Historical Sponsorship Investment in Major Areas 39.7%

19.1%16.3%

7.3%5.2%3.6%

Pro Sport Amateur Sport Festivals, fairs, annual events

CauseEntertainment Education Other Arts?

?

8.9%

0.5%

34

For the first time, branded content is the most invested in activation tactic by sponsors and properties. It is also considered by sponsors, properties and agencies to be the activation tactic that best drives business results.

2. BRANDED CONTENT INCREASES

GROWTH OF BRANDED CONTENT

35

0%

4.25%

8.5%

12.75%

17%

2010 2011 2012 2013 2014

Perc

ent o

f Act

ivatio

n Sp

end

Historical Sponsor Activation Spend on Branded Content

ACTIVATION TACTICS

36

SponsorsCreating Branded Content (25%)

Public Relations (25%)

Broadcast (25%)

Sales/Consumer Promotions (25%)

PropertiesCreating Branded Content (34%)

Hosting/Hospitality (14%)

Co-Promotions (14%)

AgenciesCreating Branded Content (44%)

Athletes (16%)

Product Sampling (15%)

Sales/Consumer Promotions (14%)

Other (11%)

What activation tactic best drives business results?

37

Sponsors target their sponsorships and investment in both gender-specific and not gender-specific properties (e.g., adults).

Compared to 2012, there appears to be a positive change in the role of women in sponsorship.

3. BETTER GENDER BALANCE

SPONSORSHIP INVESTMENT TARGET MARKETS

38

17.3%of investments

targeted at females

30.0%of investments

targeted at males

52.7%of investments

not gender specific

DEMOGRAPHIC FOCUS OF PROPERTY

39

4.8% Women and/or Girls

4.8% Men and/or Boys

38.1% Adults

26.2% Children and Youth

?26.2% Other

SPONSORSHIP BILLINGS BY TARGET MARKETS

40

27.0%of investments

targeted at females

31.0%of investments

targeted at males

42.0%of investments

not gender specific

WOMEN AND SPONSORSHIP

41

MetricMetric 2012 20142014Women Women Men

Sponsorships that target 4.8% 18.0% 43.0%

Sponsorship investment that targets 17.2% 17.3% 30.0%

Working in sponsorship 58.8% 74.5% 25.5%

Sponsorships that target 35.0% 27.0% 31.0%

Working in sponsorship 15.6% 29.3% 70.7%

Focus of property’s target market 6.3% 4.8% 4.8%

Volunteers 66.3% 64.0% 36.0%

Primary sponsorship decision maker 29.8% 53.7% 46.3%

Spon

sors

Agen

cies

Prop

ertie

sAl

l

4. SERVICING FALLS SHORT

Servicing of sponsorships by properties continues to fall short of sponsor’s expectations.

42

SPONSORSHIP (DIS)SERVICE

43

0 1 2 3 4 54.38

4.05

4.79

4.17

3.68

4.24

4.09

3.86

4.24

3.45

3.08

3.75

3.13

2.54

2.89

2.70

2.45

2.64

Likert Scale

ProvidedImportance2013

0 1 2 3 4 54.54

3.85

3.77

4.77

3.62

3.23

3.92

3.69

3.85

3.54

2.77

4.23

2.08

2.31

2.15

2.85

2.00

1.85

Likert Scale

2014

Recall stats

Loyalty stats

Target profile

Ambush protection

Activation w/ sponsors

Activation resources

Exclusivity protection

Activation w/ properties

Concluding report

Recall stats

Loyalty stats

Target profile

Ambush protection

Activation w/ sponsors

Activation resources

Exclusivity protection

Activation w/ properties

Concluding report

People seem to be sleeping better. In particular, the top concerns of the past - demonstrating ROI, getting the right fit of HR and expertise, and securing targets - have made way for greater budget and activation concerns.

5. PROGRESS IS BEING MADE

44

SLEEPLESS NIGHTS

45

0%

5%

10%

15%

20%

25%

30%

Perc

ent o

f Res

pond

ents

2012 2013 2014

Demonstrating ROI

Budget Concerns

ActivationHR & Expertise CompetitionSecuring & Targets

Other

Historical Sponsorship Concerns Facing the Industry

SLEEPLESS NIGHTS

46

“How do we monetize social media and content? The cost of creating engaging content is a challenge [and] we have to be able to see an ROI on these investments in new content and properties.”

“A qualified next ‘generation’ of industry professionals lack training and support.”

“Working with sponsors who ‘want the world’ in terms of benefits, but aren’t willing and don’t see the value of paying.”

“Corporate Canada is far behind sister companies in the US as it relates to how far ahead of an event they decide if they may sponsor/partner and secondly, that they make many decisions on activaiton too close to an event to do it effectively.”

ASK THE AGENCIES

47

“Work with agencies who leverage this [HR] expertise in-house - you don't need the resource exclusively, but rely on it when you do.”

“I think the reduction in percentage [of social media spend] demonstrates lower costs to activate, not fewer activations. Social media is still relevant.”

“Ensure that expectations and measurement systems are confirmed at the front end and written into the contracts.”

“Higher wages. Not-for-profits are notorious for under paying event staff. Lower the burn out rate (events are notorious for long hours and too little recognition [for the staff]).”

HR?

HR?

ROI?

Social?

6. CHANGE IS LOOMING

Most industry professionals are expecting to see some changes to sponsorship in the next few years. Largely related to technological changes and flexibility.

48

BIGGEST OPPORTUNITIES

49

Sponsorship in the Next 3 Years

0%

5%

10%

15%

20%

6.8%7.9%8.4%8.4%

10.0%

13.2%14.2%

17.9%

Perc

ent o

f Res

pond

ents

Technology New Properties Relationships/Partnerships

Sports Activation Measurement Branding & Promotions

Knowledge/Education

Note: Respondents share what they considered to be the three biggest opportunities in sponsorship. Responses were grouped according to theme.

BIGGEST OPPORTUNITIES

50

“Continued growth in social and digital media integration into sponsorship.”

“The momentum behind Canada’s 150th Anniversary celebrations.”

“Building partnerships that are not defined by a finite period of time; creating opportunities for a longer shelf life.”

“There’s more than hockey in Canada...why don't we start working more with other properties and expose Canadians to more sports/music/events?”

CHANGES COMING

51

0%

5%

10%

15%

20%

5.6%5.6%6.4%8.0%8.0%8.0%

9.6%9.6%

18.4%20.8%

Perc

ent o

f Res

pond

ents

Digital & Technology

Activations Measurement Tools

Collaborations Branding Strategies

New Properties

Competitions Budget Fluctuations

Sponsorship Terms &

Ownership

No Change

Expected Changes to Traditional Sponsorship Model

Note: Respondents share what they considered to be expected changes to traditional sponsorship. Responses were grouped according to theme.

CHANGES COMING

52

“Multi-year agreements with assets that are flexible rather than set for the duration of the contract.”

“Sponsoring public figures or major events will change in light of public groundswell against environmental or social disgrace.”

“More onus on properties to create and develop the sponsorship program for clients.”

“More investment in the development of content for distribution through a variety of public (e.g., Facebook, YouTube) and private (e.g., corporate internal) digital channels.”

SUMMARY

53

The Industry Calibrates$1.66B in Rights Fees

Increased Branded ContentBest Return for Respondents

Better Gender BalancePrimary Decision Makers (53% Women)

Servicing Falls ShortExcept for Exclusivity

Progress is Being MadeROI, HR and Target Concerns ↓

Change is LoomingEspecially in Technology

123

456

THANK YOU!

54

Dr. Norm O’Reilly | oreillyn@ohio.edu

Elisa Beselt | elisa.beselt@trojanone.com

Adam DeGrasse | adam.degrasse@trojanone.comVisit www.sponsorshiplandscape.ca or www.sondagecommandite.ca to enter responses.

Note: Survey is open until June 30, 2015.

| norm.oreilly@trojanone.com

CLIENTLOGO

Visit www.sponsorshiplandscape.ca or www.sondagecommandite.ca to enter responses.