Ambush Marketing — A Threat to Corporate Sponsorship

Corporations concerned about the efficiency of traditional methods of marketing communications have adopted a range of alternative media to target audiences. One such medium is commercial sponsorship, which has grown significantly in recent years. By sponsoring an event or providing a budget for an event’s broadcast, a sponsor can generate audience awareness while simultaneously creating associations of the event’s values in people’s minds. In this article, I focus on an increasingly prevalent corporate sponsorship practice in which a company, often an event sponsor’s competitor, attempts to deflect the audience’s attention to itself and away from the sponsor. This practice, known as “ambush” or “parasitic” marketing, simultaneously reduces the effectiveness of the sponsor’s message while undermining the quality and value of the sponsorship opportunity that the event owner is selling. As such, it may seriously inhibit the further growth of corporate sponsorship. Here I seek to warn sponsors of the potential threat to their sponsorship investments, outline the nature of ambushing and its strategies, and discuss the ethical perspectives related to ambush marketing and possible strategies and responses that a corporate sponsor might consider.

The Development of Commercial Sponsorship

Commercial sponsorship for marketing purposes developed only during the past twenty-five years. Sponsorship’s ability to transcend language and cultural barriers makes it an attractive global marketing option. In 1970, sponsorship expenditure in the United Kingdom was only £4 million, but, by 1994, an estimated £450 million was spent on sponsorship.1 In the United States, market sponsorship expenditure grew from $850 million in 1985 to a projected 1996 expenditure of $5.4 billion.2 The worldwide sponsorship market grew from an estimated $2 billion in 1984 to $13.02 billion in 1994.3 The key markets of Europe and the United States dominate the industry worldwide, valued in 1994 at $4.28 billion and $4.25 billion or 32.9 percent and 32.6 percent of worldwide expenditure respectively.4 Continued strong growth in this medium is forecast. These estimates of sponsorship expenditure include only the direct costs of securing the sponsorship rights. Expenditures to leverage or promote these rights must be at least equal to the direct costs, and many major sponsors invest several times the direct cost to exploit their initial investment.

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References

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4. Ibid.

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20. Ibid.

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The concepts of power, mutual dependency, expectations, risk, trust, and collaboration as well as the basic mechanisms of contractual agreements and market forces impact on the governance of this relationship. Two particular behavioral characteristics postulated by Williamson are highly appropriate: bounded rationality, which is the inability of economic actors to write contracts that cover all possible contingencies, and opportunism, which Williamson saw as the rational pursuit by economic actors of their own advantage, with every means at their disposal, including guile. See:

O.E. Williamson, Markets and Hierarchies: Analysis and Antitrust Implications (New York: Free Press, 1975).

There may be a need to go beyond transaction cost economics with its primary focus on dyadic relationships in that a variety of economic actors are involved, either directly or indirectly, in decisions regarding the sponsorship of major events. In the case of the Olympic Games, these will include the Olympic movement at all its various levels, broadcasters, sponsors, licensees, and not least the athletes and the sporting audiences. In such circumstances, management theory in the form of the network perspective and the interorganizational relationship literature is highly relevant to discussions on issues of contracts, cooperation, conflict, and control between economic actors. See:

H. Hakansson, ed., Internal Marketing and Purchasing of Industrial Goods — An Interaction Approach (New York: Wiley, 1982);

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25. Ibid., p. 66; and

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33. Ibid.

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Payne (1993), pp. 4, 5.s2.

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