View from City Road: Big prizes for race sponsors

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The Independent Online
Intrum Justitia's sponsorship of a yacht in the Whitbread Round the World race could have been just another corporate ego trip. Bo Goranson, the chairman, is after all an enthusiastic yachtsman himself. But the view in the sponsorship world is that Intrum got an absolute bargain for its pounds 3m.

There were 10,000 newspaper and magazine articles in 10 European countries, 18 hours of radio and 90 hours of TV. To buy that much advertising time would cost pounds 28m, according to Intrum's marketing specialists.

This is a highly suspect way of valuing the benefits, though it is much favoured by the sponsorship industry to justify its existence. But even if you divided by 10, the venture would still be near break-even.

The practical benefit from all that publicity is what counts, and is harder to value. This is a business heavily dependent on marketing. To what extent did the publicity raise awareness of the name and open doors to new business in Intrum's specialist marketplace?

Mr Goranson said his staff were already finding it easier to do business.

In France, where sailing vies with cycling as a mass sport, it took 16 cold telephone calls to get one appointment. Since the race, the number has fallen to 12.

Not having to exlain who you are is a help. This is, after all, a firm that few people had ever heard of before the race, unless they had received one of those sharp little letters asking for money.

Other sponsors of the Whitbread race have had more mixed results but are likely to return next time. So why is Mr Goranson saying this is the end of big-time sponsorship for him? If it was cost-effective, why stop now?

The Whitbread race raised Intrum's name from obscurity. To compete again would bring much diminished returns. The lesson for sponsors is that it pays to be highly selective and to know when to stop.