Sports sponsorship a boon for banks and insurers
In SA Nedbank, Absa, insurers Old Mutual and Sanlam, have been reaping the rewards with brand recognition strengthening
Financial services are pumping in more money into sports events in a bid to strengthen their brands and attract new customers.
Around the world, banks’ sponsorship of sports has intensified since the 2008 global economic crisis. Back in 2009 the Economist observed how banks were infiltrating stadiums because crowds had become “better heeled”.
The situation is similar in SA: for decades Absa has been synonymous with the local Premier Soccer League (PSL), Nedbank with the Ke Yona team search and the Nedbank Cup while FNB sponsored the Blitzbok rugby. On the insurance front, Momentum held on to its One Day International cricket sponsorship even in bad times when its profits were plummeting and the business losing market.
Other insurers and medical schemes are vying for headline-sponsor status on popular local marathons such as the Old Mutual Two Oceans and the Sanlam Cape Town Marathon. At the weekend in Durban, most banks hosted “business suites” where they dined the private bank clients and courted new potentials.
“Banking is the second most difficult thing to sell after insurance. Banks have to be much more innovative to give people a compelling reason to open an account with them rather than the competitor,” said Nedbank's head of sponsorship Tobie Badernhorst.
Nedbank, which hosted the Nedbank Cup at Moses Mabhida Stadium in Durban at the weekend, says sports sponsorship can be a profitable course and financial services around the world have realised that it is a great tool for building a “passionate” client base.
“Sponsorship allows us to build conviction with the brand. It is the dating process that gets the customer to tie the knot,” said Badernhorst.
He said research had shown that sponsorship is more effective at the youth and rising middle market and this Nedbank Cup final in particular was aimed at building brand affinity in the entry level and emerging middle class.
“Nedbank was seen as an elitist bank; the bank for the few. We needed to change that perception in those markets. In the first three years of the sponsorship Nedbank moved from being a non-entity in the entry-level banking market to No 1 in terms of awareness by 2010,” said Badernhorst.
At 1.52-million customers by the end of 2018, the entry-level segment is now the biggest in Nedbank’s customer base in terms of customers who use it as their main bank.
While Nedbank did not reveal the price tag of the sponsorship, which was extended when the first term expired in 2018, the overall prize money of the Nedbank Cup is in excess of R20m a year, partly to strengthen its client base among entry-level to middle-income segments.
Management consulting firm McKinsey found that sponsorships, if well targeted, have the potential to build a brand’s strength which contributes 60%-80% to overall sales.
Though no detailed research is available in the public domain about how much value financial services companies get from sponsoring sports, UK-based social media monitoring company Brandwatch found that, Barclays for instance, got mentioned 25% of the time in Premier League conversations.
While the sweet spot of the Nedbank Cup sponsorship is entry to middle-income markets, the bank like its peers who hosted clients at various business suites at Moses Mabhida, is also using the sponsorship to engage the higher echelons of the market.
“One-on-one engagement is more important in the wealth cluster and such engagement also means different things to different people. Is it about inviting them to a cocktail function, to a round of golf or to come to the Nedbank Cup final? Whatever it might be, we look at what can we use to establish and strengthen the relationship.”
The writer was hosted by Nedbank to watch the Nedbank Cup final in Durban