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Usefulness of Category Exclusivity
In order to truly gain the associative benefits that come with sponsoring a property that has a powerful brand, most sponsors feel that negotiating category exclusivity into the contract is imperative. But are there scenarios in which complete ownership of your category is not crucial to the effectiveness of your sponsorship? Should you expect to be granted category exclusivity at certain levels of financial commitment? Does your definition of your category differ from that of properties?
So when should you lock down category exclusivity? Primarily, when you're trying to tell a unique story or make a point. A Formula One team's technology hardware and services sponsor, which markets itself as the computing power behind the team, does not want a rival IT sponsor on the car casting doubt on that powerful marketing claim. The value of the property's brand should also play a significant role in your interest in receiving exclusivity. In other words, if you think an association with the property's name and logo will affect your target audience's perception of your company or their purchase intent, you should try to lock out competitors from associating with the property.
However, if your objectives are narrow and specific and the presence of competitors won't significantly impede you from meeting those objectives, then you should avoid paying the premium that comes with category exclusivity. A financial services company that signs a sponsorship deal in order to generate sign-ups for bank-issued credit cards would be throwing money away if it paid for category exclusivity. The bank may not feel that a specific sponsorship would effectively impact its business in personal banking, lending or brokerage services, so it should avoid paying for ownership of the broad financial services category. Some sponsors are becoming wise to the fact that category exclusivity is not necessary. If you scanned the inside of Safeco Field, home of Major League Baseball's Seattle Mariners, you would have seen sponsorship presence from no fewer than four banks this season.
Sponsors should expect to receive category exclusivity if they are committing significant resources to a property. If exclusivity is not presented as part of a title sponsorship or naming rights deal, the sponsor should demand that benefit. Other major sponsors and sponsors categorized as "presenting" or "founding" should also request exclusivity in return for their sponsorship investments.
For a specific sponsorship, your definition of the breadth of your category should depend on your objectives, the intelligence you have gathered on your competitors' interest in that property and your competitive position in sub-categories. For example, Company A, a technology hardware manufacturer that markets PCs, laptops, servers, storage equipment, personal audio players and handheld computers, may not be willing to pay the fee presented by a property in order to capture exclusivity in a broad IT hardware category that includes all of the above-mentioned products. If Company A has a tiny share of the personal audio player market and does not plan to aggressively grow that share, it may not want to include personal audio players in the definition of its category. But what if Company B, which also markets PCs and handhelds, buys in as the official personal audio player of the property? Attendees or fans may associate Company B's computing products with the property, which takes away from the associative benefits Company A may have received from its sponsorship. Thus, Company A might want to include wording in the contract that only allows a non-competitor in the other sub-categories to purchase the personal audio player category.
Locking out competitors may allow a sponsor to clearly present its message. However, unless safeguards are put in place by the property to block ambush activities from competing companies, and unless a company properly activates its sponsorship, category exclusivity will not provide any meaningful benefits to the sponsor.
