Decision-making Processes Surrounding Sponsorship Activities Hans Mathias Thjømøe Norwegian School of Management Erik L. Olson Norwegian School of Management and Peggy Simcic Brønn Norwegian School of Management ABSTRACT The rationale behind sponsoring is as varied as the definitions of sponsorship itself. A logical approach to sponsorship decision making would dictate that firms should have clear targets and goals for sponsorship. They should also make some attempt to coordinate sponsorship with other communications efforts while measuring its effects or return on investment. This paper describes the findings from a sample of large Norwegian businesses on how they define sponsorship, how much they spend and where, why they sponsor, and how they manage the sponsorship activities. Large-scale sponsorship is relatively new to Norway, but this late start also has provided opportunity for learning from those who have gone before. It is possible to conclude from this research that many firms have a variety of complex goals for their sponsorship efforts but not terribly high-quality management practices when it comes to decision making surrounding sponsorship. Despite the impressive growth in sponsorship spending, there is much that remains to be learned about how sponsorship works and what makes it effective (Cornwell and Maignan, 1998; Speed and Thompson, 2000). The current study attempts to provide some insight into the decision-making process of managers responsible for sponsorship activities by examining how they define sponsorship, how sponsoring fits into their strategic planning and overall communication planning, and what sort of measurement of sponsorship effectiveness they regularly do. The sample is taken from the 400 largest firms in Norway, which includes a high proportion of foreign firms with operations in Norway. Norway provides an interesting context in which to study sponsorship because the large-scale sponsorship is a relatively new phenomenon. Berge (2000) notes that sponsorship was not a major communication activity in Norway before the 1994 Olympics in Lillehammer, where Norwegian sponsorship participation was largely confined to Norwegian state-owned industry such as telecommunications, the postal service, and Statoil, the state-owned oil company. The primary Olympic sponsors were not Norwegian firms but instead were large international firms such as Coca-Cola and Kodak that typically had a long history of sponsorship activities. Due to the perceived positive response to these Olympic sponsors, however, many Norwegian firms started or greatly expanded their sponsorship activities. Most recent estimates from 1999 suggest that, from a very low base prior to Lillehammer, sponsorship spending in Norway has grown to approximately 100,000,000 USD (Berge, 2000). This is in line with per capita sponsorship spending in countries with longer histories of sponsorship such as Sweden and the United States (ESOMAR, 1999). LITERATURE REVIEW Sponsorship definitions and motivations The typical progression of a sponsoring firm is illustrated by the stages of sponsorship goals and participation described by Meenaghan (1991). The first level is simply a donor giving money to a sponsor object in order to gain attention, but without more sophisticated goals and sponsor-object selection criteria. In the next level, the sponsor develops more specific goals and becomes more interested in receiving a return on their investment. On the third level, the firm assumes the role of an 'impressario', energetically involved and controlling activities. As firms move up in progression, their sponsorship goal setting, coordination, and effect measurement should all show increasing sophistication (Cornwell and Maignan, 1998). Although Meenaghan suggests that firms typically go through these progressive stages, Lannon (1992) asserts that classifications of firms, based on the perceived value of their sponsorship investments, may be influenced by the many different definitions given to the activity that imply differing levels of goals and motivations. While there have been several attempts to define exactly what sponsorship is, there is no generally accepted definition (Cornwell and Maignan, 1998). Meenaghan (1983) provides a very general and inclusive example when defining sponsorship as 'provision of assistance either financial or in kind to an activity by a commercial organization for the purpose of achieving commercial objectives.' A more specific goal orientation is provided by Otker and Hayes (1995) who define sponsorship as the financial support that industry provides in exchange for brand exposure. Kitchen (1993) and Dolphin (1999), however, provide a more sophisticated goal in defining sponsorship as financial support given with the expectation for commercial exposure in order to achieve goodwill and good relationships. While all of these definitions include only commercial motivations to sponsor, Duncan and Moriarty (1997) provide a less commercial definition of sponsorship, by including philanthropic gifts as a form of sponsorship, where sponsorship-generated publicity plays a secondary role to simply doing good deeds for needy causes. The breadth of definitions would indicate that scholars use the term 'sponsorship' to cover a wide range of activities. Within Meenaghan's (1991) multi-level framework, firms at the first level of sponsorship participation would likely be defining sponsorship strictly as a means to increase firm or brand awareness, while those at the higher levels have developed more sophisticated definitions Journal of Advertising Research Vol. 42, No. 6, November/ December 2002 pp 6-15 www.journalofadvertisingresearch.com