Market Forces Powering Sponsorship and Co-Branding Arrangements
The changing global market climate is making corporate-music partnership more viable and desirable than in the past. For companies in all industries, old methods of marketing, such as traditional advertising, are working less effectively as too many messages vie for attention and ultimately drown each other out. At the same time, new technologies--the Internet, wireless systems, and more--are providing new means of communicating. These new technologies are enabling an unprecedented level of feedback from customer to marketer, and this in turn is reinventing marketing itself. To a greater degree than ever, companies can develop relationships with customers that involve finding out their needs, preferences, and habits such that products can be precisely tailored to those needs. Companies become, in effect, partners
in enabling consumers to achieve their dreams. It’s a far cry from the days of developing an untested product and foisting it on the public with misleading ads.
An accompanying effect of this company-customer partnership is that companies are seen as more benign and people-friendly than in the past. Companies and their customers are becoming communities of common interests. (Think of Apple Computer, the maker of iPods, and its quasi-cult of adherents.) Recognizing this, and wanting to extend it, companies are increasingly associating themselves with music and musicians to enhance their brand and communicate a corporate personality to customers.
Simultaneously, these companies are hungry to use every available communications tool to reach their audiences. Music, many companies have concluded, can be perfect for projecting their messaging through some of these tools.
Music also can be a tool for localizing a corporate message. A multinational company may want to tailor its offering to a specific territory. It can signal this effort by using a locally popular performer in its ads. From the musician’s perspective, the value of the corporate sponsor is fairly obvious.
A corporate sponsor may have far more clout, in both media access and pure financial muscle, than any music company. How much more clout? Consider that in 2004, retail sales for the entire worldwide music industry totaled around $32 billion. Then consider that retail sales in the same year for Proctor & Gamble--one multinational company-- totaled more than $54 billion. One company earned 40 percent more than the entire music business. No wonder that record companies are increasingly seeking commercial partners to help promote their acts.
So is born the partnership of corporation and recording artist. It’s not new, of course.
But today it has taken on greater importance as the costs of marketing music worldwide have increased, corporations have become more eager to underwrite the development af artists who can promote a company’s values, and artists have begun viewing corporate work as less stigmatizing than in the past, when it was viewed as “selling out.” (As an executive at ad agency Saatchi and Saatchi noted, “Some musicians have this distaste for ads as ‘dirty’ selling. But here’s a bulletin: record promotion is selling, too. It’s all about selling.”) Now, artists are being encouraged by their record companies to sell their music in all possible ways, including ads and corporate cobranding.
Some examples of musicians benefiting from use in ads, culled from the MIDEM 2006 magazine: Hip-hop artist Chris Classic’s track “Unleashed” was featured in ads for DaimlerChrysler’s car the Dodge Charger. Afterward, some 20,000 fans contacted the record company to buy the track. Another act had a track used on a Saatchi and Saatchi ad campaign, spawning flurries of e-mails from kids asking where to buy the song.
Those examples represent fairly traditional uses of music for selling other products.
Hit songs have been licensed by ad agencies for a long, long time. And star performers have rented themselves out to advertisers since the dawn of mass communication.
(Remember Michael Jackson’s Pepsi commercials?) But the landscape has been changing.
Trends that have begun to reshape the market for sponsorship and co-branding include the following:
● New kinds of business arrangements, including joint ventures between corporate brands and music providers
● Opportunities for corporate brands to get into exclusive content creation, ownership, and exploitation
● Brands becoming media players
● The creation of agencies devoted to matching bands with brands