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Are sponsors blamed for edging off? Consumer reactions to sponsorship terminations

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Abstract

Firms regularly terminate sponsorships, even without publicly known misconduct by the sponsee such as athlete doping. Consumer reactions to these sponsorship terminations by firms have not been studied despite being a regular occurrence. Using a set of experimental studies, this paper analyzes consumer reactions to these sponsorship terminations (i.e., early and non-renewal) that were not caused by a sponsee’s misconduct, the underlying process that causes the reactions, and the role of several moderating factors (trust, power balance, and locus of control). Our findings reveal that sponsorship terminations have a negative effect on sponsors’ brand images—particularly early terminations that occur before the end of a contract—because consumers perceive these sponsorship terminations as unfair. The results also suggest that a termination is particularly harmful for the sponsor’s perceived fairness if the sponsor is powerful and if the termination decision is under the sponsor’s control. Further, the termination effect is particularly strong for firms that consumers trust.

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Notes

  1. Furthermore, an analysis of the Google Search Volume around the time of exemplary terminations supports the notion that consumers notice sponsorship terminations (see “Appendix A” for details).

  2. The detailed experimental manipulations for all experimental studies are available upon request.

  3. Here and in the following analyses, we checked the equality of variances (Levene’s test), and we provide the corresponding corrected t-values and p-values where applicable.

  4. Here, the question arises whether consumers generally disapprove of contract terminations beyond the case of sponsorship terminations, e.g., when considering a supplier contract. Theory suggests that because these non-sponsoring B2B-contracts do not show the key characteristics of sponsorships that we discussed above, i.e., regular, non-sponsoring B2B-contracts are usually not viewed as arrangements that “provide benefit to society” or “support causes that deserve support”. Thus, a termination should not lead to negative effects on fairness and brand attitude. To assess this, we ran an additional study, which we report in “Appendix C”. As expected, we do not find a significant effect on fairness and brand attitude if a firm terminates a regular B2B contract (e.g., contract with a supplier). This suggests that consumers do differentiate in the judgement between different contract types.

  5. 95% confidence intervals are reported in brackets.

  6. In addition to these two conditions in which either the sponsor or the sponsee was powerful, an additional intermediate condition was implemented in which the power was equally distributed. The results are similar to the results in the “power in favor of the sponsor” condition; early terminations show a negative effect on perceived fairness compared to the maintenance condition, while non-renewals show no significant differences compared to the maintenance group. For the sake of conceptual clarity and because an equal distributed power balance is quite rare to observe in practice, we omit this condition from the analysis which is presented here, but the results are available from the authors upon request.

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Author information

Authors and Affiliations

  1. Department for Environmental and Business Economics, University of Southern Denmark (Esbjerg), Niels Bohrs Vej 9, 6700, Esbjerg, Denmark

    Oliver Schnittka

  2. Kühne Logistics University, Großer Grasbrook 17, 20457, Hamburg, Germany

    Alexander Himme

  3. School of Business and Economics, Eberhard Karls University of Tübingen, Nauklerstr. 47, 72074, Tübingen, Germany

    Dominik Papies

  4. Institute for Marketing, University of Hamburg, Moorweidenstraße 18, 20148, Hamburg, Germany

    David Pellenwessel

Authors
  1. Oliver Schnittka
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  2. Alexander Himme
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  3. Dominik Papies
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  4. David Pellenwessel
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Correspondence to Oliver Schnittka.

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Appendices

Appendix A: Examples of Google search interest for the parties involved around sponsorship terminations

Appendix B: References for sponsorship terminations (Table 1)

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Art Not Oil (2014) Southbank centre drops shell as sponsor. http://www.artnotoil.org.uk/blog/southbank-centre-drops-shell-sponsor

BBC (2012) Unilever quits as Tate Modern’s Turbine Hall sponsor. http://www.bbc.co.uk/news/entertainment-arts-19293762

BBC (2014a) Football Conference agree to end Skrill sponsorship deal. http://www.bbc.com/sport/0/football/26018905

BBC (2014b) Great North Run ‘unaffected’ by Bupa sponsor withdrawal. http://www.bbc.com/news/uk-england-tyne-30104805

Bloomberg (2012) Sahara Group to withdraw sponsorship to India’s Cricket Team. http://www.bloomberg.com/news/2012-02-05/sahara-group-to-withdraw-sponsorship-to-india-s-cricket-team.html

Circa (2013) Reebok ends sponsorship of rapper Rick Ross over lyrics. http://circanews.com/news/reebok-ends-rick-ross-sponsorship

Cleveland.com (2011) PNC trims Philly flower show from sponsorships. http://www.cleveland.com/business/index.ssf/2011/03/pnc_trims_philly_flower_show_f.html

Complete Music Update (2015) Motorpoint ends sponsorship of Sheffield Arena. http://www.completemusicupdate.com/article/motorpoint-ends-sponsorship-of-sheffield-arena/

Crain’s New York (2009) JVC ends sponsorship of NYC jazz festival. http://www.crainsnewyork.com/article/20090427/FREE/904279967/jvc-ends-sponsorship-of-nyc-jazz-festival

Daily Mail (2013) Sponsor drops out of Canadian concert after performer Chris Brown causes Twitter backlash. http://www.dailymail.co.uk/tvshowbiz/article-2362734/Sponsor-drops-Canadian-concert-performer-Chris-Brown-causes-Twitter-backlash.html

ESPN (2009) RCR unsure of sponsor for No. 07 car http://sports.espn.go.com/rpm/nascar/cup/news/story?id=4491918

ESPN (2011a) Shaun White, Red Bull part ways. http://espn.go.com/action/story/_/id/6819685/shaun-white-ends-sponsorship-red-bull

ESPN (2011b) Sony Ericsson to part with WTA tour. http://espn.go.com/tennis/story/_/id/7383357/sony-ericsson-sponsorship-wta-tour-end-following-2012-season

ESPN (2014) Kelly Slater ends sponsorship with Quiksilver. http://xgames.espn.go.com/xgames/surfing/article/10708101/kelly-slater-ends-sponsorship-quiksilver

ESPN (2015) Danica Patrick eyes new sponsor for 2016 with GoDaddy not in picture. http://espn.go.com/racing/nascar/cup/story/_/id/12785122/godaddy-ends-sponsorship-danica-patrick-nascar

FOX Sports (2012) Ford of Europe will end their factory involvement in the World Rally Championship at the end of 2012. http://www.foxsports.com.au/motor-sports/ford-of-europe-will-end-their-factory-involvement-in-the-world-rally-championship-at-the-end-of-2012/story-e6frf3z3-1226496752498

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Handelsblatt (2011b) Commerzbank beendet das Triathlon-Engagement. http://www.handelsblatt.com/sport/sonstige-sportarten/sponsoring-commerzbank-beendet-das-triathlon-engagement/4339114.html

Milwaukee Business Journal (2014) U.S. Cellular to end naming-rights sponsorship of downtown arena. http://www.bizjournals.com/milwaukee/news/2014/05/02/u-s-cellular-to-end-naming-rights-sponsorship-of.html

Peta Australia (2013) Victory: Coopers Ends Sponsorship of Cruel Jumps Racing. http://www.peta.org.au/the-issues/use-for-entertainment/victory-coopers-ends-sponsorship-of-cruel-jumps-racing/

Platform London (2013) Statoil ends music sponsorship after growing controversy in Norway. http://platformlondon.org/2013/12/16/statoil-ends-music-sponsorship-after-growing-controversy-in-norway/

Radsport News (2014) Hamburger Vattenfall Cyclassics: Sponsor steigt 2015 aus. http://www.radsport-news.com/sport/sportnews_90771.htm

Reuters (2010) World Team Cup 2011 scrapped due to lack of a sponsor. http://ca.reuters.com/article/sportsNews/idCATRE6BC1X120101213

Reuters (2012) UPDATE 1—Cricket-Sahara withdraws India cricket sponsorship, IPL team. http://uk.reuters.com/article/2012/02/04/cricket-india-sponsorship-idUKL4E8D402B2

SBS (2014) Biennale of Sydney cuts ties with sponsor Transfield. http://www.sbs.com.au/news/article/2014/03/07/biennale-sydney-cuts-ties-sponsor-transfield

Sponsors (2012) Sponsor beendet Engagement wegen Wiesenhof. http://www.sponsors.de/no_cache/deutsch/startseite/suche/article///06826fa199/?swords_unternehmen=8&tx_ttnews[pointer]=3

Sponsors (2015) Interwetten steigt vorzeitig beim VfB Stuttgart aus. http://www.sponsors.de/index.php?id=72&tx_ttnews[swords]=sponsoringpaket

SportsBusiness Daily (2012) EPL’s Newcastle United Decides on early termination of Virgin Money shirt sponsorship. http://www.sportsbusinessdaily.com/Daily/Issues/2012/10/03/Marketing-and-Sponsorship/Newcastle.aspx?hl=Sponsorship%20ends%20contract%20early&sc=0

Sports Illustrated (2013) Olympic hero Leo Manzano in search of sponsorship. http://www.si.com/more-sports/2013/06/20/leo-manzano-nike-sponsorship

The Guardian (2012) Unilever ends £4.4 m sponsorship of Tate Modern’s turbine hall. http://www.guardian.co.uk/artanddesign/2012/aug/16/unilever-ends-turbine-hall-sponsorship

The Guardian (2015) Folio Society ends sponsorship of Folio prize. http://www.theguardian.com/books/2015/may/19/folio-society-ends-sponsorship-of-folio-prize

The Hollywood Reporter (2015) IMG loses Mercedes as New York Fashion Week sponsor. http://www.hollywoodreporter.com/news/img-loses-mercedes-as-fashion-761135

USA today (2010) FedEx ends Orange Bowl sponsorship after 20 years. http://usatoday30/sports/college/football/2010-05-03-fedex-orange-bowl-sponsorship_N.htm

Velo News (2014) Team Belkin announces sponsorship agreement with Dutch Lottery, BrandLoyality. http://velonews.competitor.com/2014/07/news/team-belkin-sponsorship-outlook-looks-improving_339002

Welt (2015) Der HSV will endlich wieder lieb gehabt werden. http://www.welt.de/regionales/hamburg/article136717628/Der-HSV-will-endlich-wieder-lieb-gehabt-werden.html

Appendix C: Terminations of sponsorship contracts versus terminations of other contracts

A core tenet of this paper is that sponsorship terminations differ from other contract terminations (e.g., terminations of firm-supplier contracts) because these non-sponsoring B2B-contracts do not show the key characteristics of sponsorships that we discussed above, i.e., regular, non-sponsoring B2B-contracts are usually not viewed as arrangements that “provide benefit to society” or “support causes that deserve support”. Hence, we expect that terminations of such contracts will not affect the fairness perception of the terminating firm in the same way. To test this notion, one study empirically examines whether consumers show the same type of reaction as revealed in Studies 1–4 when confronted with a non-sponsoring B2B contract termination.

3.1 Procedure

We recruited 91 respondents (mean age 37.92 years, SD 14.45; 64.8% male) through the same German online access panel as before (but different respondents). Similar to Study 1, we randomly assigned respondents to one of three conditions (B2B contract continuation strategy: maintenance vs. non-renewal vs. early termination).

3.2 Material

We applied the same research design and priming procedure as in Study 1 (Brand X as the focal brand). A hypothetical B2B contract was implemented to avoid respondent information biases. Selected B2B contract partner was a large German advertising agency (BBDO). After some introductory questions, every respondent received neutral information about Brand X and BBDO (i.e., through screenshots of their respective websites). This information was constant across conditions. The respondents received a website screenshot of a German newspaper that included a fictitious press article. To manipulate the B2B contract continuation strategy, the press articles contained either information about Brand X’s decision to maintain, to not renew, or to early terminate the B2B contract with BBDO. We took great care to design the press articles as similar as possible to the ones that we used in Study 1 while at the same time mimicking real articles that would report on these events. Pre-tests revealed that the contract continuation scenarios were perceived as realistic.

3.2.1 Measures

Following the experimental manipulation, we used the same measure for perceived fairness as in Study 1 (Cronbach’s α = 0.92; average variances extracted for all factors within a confirmatory factor analysis were 80.96%) and the same manipulation check items.

3.2.2 Manipulation checks

Our manipulation checks provide support for our intended manipulation of the B2B contract continuation strategy. That is, agreement to the statement that X has terminated the B2B contract with BBDO early was highest in the early termination condition (M = 6.59) compared to the non-renewal (M = 2.53) and maintenance condition (M = 1.67). Similarly, agreement to the statement that X has fulfilled its contract duties was weakest in the early termination condition (M = 3.33) compared to the non-renewal (M = 5.92) and maintenance condition (M = 4.78). Finally, agreement to the statement that X has not continued its B2B contract with BBDO was weakest in the maintenance condition (M = 1.63) compared to the non-renewal (M = 4.70) and early termination condition (M = 5.34). Table 2 contains the details.

3.3 Results

To test our expectations (i.e., the effect of regular B2B contract terminations), we use an ANOVA procedure. Figure 7 displays the mean values and standard deviations per experimental group. Table 9 contains the F-value for the ANOVA, η 2 for the effect sizes, and t-statistics (p-values) for the planned comparisons.

Fig. 7
figure 7

B2B contract continuation strategy: means and standard deviations (in parentheses)

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Table 9 ANOVA results and t-tests (B2B contract continuation strategy)
Full size table

The results show a non-significant main effect of the B2B contract continuation strategy on the perceived fairness of the firm (F(2, 76) = 2.02, p = 0.14). Neither an early termination (M = 4.03, SD 1.17) of the B2B contract (t(42) = − 1.09, p = 0.28) nor a non-renewal (M = 4.68, SD 1.19; MMaintenance = 4.51, SD 1.58) of the B2B contract (t(50) = 0.38, p = 0.71) had a negative effect on the perceived fairness of the firm. Thus, in contrast to a sponsorship termination, a firm’s termination of a regular B2B contract (i.e., non-sponsoring contract) does not affect the perceived fairness of the firm.

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Schnittka, O., Himme, A., Papies, D. et al. Are sponsors blamed for edging off? Consumer reactions to sponsorship terminations. J Bus Econ 87, 943–984 (2017). https://doi.org/10.1007/s11573-017-0859-3

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