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December 13, 2012

How savvy sports sponsors can make the most of emerging Southeast Asia market

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With London 2012 in the rear-view mirror, industry eyes have shifted their focus to the upcoming blue chip events in Brazil and Russia. Along with India and China, the BRIC nations have long been identified for the opportunities they present global brands.

While this focus is sure to continue, brands are beginning to pay more attention towards the emerging Southeast Asia markets where an expanding middle class offers brands massive opportunities for growth. When you look at the economic development in the region, it’s not hard to see why.

According to Morgan Stanley, economic growth among the four biggest economies in the region – Thailand, Malaysia, Singapore and Indonesia – is set to expand by 4.5% in 2013 compared to only 3.1% at a global level. Meanwhile, stock market gains in the Philippines have outpaced the rest of Asia with 29.8% increases. Factor in the opening of trade restrictions in other markets such as Myanmar and you begin to form a compelling case for brand development in the region.

So what does this mean for sports sponsorship?

It means opportunity and challenge. It’s fair to say that the sponsorship market across Southeast Asia is by no means mature, which means industry leaders must capitalise on every available opportunity and minimise every challenge. Brands that demonstrate an understanding of the local environment and an interest in supporting the growth and development of the country will fare best over time. What better way to do this amongst a sports-mad population than through sponsorship?

Brokerage company, CLSA Asia Pacific Markets, estimate that Southeast Asia’s middle class is set to reach 145million across the region by 2015. This would represent a market seven times larger than the entire population of Australia. While spread across multiple markets this represents huge opportunities for brands both local and international to establish their foothold in the region.

Likewise where the size of the region represents potential, it also presents challenges as the differences in each market can be vast. Differences in infrastructure, fan needs, specific sport events and language barriers all pose their own challenges when delivering to the region as a whole. When hosting regional tournaments, such as the ASEAN Basketball League or AFF Suzuki Cup (ASEAN Football Championships), brand flexibility is crucial for adapting to the demands of each local market and achieving the best results.

With relatively minimal regulation in place the relative prevalence of ambush marketing around sporting events is one of the biggest challenges currently facing sponsorship in the region. It is not uncommon to see multiple brands in and around venues – official or not  – and the onus is therefore on official sponsors to react with understanding and flexibility and raise their game in the creativity stakes to ensure they stand out.

Having recognised the potential for sponsorship in the region many Premier League clubs have already made the move to Southeast Asia. It could be said that Chelsea has led the way among EPL clubs in the region having established an Asian office in Singapore in August 2011 and acquiring Singha as a regional sponsor. Other teams have been quick to follow suit with sponsorships by local brands such as Chang (Everton), Air Asia (QPR) and most recently, Grand Royal Whiskey who became Myanmar’s first company to partner with a European football club when signing a two-year deal with Chelsea.

There are of course a number of international events for other sporting codes in the region F1 is prominent in Singapore and Kuala Lumpur already, while Bangkok is keen to host a race from 2014 onwards. In golf, the Barclays Singapore Open and CIMB Classic have seen the likes of Rory McIlroy and Tiger Woods strut their stuff while basketball, badminton and boxing are all popular in the region. These sports offer brands an entry point into the Southeast Asian market and an opportunity to develop an emotional relationship with consumers that could not be forged through traditional advertising.

Although there is perhaps more willingness to do so, brands should not be solely interested in the global events within the region. As the infrastructure and funding for domestic leagues and sporting bodies is relatively limited, it is here where brands can establish themselves in the hearts and minds of both participants and fans through supporting the growth of sport.

Take Myanmar for example, where Caribbean Telco Digicel has become a key partner of the Myanmar Football Federation; establishing themselves at the forefront of the liberalisation of Myanmar’s telecommunications sector. Like Digicel have shown in Myanmar, understanding the needs of the local environment and supporting the growth and development of the country sees even greater returns for their efforts.  They have engaged with fans on an emotional level and have become a part of their growth and success as a nation.

Overall, there is a bright future for sponsorship in Southeast Asia and while the economy continues to flourish brands will continue to invest. So long as the approach is win-win-win then everyone will benefit.

 


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