In common with other global lenders, HSBC is being forced to cut operational costs, but it is maintaining its association with high-profile sporting events. The bank's sponsorship head says he employs a prudent and selective approach to his activities in this area, Ben Flanagan writes
HSBC might be going through tough times like other major global banks, but not when it comes to sponsorship deals.
The high street lender has a high-profile sport involvement through the Dubai Rugby Sevens and the Abu Dhabi HSBC Golf Championship, and the moves have paid off.
Giles Morgan, the head of sponsorship at HSBC, says the bank is able accurately to track the return on its investments in global sponsorship deals.
"Typically, we get five or six to one. So for every £1 [Dh5.70] we spend, we would get £6 back," Mr Morgan says. "Three-to-one is the benchmark. But … we're very targeted in what we're trying to do."
These are difficult days for global banks. HSBC plans to cut costs by up to US$3.5 billion (Dh12.85bn) by the end of 2013, eliminating 30,000 jobs in the process.
Mr Morgan says the lender will be reflecting these changes in its sponsorship strategy by doing fewer things but doing those better.
"There isn't such a thing as one size fits all," he says. "Not everyone likes rugby; not everyone likes golf; not everyone likes the cultural programme that we're doing globally. But we are yielding a much better return by targeting."
q What are your expectations for the Dubai Rugby Sevens and Abu Dhabi HSBC Golf Championship?
a Rugby and golf are both excellent metaphors for the business in terms of who they reach, and where we can reach them. The Dubai Sevens has always been a perennial favourite. What we've now done is become a title sponsor of the HSBC Sevens World Series, of which Dubai is a key part. It's a good place for us to communicate with our customers in our key cities.
q What's your sponsorship budget?
a It's probably about 10 to 12 per cent of our marketing spend around the world. We don't release the numbers of what we spend. But some brands and companies use sponsorship to get mass awareness: sports like soccer and Formula One hit a very mass audience, which for many companies is absolutely vital. But not everybody can be an HSBC customer. And that's OK. That's not what we're trying to do: it's an aspirational, affluent brand.
q How are HSBC's sponsorship budgets going to change over the next five years?
a We're definitely looking to do fewer, bigger things better. This is not a company that believes in wastage at any time in its history, but particularly now. The business is making significant savings as a company globally, in the billions. And therefore it's required of me to ensure that we're reflecting that by making the right decisions to invest where we need to.
q Can you accurately define the return on investment for your Middle East sponsorships?
a Absolutely. Sponsorship is quite cold and analytical. It can range from simple things like client engagement and how we're dealing with them, and you can track that. We can use the equity of a rugby, golf or cultural programme to sell more current accounts. We also look at our brand-equity scores, media evaluation in terms of logo exposure.
It sounds like you're pretty comfortable that you're able to measure your return on investment accurately. Is that the case?
a I think we're as advanced as any company in the world in how we measure sponsorship. Because we have to be. I report to the senior management of the company - I'm responsible for a significant budget. And financial service companies have a fiduciary care to make sure that we're making the right and sound business investments. And HSBC historically has been known to always do that. This company has survived for 147 years by making prudent business decisions. Our sponsorship investments are no different. I have to be able to demonstrate what we're trying to achieve, and what we did achieve. And if I didn't I wouldn't get a budget, and quite rightly so.
q Emirates [Airline], the title sponsor of the Rugby Sevens, is one of the biggest spenders in the regional sponsorship industry. Have deals by big Middle Eastern companies inflated the market?
a No, not particularly. It depends on the property. Airlines, particularly Emirates, use sports sponsorship as a vehicle to get brand awareness, and have been a big sponsor of sport around the world. Etihad [Airways] are obviously using that as well. So they're using it as much as to generate brand awareness. And therefore things like soccer become a very obvious place for them to go.
q Are you looking for any other sponsorship deals in the Middle East region?
a Not aggressively. We're very happy with golf and rugby and the cultural programme which we'll be announcing later on in the year. We feel that it's probably enough for us right now. But I'd never say never. Businesses don't stand still. They're always looking at the next stage of their evolution.