In sponsorship, a discussion around category exclusivity can prompt all kinds of interesting exchanges and emotions. Just ask Anna Kendrick:

Category Exclusivity is such a foundational concept in sponsorship. This type of sponsorship asset  involves a commitment by the property to the brand that they will limit (or eliminate altogether) how they might partner with another company within a certain industry or product category.

It ranks highly as a most sought after benefit in sponsorship. Below is a summary of the results from IEG’s most recent sponsorship decision makers surveys from 2017 (Source: sponsorship.com):

For brands, category exclusivity comes with a cost. When a property agrees to category exclusivity, they’re foregoing revenue that could be generated from another deal with another brand - so they charge more for including this asset in a deal than they would otherwise. 

In recent years, the NHL and some of North America’s largest beer and alcoholic beverage partners agreed to “semi-exclusive” partnerships with the league - marking the first time that the league didn’t have an exclusive beer sponsor in quite some time (More Info: theglobeandmail.com). 

While the NHL’s beer sponsors are paying less for their partnerships than they would have paid if category exclusivity were included, are their desired marketing and business outcomes being diluted because they are now competing for the mindshare of hockey fans with competitors? I think common sense tells us that the answer to this question is “yes”. But the real question is,  by how much are those outcomes being impacted?

In general, has the sponsorship industry figured out a consistent way to assess the incremental benefit of category exclusivity in an agreement (vs the same deal without it)? 

A quick LinkedIn poll I conducted on the topic recently only had 40 respondents, but nearly all of the respondents were experienced sponsorship professionals. As you can see from the screenshot below, it appears as though the industry remains a bit perplexed on this topic…

It seems as though many sponsors want category exclusivity included in a sponsorship agreement, but they don’t quite have a clear and tangible explanation for why it’s worth paying for.

The challenge is that category exclusivity doesn’t really have value in isolation… it’s barely even possible for it to exist by itself. Brands invest in sponsorship to generate marketing and business outcomes via other asset types (like on-site or digital media branding integrations, or like the right to use a property’s logos and marks), first and foremost. And the effectiveness of a sponsorship depends on the performance of these other assets, as well as the sponsorship activation initiatives of the brand. 

So drawing conclusions around the incremental benefit of category exclusivity would be challenging without first perfectly isolating and measuring these other factors… and also without accounting for the “interaction” between other sponsorship assets and factors with category exclusivity.

If anyone has some solid data-driven insights on this topic, I’d love to hear from them (mitch.thompson@pandopartner.com). Although given the competitive nature of category exclusivity as a concept, such insights might just remain hidden for years to come…