Innovation Isn't Always Convenient
When markets lack competition, consumers are harmed. The unchallenged competitor faces no countervailing force to keep prices down and keep customer service value up. In this situation there is no opportunity for a competing viewpoint that may serve a market more efficiently, to take root. Worse, without competition in a market, innovation is stifled. On the flip side, new ideas – even ones that that go against conventional wisdom – can ultimately lead to much greater choices and services to the market, and often times be the catalyst for economic growth for an entire market or economy.
Just look at the PC market with Microsoft as the dominant force before the Internet. If Microsoft had its way, we’d still be installing software locally on our desktops. The Internet, as we know it, wouldn’t exist. We wouldn’t know a blog from a frog. Until Netscape was funded and realized, software developers could only distribute their software through Microsoft’s OS requirements, and it was near impossible for data to be shared between PC users. The web browser - not pioneered by Microsoft - facilitated a totally new way to create and share information and ideas. It was the impetus to creating out modern information economy.
What does this have to do with sponsorship, you ask? Well, in sponsorship we have our own Microsoft. It is called IEG. Much like Microsoft held a virtual monopoly over desktop computers and the software and information people could access on their computers, IEG controls the information and sets conventional wisdom about sponsorship. From how sponsorships are sold and valued, to how large the market is, to what the trends are, IEG is "the worldwide authority on sponsorship
Simply stated, no other market competitor has been able to establish enough of a footing to challenge IEG, its information, and its market perspective. It's so entrenched and has so many resources to continue reinforcing its view of the marketplace, that no legitimate competitor has been able to make IEG face the market forces it needs to bring more value to the market through innovation. IEG is too comfortable to be truly innovative anymore. I mean when you are getting paid nicely for doing what you do, how would you have any inclination or motivation to change?
IEG surely has good intentions, but the announcement and release of the IEG sourcebook online this week is a stark reminder of how innovation is stifled when one dominant force controls a market and doesn’t need to worry about competition. The press release announcing this new product touts the fact IEG worked with a company called Multiview that publishes business directories, like the American Concrete Pavement Association, to put this new website offering out. Could one be more conventional? Why didn’t some fiery, hungry software entrepreneurs that thrive on doing new things do it? And what in the heck took so long for this thing to go online in the first place?
Not to put too fine a point on it, but I started a company that created online records of sponsorship opportunities, 10 years ago. It launched in April of 2001. It had a greater depth of data, was more searchable by more criteria, and was in a more consistent form than what was just released brand new for 2009. To me, it seems IEG basically took its Sourcebook and turned it over to another company to put online. The records in the online Sourcebook have links to websites and email addresses, which is a modest improvement over a paper directory I suppose, but it doesn’t seem customers can update the data, and the formats aren’t very consistent either. Worst of all, the search is strictly by keyword, state and zip code.
This site, SponsorPitch, which is currently about half way to its full set of planned features, offers a similar ability to put a sponsorship opportunity online and it offers more data sharing tools. It also collects more data and offers more search options. And there are others that do as well. They are also free, while IEG charges print-style pricing at $395/year to be listed in a cookie-cutter online sourcebook (or "about $1 a day"). When music labels tried to charge for their name, rather than their product... well, we know what happened.
Given the resources IEG and its parent company, WPP Group, have at their disposal, they could create an amazing website and information sharing platform that would bring incredible efficiencies to the sponsorship industry and make sponsorship more effective as a result. This could only grow the total available market of sponsorship $ available to everyone. IEG could partner with new providers to bring totally new ideas to fruition, and capitalize on them, for the betterment of all. These things would not be based on what is convenient for IEG today. They would be new ways of doing things that would tear down some of IEG’s existing business models and make them start thinking in a different direction, so more growth could be spurred tomorrow.
This is what competition and innovation does. It forces old ways to be replaced with more efficient ways of doing things based on new ideas and technologies. Sure, someone may lose some size and power, but the market doesn’t care who serves it, it just wants to be served. Travel agencies got reduced after Priceline, Travelocity, and Expedia, but I don’t think the market of travel consumers is complaining. And even though airlines are struggling, more people are flying than ever before. So too will there be more sponsorships to cover, promote, and provide services for, as time goes on, but only if the market is grown.
IEG should be given credit for trying the online marketplace venture with a partner (Sponsor Direct) a few years ago, even though it never really came to fruition as a viable concept. But perhaps this episode and the new online Sourcebook demonstrate IEG simply can’t innovate for the market. If this is the case, shouldn't IEG use its position to encourage and promote innovations in the sponsorship marketplace, even from those that may see the market differently?
What do you think?
The opinions expressed herein do not necessarily represent those of the publisher, SponsorPitch, LLC. Mike can be reached by email at mike@sponsorpitch.com and on Twitter at @mjmunson. Also, don't forget to view all of Mike's previous posts.