Why Do Luxury Companies Sponsor Art?

Course: The Environment of Visual Arts Administration Instructor: Prof. Carlo Lamagna Title of the paper: Why do luxury companies sponsor art? Author: Qing Zhong Why do luxury companies sponsor art? Motivations of corporate art sponsorship fall in many categories, as suggested by O'Hagan and Denice (O'Hagan,J. 2000). The analysis of this article concentrates on the external benefits a luxury company could gain from sponsoring art and particular attention will be given to the promotion of brand image, as it is a dominant motivation for corporate decision makers in order to raise brand awareness (Hitters, 1996).

To examine the outcomes of art sponsorship, examples of some luxury companies will be given. These examples include but are not necessarily limited to, Deutsche Bank, LVMH and Hermes. Each example will examine one aspect of the three major motivations that can be generalized into the publicity/brand image promotion category. In addition to these three examples, a personal observation will be given as a complete inspection analyzing all the motivations in a flowing process.

All the cases used in this article are “designer sponsorship” which means that luxury companies either initiate corporate art organizations or organize their own art events (Eamon O hOisin 1995). Instead of sponsoring existent art organizations or events, designer sponsorship allow luxury companies to take control over all aspects of the activities and thus maximizes the potential outcomes. The starting point of this discussion is the definition of sponsorship.

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It has been reiterated thousands of times by many luxury companies as selfless motives. However, it is not true in reality. Differing from charity or philanthropy, sponsorship is at its best a win-win situation in which sponsors put their own benefits, instead of the sponsored subjects’, in the first place. For the recipients, financial support may save them from desperate situations. For the givers, expected benefits include earning capacity growth or transferring a responsible corporate image to the public.

Luxury companies may not gain directly from their sponsorship behaviors, but they gain huge indirect bnefits from branding and image promotion to the public (Krzysztof Klincewicz, 1998). Indirect benefits relating to art sponsorship could be further detailed in three aspects. Firstly, by appearing more frequently in front of the public’s eyes on banners, boards, websites or TV news report, luxury companies propagate themselves and impress the latent clients in a way that is different from traditional advertisements.

A good example worth mentioning is the Deutsche Bank’s sponsorship for various art forms, including art fairs such as the International Hong Kong Art Fair, Art Fair Tokyo, self designed art events such as “Artist of the Year” and influential long-term art projects like the cooperation between Deutsche Bank and the Guggenheim Museum. Figure 1 Hong Kong International Art Fair Sponsorship for worldly renowned art events gives Deutsche Bank a wide coverage and exposure in social media and thus expands its visibility to the public, but this kind of brand exposure is not directly related with Deutsche Bank’s products.

It gives the public a fresh and indirect perspective to approach the bank and its products. As can be seen in Figure 1, whenever viewers browse on the Hong Kong Art Fair’s website, they can’t avoid noticing the little image of the bank on the right corner. Same situation applies to other art events such as the “Deutsche Bank’s Artist of the Year”. It is impossible for the media to mention this event without saying its title beginning with the “Deutsche Bank”.

It is neither impossible for the public to get a first impression for the event without knowing that it is sponsored by the bank. Secondly, art sponsorship transcends the role of a narrowly defined advertising tool and adds meanings and value to the company and its products, which is the most essential difference between art sponsorship and sports or entertainment sponsorship (O'Hagan,J. 2000). Value creation is essential as it stimulates emotional connections in human minds and help luxury companies attract and gather key clients who share the same kind of ifestyle with their unique brands. By sponsoring art, luxury companies create images that consistently convey their value and expect potential clients connect the corporate identity with these images, which is often times not just an illusion as meaning transferring and image associations are most effective and immediate when such image links exist (Gwinner, K. 1997). Let’s take a look at Bernard Arnault‘s plan on the LVMH Museum, which has been a controversial issue since 2006 because of the conflict between the public rights and the corporate’s benefits.

Figure 2 LVMH Museum The museum looks fabulous. It’s itself an art work by the renowned architect Frank Gehry, but it’s also a iconic image of the corporate self-portrait: arrogant, powerful, egocentric and elitist. The project once ceased constructing because neighbors objected: they want the space to remain green and they don't want this to be the start of more buildings in the bois, even if it's by Gehry. However, the senate finally compromised to LVMH’s superpower announcing that this project contributes to the civic pride and cultural identity of the nation.

Ironically, the content of this museum may not be as democratic or liberal as stated. It will include Arnault’s private and corporate collections as well as heritage pieces from several brands such as Dior and Vuitton-those have always been regarded as belongings of the elite. Contrary to the senate’s announcement, LVMH reinforces its value and identity by building up a private coded museum that can only be decoded by the counterparts, namely, the limited elite who would have the sense and taste to appreciate the art in the same way the company appreciates it.

Wouldn’t the public be scared off if they approach this apparently exclusive and flamboyant museum? They might come up with an even stronger conclusion that glory only belongs to the superior. As for the “lucky” elite, their requirements for supremacy can be further satisfied and therefore confirms their degree of honesty for the company. Thirdly, since sponsorship is naturally linked with social responsibility, it will relieve the public’s aversion for the luxury that is often times regarded as a superior, limited VIP belonging distinguishing the elite class from the grass roots.

Promotion of public image also provides better returns in luxury companies’ rent-seeking process - that of lobbying important politicians or policy makers (O'Hagan, J. 2000). Cartier might have been excelled in establishing such a generous and socially responsible identity in its continuous giving for the Foundation Cartier since 1984. Besides the organization’s name, there is no link between the artworks commissioned by or in the foundation’s collection and the Cartier brand.

This kind of sponsorship is therefore called the “pure” sponsorship in order to distinguish from the product-related one (O'Hagan,J. 2000). Figure 3 The Foundation Cartier The artworks in the collection travel around the world and ongoing programs take place in the foundation’s dynamic, light-filled home in Paris, which Figure 2 presents. For nearly 30 years, Foundation Cartier has been sponsoring the contemporary art in a modest and prudent manner.

Though hard to notice, this conduct might have won a good reputation for Cartier and would benefit the brand enormously in its long term rent-seeking activities. Finally, in order to delineate a more consistent and comprehensive picture, an independent case based on my personal observation at the Rolex Mentor ; Protege Arts Initiative will be studied to integrate all the three motivations stated above. The Rolex Mentor and Protege Arts Initiative is an international philanthropic programme created to assist extraordinary, rising artists to achieve their full potential.

It seeks out these artists from around the world and brings them together with great masters, for a year of creative collaboration in a one-to-one mentoring relationship. The event that I volunteered at was a “dinner celebrating the Mentors and Proteges of the 2010-2011 Rolex Arts Initiative”. It was actually a quite exclusive event with safeguards standing outside the entrance and all guests dressing up with their by-invitation-only cards. Admittedly, Rolex has done a lot to propagate this initiative, as can be seen on various websites, on banners, n magazines and on spot of the celebrating dinner (Refer to Figure 4). Figure 4 Entrance of the dinner for celebration the Rolex Arts Initiative However, “By Invitation Only” is what I felt for this arts initiative because during a whole year of mentoring, no public access has been allowed into the procedure all the way from selecting qualified candidates to presenting the cooperative final projects. Only the “selected” will have a real sense for what is happening within this event.

This “selected” group includes the renowned artists, board of the Rolex, celebrities and business magnets, all of whom share a common character of being superior and elite (from my observation at the Rolex dinner). As the art initiative reflects the value of Rolex, it satisfies and attracts the same group of people who recognize and approve of this value. If attracting only a small group of people is what Rolex aims at, there will be some questions to ask: Does the initiative promote the public image of Rolex? Is this program contributing to the overall goodness of the society?

Can the public feel the goodness and if yes, to what extent? Information gathered from the websites or the observation did not suggest a positive answer to this question, but together they do not provide enough evidence to make a decisive conclusion. Luxury companies’ motivations for art sponsorship are tailored to the internal and external situation each company faces. They are diversified and sometimes hard to recognize, but together they stimulates information and resource exchange between art organizations, business and the public and contribute to the flourish of the art ecology.

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Krzysztof Klincewicz. "Ethical Aspects of Sponsorship. " Journal of Business Ethics 17, no. 9/10, How to Make Business Ethics Operational: Creating Effective Alliances: The 10th Annual EBEN Conference (Jul. , 1998): pp. 1103-1110. O'Hagan, J. "Why do Companies Sponsor Arts Events? some Evidence and a Proposed Classification. " Journal of Cultural Economics 24, no. 3 (2000): 205. pp. 6. 8 Okonkwo, Uche. Luxury Fashion Branding : Trends, Tactics, Techniques. Basingstoke: Basingstoke : Palgrave Macmillan, 2007. -------------------------------------------- [ 1 ]. Deusche Bank,“Art & Music: Fostering Creativity”, http://www. db. com/csr/en/art_and_music. htm (Accessed November 21). [ 2 ]. Judith H. Dobrzynski, “Paris To Get Gehry's LVMH Museum Afterall”, Arts Journel Weblog, http://www. artsjournal. com/realcleararts/2011/04/lvmh. html (Accessed November 21). [ 3 ]. LaPlaca Cohen, “Cultural Sponsorship”, http://www. laplacacohen. com (Accessed November 21). [ 4 ]. The Rolex Mentor and Protege Arts Initiative, “About the initiative”, http://www. rolexmentorprotege. com/en/ about-the-initiative/index. jsp(Accessed November 21, 11).

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