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The Sponsorship Playbook

The Relevancy of Sponsorship

Sponsorships continue to be relevant to brands as a key way to grow brand awareness and consideration.  According to CNBC, it’s estimated that brands spent $66 billion on sponsorship deals worldwide in 2018.  This investment encompasses a variety of properties from sports to entertainment to causes, with the goals remaining the same; to engrain the sponsor’s brand into the hearts and minds of the property’s consumer fan base in an effort to raise awareness, increase loyalty and ultimately drive sales.
The below highlights some of the considerations that brands should review before they ink a new sponsorship deal.

Finding The Right One

Brands must first determine their overall marketing objectives.  The most successful sponsorships come from companies that have asked themselves; “What are we trying to achieve with this sponsorship?” and “Can this particular opportunity achieve these objectives?”  For instance, if a brand is looking to immediately impact the lower sales funnel they may want to explore other marketing avenues as returns via sponsorship can take time to develop.
As they say; “You are the company you keep.”  As brands evaluate a sponsorship, they should reflect upon their own brand ethos and ensure that it aligns with the property and other sponsors.  Since many sponsorships require terms of five years or more, it is important for brands to only associate with properties that they would be proud to have their logo associated.
Sponsorship fees can be expensive.  According to Bloomberg.com, Social Finance Inc. (SoFi), a finance-tech startup, committed to paying more than $30 million annually over 20 years for naming rights to the Rams’ and Chargers’ new football stadium in Los Angeles.  As brands review proposals, they need to understand that the true cost of the sponsorship goes beyond the fee paid to the property.  To fully leverage the sponsorship and achieve their objectives it is typical for brands to spend $2.20 on activation for every $1 spent on the sponsorship, according to an IEG 2017 Sponsorship Decision-Makers Survey.

Negotiating the Deal

Many properties will start sponsorship discussions with an off-the-shelf proposal.  It is critical that the brand review the proposal and request revisions to confirm that it meets their specific needs and goals (in fact, at Advantage, we help our clients “reverse engineer” the process and identify what we need in a deal prior to any discussions).  A variety of branding and access assets are often included in most deals; digital, social and mobile media on-site signage activation footprint tickets and hospitality.  The strongest (and most expensive) sponsorships will include the ability to use the property’s Intellectual Property (marks/logos) and provide category exclusivity for the brand.  If the brand does not plan to utilize the IP, the property may be willing to offer a pure media or hospitality package as a less expensive alternative.
Before the deal is finalized, it is recommended that the brand secure an un-biased sponsorship and media valuation on the proposal.  The valuation will provide the brand with a comparison of the value of the assets against the asking price and serve as a strong negotiating tool.  Our valuation methodology calculates line-by-line value based on four type of asset class; IP, media assets, impression-based assets and marketplace value assets.  This step does not however answer the question of whether the proposal meets the brand’s objectives or is a good fit for the company. This is simply a tool to analyze the assets and determine the overall proposal value.

Amplifying the Partnership

The best partnerships are activated through more than just one channel.  As deals are signed, companies should engage internal company support across both the leadership and integrated marketing teams.  The most successful sponsorships are amplified across social, digital, PR, experiential, advertising channels and down to the regional/local levels when possible.  Having the appropriate activation budget available along with internal company support will go a long way in determining whether the sponsorship moves the needle.
Be in it for the long haul.  As companies consider new opportunities, they need to understand if it is a new opportunity or if they are replacing another brand from the same category.  If the brand is taking over an existing category sponsorship, they will likely need to invest more in activation in order to change consumer perception and awareness currently owned by the original brand.  Additionally, for new sponsorships, brands should still expect that it will take a few years before they develop substantial equity with a property and its fan base.
It is also important to develop KPIs on the onset of a sponsorship and then hire a third party to measure the return on objectives around awareness, consideration and lift as well as additional brand and business specific objectives.  In the same IEG 2017 Sponsorship study referenced above, 31% of brands interviewed stated that they did not allocate any budget towards measurement.  These brands are likely to have a more difficult time understanding where they stand in the sponsorship space as well as convincing internal executives that an extension should be signed after the first term expires.
Based on research from FASPO that 82% of consumers stated sponsorship engagements are “very good and beneficial to a brand’s image” and from Turnkey that almost 55% of avid sports fans said they are “more likely to consider trying a product if that product is an official sponsor,” there is no denying that sponsorships are a powerful marketing tool if carefully selected and properly activated.

 

 

Advantage currently supports various brands on the development of sponsorship strategies as well as negotiating deals and performing valuations across sports, music and entertainment properties.  If you need help with a sponsorship, we would love to hear from you.