Sponsorship. For many organizations such as sports clubs and charities, it's what keeps them alive. And for companies, providing sponsorship gives them an opportunity to gain brand awareness, grow market share and to be good corporate citizens.
But how do you identify a good strategic sponsorship opportunity? How do you figure out how to get a return on investment for your sponsorship dollars? And what is the criteria I use for evaluating sponsorship opportunities for my clients? These questions are answered in today's post.
What I want to share with you are some guidelines as they relate to strategic sponsorship. If you run a company and sponsorship opportunities are put in front of you, you can use these guidelines to determine if it's going to be dollars well spent. You can also use them as a way of presenting to a potential sponsoree the basis upon which you will provide sponsorship to them. (I refer to sponsorship recipients as sponsorees.)
If you're seeking sponsorship – for example if you're a sports club, charity etc – you can use these guidelines to identify how best you can give value to a sponsor. Further, it will help you to better articulate how that value will be generated.
The guidelines presented here apply to sponsorships ranging from $10,000 to $1,000,000 and more, so they are highly applicable to pretty much any type of sponsorship opportunity.
What follows are six Strategic Factors to consider for sponsorship, and then I outline the Value Creation Factors, which relate specifically to how an organization can generate a return on investment for its sponsorship monies.
Strategic factors for sponsorship
1. Target market alignment
The target market/member base of a potential sponsoree must match the profile of your existing customer base. The greater the misalignment in terms of target profile, the less attractive the opportunity.
2. Values alignment
There must be shared values between the intended sponsor and sponsoree. This forms the foundation for a good working relationship.
When it comes to assessing values, don't fall for the cutesy values or mission statements. The only way to get a good handle on an organization's values and culture is to get to know the people and observe their behavior. When you have people saying one thing, then doing another, you know you have potential problems.
3. Strategic positioning
The potential value you can get from a sponsorship opportunity depends a lot on how well the potential sponsoree is positioned in the marketplace. The better they are strategically positioned, the better you can potentially dovetail into that in terms of branding opportunities.
Strategic positioning flows down to an organization's overall strategy, strategic direction and plan. So ask the potential sponsoree about their strategic positioning and their overall strategy.
4. Organizational Structure
How well is the potential sponsoree organized in terms of its infrastructure? How well documented are its processes and systems? An organization that flies by the seat of its pants can be a nightmare to work with.
5. Overall scope
Taking into account all of the above factors provides you with an idea of the scope of the sponsorship opportunity. When all the ducks are in a row in terms of the factors outlined above, you know you have the potential of a very good sponsorship opportunity.
6. Cost-Benefit
To assess the potential overall value, you need to conduct a cost-benefit analysis. In that cost-benefit analysis you look closely at the factors outlined above, add in the financial request, then work through specifically what the sponsoree will provide in return for the dollars given to it.
To measure potential return on investment you need to analyze the potential return against specific value creation factors.
Value Creation Factors
Once you have some semblance of understanding around the strategic factors outlined above, you can then start looking at specific value creation factors that generate the sponsorship return on investment. The three key factors are:
- Branding rights
- Promotional rights and activity
- Database rights and activity
Branding rights
Branding rights. This is where the sponsor pays for the right to get its name in front of the sponsored organization's members and wider target market.
Branding rights is an extension of the more traditionally known naming rights, in which naming rights are applied to such things as stadia and uniforms.
With branding rights you are looking to attach your brand to a much wider number of branding and promotional vehicles,media and the like, such as websites.
Traditionally, branding and naming rights can be a hard-to-quantify element of sponsorship. However there are some metrics we can use to identify how well they are performing.
Generally speaking though, if all a potential sponsoree is offering is simple branding rights, then that is likely to be a poor investment. The solution for adding better value? Promotional rights and database rights.
Promotional Rights and Activity
A key element of any potential value a potential sponsor can get from a sponsoree is determined not by the branding rights, but by promotional rights and activity the sponsoree implements. Such promotional activity can include:
- Press releases
- Viral campaigns
- General promotional campaigns
- "Face time" events, where sponsors get in front of sponsoree's members, centres of influence, and the wider market
The sponsoree must have – as part of its strategic plan and promotional responsibilities – a calendar of promotional activity to implement. These activities target the sponsorees members and wider target audience. Sponsors are then able to piggy-back on this activity.
If you are considering sponsoring an organization, ask to see its promotional or marketing plan.
Database Rights and Activity
This is potentially the most powerful sponsorship asset a sponsor can utilize. So what are database rights and activity? This refers to endorsed-promotional activity conducted to the sponsorees membership database. In other words, it is is where the organization being sponsored implements endorsed promotion campaigns to its member base, promoting the sponsor, its products, events hosted by the sponsor and so on.
When I evaluate a sponsorship opportunity for a client, one of the key things I look at is the membership database. When looking at that database, key factors include:
- Size of database
- How "sticky" or "engaged" that database is towards its member organization
- How well that database is managed (system, updates etc)
- How often that database is used
A point of clarification. Database base rights does not refer to the sponsor having all and sundry access to the sponsoree's database, which potentially can run foul of privacy laws and/or sully the relationship the sponsoree has with its members.
The database and its use remains in control of the sponsoree. However, the sponsor and sponsoree must have a terms of agreement as to how that database can be used to build the sponsor's brand.
Conclusion – Putting the return into Return on Investment
As a business owner, sponsorship can potentially provide you with a good return on investment. There are financial metrics and models I use to help measure this return, so that you know you are getting good value for money. Like anything in your business though, you must take a strategic approach.
Use the guidelines outlined here as a means to identifying and developing good sponsorship opportunities.
To learn more about strategic sponsorship, or to find out how you can best make use of a sponsorship opportunity – either as a sponsor or sponsoree – feel free to call me on 0064 9 534 9314.
