Sponsorship: For a Return on Investment

Guy Masterman

• Publisher: Routledge
• Year: 2012
• Print ISBN: 9780750686402
• eBook ISBN: 9781136365102
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Sponsorship is both a critical communications tool for sponsors as well as a fundamental revenue stream for rights owners. Market leaders use sponsorship widely and arguably more successfully than any other communications tool to achieve competitive advantage whilst events of all sizes depend on sponsorship just to exist. As the importance of sponsorship has increased the demands of it have risen too. Now sponsors seek measurable return on their investment. Sponsorship: For a Return on Investment provides a unique insight on the use of sponsorship for a return on investment and will appeal to practitioners and undergraduate and postgraduate students alike. It builds a conceptual framework for the development, planning, implementation and evaluation of strategies for sport, arts, music and community sponsorship, and from two perspectives:

• For rights owners, the importance of effectively acquiring and then developing a bespoke approach for the recruitment of sponsors for effective sponsorship programmes.
• For sponsors, a better understanding of how sponsorship can be used for successful integrated marketing communications.

A broad selection of examples and case studies from around the world are provided in order to demonstrate the importance of sponsorship on an international basis. This book is vital resource for both students and practioners.

Section Two Rights

4. Sponsorship rights

5. Endorsement

6. The media and sponsorship

7. Recruiting sponsors and developing sponsorship programmes

8. Selling sponsorship

The chapters in this section focus on sponsorship rights, what they are, the role the media play alongside in their support of sponsorship and how they are devised in order to create sponsorship programmes.

Chapter 4 considers the recruitment of sponsors with tailored and bespoke rights in an approach that seeks to identify and satisfy sponsors needs. Types of rights are discussed here and Chapter 5 continues this discussion by considering the use of endorsement.

Chapter 6 explores the often interdependent nature of the relationship sponsorship has with various media and in particular the securing of media exposure in order to support the rights that are offered to sponsors. Chapter 7 turns to the recruitment process to be undergone by rights owners, the choices available and the decisions required in order to acquire sponsors and place them into sponsorship programmes. Finally, Chapter 8 considers a specific approach for the successful selling of sponsorships including the use of sponsorship proposals.

Sponsorship Rights

DOI: 10.4324/9780080942735-4

The objectives for this chapter are to:

• Identify and analyse approaches for the development of sponsorship rights
• Understand and analyse the levels of status that may be provided to sponsors as part of their sponsorship rights
• Evaluate and understand basic sponsorship programme structure
• Explore the role of asset audits in the development of sponsorship inventory
• Understand the process by which sponsorship rights can be developed
• Identify types of sponsorship rights
• Understand the importance of functional rights and the role of the media

Kodak, IOC TOP partner kodak promotes the long association it has had with the IOe and the Olympic Games since 1896 via a poster outside the Panathenaic Stadium, Athens in 2006

Introduction

This chapter considers the benefits, in assets and associations, that rights owners can pass on to their sponsors. These rights are tangible and intangible entitlements that by agreement are bundled together into sponsorship packages for prescribed lengths of time. The chapter begins with a discussion of the approach that rights owners can adopt in the sponsor recruitment process. Current and evolved practice is included and the need to achieve relationships that will achieve a return on investment is considered in order to develop an approach for best industry practice. This approach steers away from fixed packaging and moves towards bespoke tailoring to better meet sponsors’ objectives.

The discussion here considers the various categories of sponsorship rights and attempts to make sense of the wide range of terminology that is used in the industry. The focus then turns to packaging by firstly considering how rights owners can structure their sponsorship programmes. In order to determine what rights a sponsor eventually receives, a rights owner has to consider whether it will have one or several sponsors, and if it is several then whether they will fit into a tiered or flat programme structure.

Rights owners have to multi-task in their recruitment process. Whilst they consider how many sponsors they want and how their programme will be shaped, they also have to consider all the types of rights that they have to offer so that they are prepared for future negotiations. In order to be fully prepared they need to audit their assets and produce a sponsorship inventory; a list of all possible assets that might be shaped into rights for any particular sponsor. In particular the importance of sponsorship function is highlighted. At the same time a further task is to agree any media partnerships, bookings and schedules so that the rights that are associated with media exposure and coverage are secured prior to negotiations with sponsors.

There are two basic types of sponsorship a rights owner can offer a sponsor, fixed or bespoke. These are discussed below.

Fixed Packaging

A fixed approach offers a sponsor a set of rights that are pre-determined prior to any consultation with that sponsor, a fixed package. Essentially this was how the sponsorship industry developed in its early years. Rights holders bundled their rights together into packages that could sit together in one programme. These packages were predominantly placed into tiered programmes whereby each package at each tier would be almost exactly the same and more often than not sold at the same fee. This was an ‘off-the-shelf’ approach and one that was totally non- customer focused. Whilst it served well to evolve sponsorship as a communications tool it also helped to develop the issues that surround sponsorship today. By offering a pre-determined set of rights, a rights owner demonstrates no interest in its potential sponsors’ needs. As a result of this lack of understanding of the need for ‘sponsorship fit’, and because generally there is a lack of effective evaluation and methods by which to evaluate, many rights owners are guilty of not making their sponsorship accountable and therefore find it difficult to demonstrate a return on investment to their sponsors.

Sponsors were continually asked to consider packages via ‘cold-sell’ approaches. In effect a sponsor was being asked to take out a sponsorship without any consultation about their needs, they were being asked to fit their requirement around what was on offer. Whilst this approach is now considered obsolete by many theorists, the practice of selling fixed packages is still surprisingly widespread and is even common amongst some major rights owners. Visit any one of a number of websites to discover this practice. The National Lacrosse League (NLL) in the USA for example, regularly uses its website to describe various sponsorship opportunities. In one case it described ‘Game of the Week – Presenting Sponsor’ package details that included specific advertising details at eight arenas around the country, opening and closing television ‘billboards’ and 30-second commercials throughout the season. The advertising signage was specifically itemized and it referred to 64 ‘promotional opportunities during the intermission’. At the end of the description it mentioned that additional benefits included tickets, hospitality and ‘meet and greets’. It also stated that the fees involved were $100,000 to $250,000 and that they would be customized to each individual sponsor. The issue with this approach is that it is specifically itemized and has a price range that has already been determined. The package was actually pre-determined and any interested sponsor would find it difficult to perceive that it might receive a tailored approach from the NLL (2004).

There is no harm in presenting possible rights that might be later bundled together or in doing that via a website, after all this is a relatively cheap option and interested parties may just visit on the off-chance. However, such an approach should not use itemized numbers of rights nor should it indicate prices if it is to credibly demonstrate flexibility for tailoring to meet a sponsor’s needs.

The fact that this is still industry practice raises the question, where does the fault lie? Clearly rights owners are intent on overestimating their bargaining power by assuming that they will attract sponsors by offering them packages they have previously defined. There is also blame to cast on the sponsors that take out these sponsorships. Proponents of the practice would point out at this juncture, that if the sponsorships are getting sold then why worry about it. In fact there is a worry because an ill-founded sponsorship that is unlikely to meet sponsors objectives has a greater chance of failing and then not being renewed. There is a greater chance of this happening if there is no consultation undertaken and the sponsor’s objectives are not identified.

Bespoke Packaging

If a fixed package approach is at one end of the spectrum then a bespoke approach is at the other. A bespoke approach will develop sponsorships so that they are mutually beneficial by meeting both rights owners and sponsors objectives. At this level the tailoring of a set of rights into a package that meets a targeted potential sponsor’s objectives might be considered as fulfilling a brief. A sponsor might even be asked to supply a brief as part of the initial consultation. For example, a rights owner contacts a potential sponsor and discusses what their needs would be from a sponsorship then goes away and returns later with a solution in the form of a package of rights. In such a case the rights owner has attempted to provide the sponsor with a sponsorship that has been tailored to meet requirements and as such might be praised for their bespoke approach to the task.

However, whilst the sponsor might admire the rights owners for their efforts, they might even then view this from a negative perspective. The sponsor wants a marketing solution and if it is itself following an integrated marketing communications approach it will want to explore all other forms of solution to its requirements before accepting the solution on offer via a sponsorship route. Other forms of media and communications might provide solutions too. From this perspective, the rights owner is still only able to offer a limited set of rights. These rights, bundled up into a package that meets the requirements, may still not be as lucrative a solution as other options; the sponsorship solution may not offer the best return on investment. Indeed, this sponsorship may be also outdone by other sponsorships. This is not a dilemma for potential sponsors as they can effectively, either in-house or by outsourced agency, seek and find their best marketing solution. It is, however, a dilemma for rights owners and raises the question, what is the best approach to adopt?

The answer is that it is still via a bespoke and tailored route. A well-tailored sponsorship solution may not get accepted because there are other options that work better, but if there is a process that is implemented prior to this that involves researching and targeting the right potential sponsors before they are approached, in order to discuss their requirements, then the rights owner is greatly reducing its risk of failure. If the approach is any less than this then the risk of failure is at its greatest. The future of sponsorship may very well depend on this premise, because if sponsors cannot evaluate to determine if they have met their requirements, then they will select other forms of communications solutions. So sponsorship is very much going to be held accountable and as such it needs to demonstrate a return on investment. The process for a successful targeted and tailored approach is more closely identified and discussed in Chapter 7.

Categories of Sponsorship Rights

When sponsorship rights are bundled together they include some kind of acknowledgement of the status the sponsor acquires through the relationship. This will normally involve a title of some description. Throughout the last 40 years and the development of sponsorship, these titles have incorporated a diverse range of vocabulary and terminology. Sponsors have been acknowledged as simply ‘sponsor’ and over time this has also developed some negative perception. As a result other terminologies have developed with ‘official suppliers’, ‘presented by’, ‘in association with’, all in wide use throughout all kinds of sponsorships. In recent years, and perhaps as a result of closer relationship building, there are now ‘partners’ and ‘partnerships’. The International Olympic Committee (IOC) refers to its current key sponsors as partners in its TOP programme. The 2006 FIFA World Cup (Germany) refers to its sponsors as ‘official partners’. Manchester United refers to AIG, its shirt sponsors, as its ‘principal sponsor’ and The English Football Association (The F.A.) has F.A. partners and previously referred to them as ‘pillars’. Other acknowledgements across the industry include ‘hosts’, ‘friends’, ‘supporters’ and ‘corporate champions’, and the variance only demonstrates that rights owners can acknowledge their sponsors as they and their sponsors mutually see fit.

With such a variety of acknowledgements it is difficult to categorize sponsorship status and apply analysis in order to identify the nature of such associations.

However, in general there are five categories of sponsorship rights that can be sold on to a sponsor (see Figure 4.1).

Figure 4.1 Categories of Sponsorship Rights (adapted from Masterman, 2004)

It is possible to have more than one category of rights. For example, a title sponsor is likely to have sector rights and exclusivity and may have supplier rights. Depending on the programme of sponsorship, a sponsor with naming rights to a building may very well be considered to be the most important and in that sense may be referred to as a title sponsor, even ‘the’ sponsor if they are the only one. A presenting sponsor may also have naming, sector and supplier rights. A sponsor with sector rights may have supplier rights however, not all sponsors receive supplier rights although the argument for doing so is increasingly getting stronger.

The potential for providing a function in the sponsorship via supplier rights is an opportunity to highlight and demonstrate product...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Dedication
• Contents
• List of figures
• List of case studies
• Acknowledgements
• The Author
• Introduction
• Section One ponsorship Explained
• Section Two Rights
• Section Three: Successful Sponsorship
• Index