Sponsorship valuations have always been the specialty of a handful of agencies or consultants because it requires media knowledge and a thorough understanding of sponsorship. Sponsees and sponsors alike have very little information on how sponsorship evaluations are actually done. Today we open the black box and share some of the practices. As the old saying goes, knowledge is power.

Media values

At the core of the sponsorship value evaluation lays the media values. Equivalencies are used to determine the value of sponsorship assets compared to other communication channels and their actual costs. Our media values are always up to date. Furthermore, we use media values for every single market. That means the values are specific to your reality and are a more precise representation of the value of your sponsorship package.

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What is ambush marketing?

Ambush tactics are used when a non-sponsor tries to associate itself with an event by using communication techniques that will lead consumers to believe the company acts as an official sponsor. There are many different sponsorship ambush tactics. The most notorious involves buying media during air-time of an event, or around it, with out-of-home advertising. Others involves promotion using a theme similar to the event’s or even sponsoring a similar event to create confusion. Has this morally disputable practice been diminishing due to the increasing legal protection granted to property and its sponsors (which is the case with the Olympics)? Somewhat, but the ambushers are finding even more creative ways to do so within the boundaries of the law. The upcoming Sochi Olympics will tell us if ambushing boundaries will be pushed once more.

10. 1984 Los Angeles Olympic Games – Kodak (Actual sponsor: Fuji)

The Origins of Ambush Marketing

During the 1976 Montreal Olympics, there were 628 official sponsors, which meant the dilution of the Olympic brand: smaller impact for, and awareness of, official sponsors. The Los Angeles Olympic Games saw a complete overhaul of the sponsorship structure in order to increase private funding of the event. The restructuring of sponsorship rights and the implementation of exclusivity was indeed an overwhelming financial success with a surplus of more than US$250 million in sponsorship revenues, making it the first Olympics to be funded entirely privately. This new strategy saw many companies frustrated of being left out and it paved the way for marketers to try to associate their brand with the event, even illegitimately. In the camera sector, Fuji won the bid, leaving a frustrated Kodak sponsoring the US broadcast. The tactic worked as the public did consider that Kodak was an official Olympic sponsor.

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On one hand, a precious tool in the sponsorship arsenal; on the other hand, a fundamental—and sometimes harsh—element of the reality of supply and demand.

In fact, sponsorship valuation is key to establishing a pricing strategy, estimating market value and managing your sponsorship portfolio.

Why do I need to evaluate sponsorship proposals?

For properties:

As each new proposal you build is customized to the sponsor’s specific objectives, you need the sounding board of evaluation every time. First, you do not want to put yourself in a bad place pitching a ridiculous amount to a brand: they will evaluate the true value of your sponsorship (read further)! Moreover, each package being different, you don’t want sponsors with similar levels to have a disproportionate amount of assets for the same rights fee. It’s a tool that will keep fairness, and maintain harmony between sponsors. As a general rule of thumb, you want the value of the proposal to be at least at par with the asking price. Sponsors are looking at a 2 to 1 or even 3 to 1 ratio, due to the uncertain nature of sponsorship. Evaluating your proposals will ensure that you get the right value for your proposal.

For sponsors:

Sponsorship valuation is an essential part of acquiring a new property. In this day and age, all marketing expenses can be under scrutiny. This is especially true for sponsorship because of its very nature: the presence of hospitality and the entertainment aspect attached to it might raise suspicions that the decision to sponsor was motivated by top managers’ appreciation of a particular sport more than by sound market insight. John Kerry, secretary of state, raised the issue in his now infamous quote about sponsorship being wasteful. He tried, to no avail, banning companies that received bailout money to pursue such a marketing strategy. In other words, the process of sponsorship selection and evaluation must be extremely thorough. A strong business case must be put in place because folks from the finance department, external controllers, or even stockholders will ask questions about the sponsorship value and how the decision to sponsor was made. After all, sponsorship is a marketing investment, not a donation; thus you need to assess the value of your buy as you would do with any media campaign.

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Sponsorship evaluation is built by pulling together the hard and soft assets a property owns. The “hard assets” are the media value equivalencies for every elements offered to a sponsor. These media values are adjusted to the specific nature of the benefits and visibilities sponsorship can provide. Intangible values, or “soft assets”, are measuring the qualitative aspects of a property. The resulting score will be multiplied by the value of tangible assets to determine the overall value of the sponsorship proposal. Today, we will deep dive into sponsorship intangibles and what goes on while evaluating the magic behind an event.

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Sport transcends cultures and borders, it is a global language. It creates an emotional connection with audiences around the world, making it an ideal vehicle for the development of global brands. Formula 1 is a distinctive market when it comes to sponsorship, with the global reach of its 22 races and the colossal budgets that are at stake.

Multiple levels of sponsorship

Formula 1 is composed of different entities that can be sponsored (properties) and on different hierarchical levels. For example drivers, teams, circuits and the Championship itself.

Each level of sponsorship in Formula 1 has distinct characteristics that meet specific communication objectives.

Sponsorship of the driver will be influenced by the competition hazards. A driver with more on-track successes will be more popular and therefore, more visible. The nationality of the driver can also position him advantageously in his homeland. We need only think of the Santander bank following the driver Fernando Alonso from McLaren to Ferrari, to increase visibility in Spain.

The main advantage of sponsoring a team is the visibility on the car itself. Television cameras are pointed at the cars and races benefit from a worldwide broadcast. However, the large number of sponsors on the car can make brand recognition difficult. This type of sponsorship will allow a brand to publicize the relationship using the trademark of the team in various communications.

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What 20 years of experience can teach you. An Interview with Claude Savard, VP corporate partnerships at Tennis Canada

Sponsorship might seem like a gold rush, easy money for an organization. However, finding sponsors is an art and requires tedious work. Even more so today, as sponsors are more sophisticated than ever in setting their objectives upfront and systematically measuring results. Claude Savard has extensive expertise in terms of selling sponsorship, andhas learned the how-to’s in the field with many trials and errors. Today, he is delighted to share some of his hard-earned experience. We interviewed Claude during the Infopresse 2013 Sponsorship Rendez-vous.

Q: To anyone who experienced it first hand, selling sponsorship is a difficult endeavour, what is the best approach?

Selling sponsorship is a process. These days, you have to be relevant to the brand and tailor the proposal to the sponsor’s needs. To do so, you must know the company as much as you possibly can. In a nutshell, you can divide the selling process into 7 steps: selecting the right sponsor, doing a thorough research, setting a first meeting, drafting the proposal, holding an in-person presentation, following up and then proceed to negotiate or close the deal. Let’s examine the 7 ingredients of this sponsorship-selling recipe.

1) Sponsorship selection

Before going to prospective sponsors in a given category, you must first understand what your own objectives and communication challenges are: “You too can gain from an association with the right sponsor, in terms of reaching your own communication objectives”. Things to lookout for are the popularity of a brand and its (positive) image, which can reflect on your organization. For example, an association with a premium brand could provide a sense of prestige to your event and, therefore, engage other players.

Another key element is the right property-sponsor fit, be it with the company or the audience itself. Finally, Claude insists on the fact that a partnership can bring more to the table than money alone: “Look for specific assets that sponsors can bring, it can leapfrog your sponsor acquisition or tackle some challenges your own organization is facing.”

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The Science Of Sponsorship series

“The Science Of Sponsorship” is a series dedicated to scientific discoveries driving the sponsorship marketing sciences world-wide.

 

1. Assessing the Financial Impact of Sponsorship Investment

This article outlines an effective approach to the problem of assessing the financial impact of sponsorship investment, which has a track record of successful implementation in the sponsorship industry. The approach is outlined as a five-step process:

1. Involving comprehensive segmentation
2. Benchmarking to derive a brand discount rate
3. Modeling of financial performance
4. Determining the role of the brand in ultimately driving usage choice
5. Providing the techniques to calculate Brand Contribution in financial terms

Conclusion: the complex tasks involved in assessing the financial impact of sponsorship investment and the impact on shareholder value can be rigorously addressed and sponsorship managers can make improved decisions which are underpinned by market and financial analysis. Read the full article Kourovskaia, A. A., & Meenaghan, T. (2013). Assessing the financial impact of sponsorship investment. Psychology & Marketing, 30(5), 417-430.

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The Science Of Sponsorship Series

"The Science Of Sponsorship" is a series dedicated to scientific discoveries driving the sponsorship marketing sciences world-wide.

 

1. Sport Sponsorship as a Tool of Marketing Communication–A Case Study of Two Real Estate Companies

Companies are known to use sponsorship as a means to associate with a particular event as part of their marketing efforts. Many companies, whether their products or services have some association with a sport or not, are using sport sponsorship. Real Estate companies being prominent sponsors of sports in the country, a qualitative case study methodology has been used, based on documents of two Real Estate companies. Here are the key findings:

• Some of the most commonly used objectives of sport sponsorship are: corporate image, entertainment for clients, and employee relations.
• Companies select a specific sport sponsorship property on the basis of different criteria such as the interest of the top management and the concerned sport’s potential to convey the marketing message.
• Companies do not carry out formal evaluation of the effectiveness of sport sponsorship.

Read the full article Singh, G., & Bhatia, A. (2013). Sport Sponsorship as a Tool of Marketing Communication–A Case Study of Two Real Estate Companies. International Journal of Research in Business and Technology, 3(2), 149-158.

 

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A glossary (or lexicon) is an effective reference tool when working with all aspects of sponsorship marketing. It’s important to understand the subtle differences between the terms to communicate clearly. We put together a long list of frequently used terms in sponsorship marketing. We suggest you take a deep breath, read our list, and research new terms to understand them well.

Bon voyage!

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Sponsorship is first and foremost a business relationship between two organizations with different goals. Aligning objectives to deliver greater value for both partners builds the relationship into a true alliance that can generate powerful results for both parties.

In the current industry, there is a 55% satisfaction level with ROI. However, that means a dissatisfaction rate of 45%, and that is an incredibly high figure. As well, 41% of sponsors are looking to drop their current sponsorships and jump ship.

The number one key to sponsorship renewal efforts is a healty sponsor-sponsee relationship, but this relationship typically does not get much attention. The quality of the relationship is a pre-requisite. There are times when a sponsor could be in the right sport but working with the wrong partner.

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In this industry, it is not uncommon to witness sponsorship portfolios growing organically, without a clear vision of which properties with which to align the brand. That approach might lead to exposing brands to unwanted risks. First and foremost, managers must know the amount of exposure of their portfolio, and the avenues to mitigate it. Risk can be multiple and varied. There are factors that can seriously impeach reaching sponsorship objective or even harm the brand long after the sponsorship agreement has expired (examples abound, especially in the cycling world…). Yet, simple tools can be used by sponsorship and marketing managers in order to quickly assess the situation and build a contingency plan to re-balance the risk within their brand sponsorship portfolio.

1. Inventory

Often overlooked, managers must have a clear overview of the whole sponsorship portfolio including information such as rights fees, activation budgets, contract deadlines and sets of primary and secondary objectives to be attained by associating with the property.

2. Evaluating the risk of each property

Simple qualitative scales can be used by managers, in order to rate individual properties and measure the overall exposure to risk within their sponsorship portfolio. Example of a simple scale: 

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It may seem obvious but in an ever more competitive market, properties are under mounting pressures to gain revenues from sponsorship, and the task gets even harder during sluggish economic times. As it is true for the consumer market, attracting new business is a much costlier endeavor than retaining existing partners. That is why your sponsors are your greatest assets. I am a firm believer in the concept of shared value. Properties and sponsors might not always agree, but they do have common goals that can create added value for both partners once reached.

What are the things both partners value?

Besides the revenue gained from a sponsorship deal, properties will also seek objectives of their own like visibility, ticket sales, brand image and networking opportunities, to name a few. Sponsors will sign a sponsorship deal for various reasons like visibility, awareness, affinity with the target audience, brand image, sales or to mobilize their employees, for example.

Activation

It is a well-documented fact that sponsorship activation is a prerequisite for a sponsor to achieve its communication goals. Properties will largely benefit from a sponsor’s activation program, in various ways. It will generate both visibility and awareness: a great way of catching the interest a potential sponsor. Depending on the property’s industry, such publicity will also help in selling tickets or generating increased traffic.

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Fit between a sponsor and a property is a clear driver of sponsorship performance. In fact, the right fit will substantially improve brand awareness. This awareness is often needed to obtain a positive return on sponsorship investments and also to achieve more elaborate goals, like brand image transfer, affinity with a specific target market, better attitude toward the brand and a rise in purchase intents. High fit will increase a brand’s acceptance by the public, and its presence will be perceived as more altruistic.

What is fit?

Fit, also called congruence or relatedness, is the perceived pertinence in consumers’ mind between a sponsee and a sponsor. Spontaneously, we’re thinking about the natural fit between Adidas and the World Cup or Shell’s involvement with Ferrari. This natural association is called “functional fit” for the usefulness of the product or service to the property. There can be multiple degrees of fit, less obvious than the logical congruent associations mentioned above.

 

Target audience

Are your consumers predominately hanging at one event or supporting a specific cause? Kruger’s, Canada’s #1 tissue brand, is supporting the Canadian breast Cancer foundation and the Scotties®' Tournament of Hearts® championship precisely because their consumers are involved in such organization or touched by it to some degree.

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