Corporate Sponsorship: Managing Your Brand Assets
While there are several corporate sponsorship mediums (e.g. event, music, entertainment) sponsoring professional and collegiate sports activities can be a fun, exciting venture for a corporation. Choosing the correct sports and constructing (and negotiating) the most advantageous sponsorship packages is a combination of art and science. Investment in sport sponsorships was projected by the sponsorship consultancy IEG (2006) to rise to $9.9 billion in 2007 from $8.94 billion in 2006, accounting for 66% of all sponsorship investments in the U.S.1 In 2011, the worldwide total revenue from sports sponsorship was about $35 billion.2 This demonstrates the enormity of the sport sponsorship industry and its potential for revenue generation.
Sports marketing should be treated like any other strategic marketing initiative. Sports are a means to a marketing end. Unfortunately, in too many cases, the decision to sponsor a sport and subsequent decisions on the structure and components of the sponsorship can be made with little study of the tangible business effect the decision can have. In 2002, several companies were reported to have spent over $100 million dollars on sport sponsorships, but do these companies measure ROI or evaluate the success of each of these sponsorships?3
Additionally, sports marketing sponsorships require a significant people commitment to make the event effective. We have seen many companies simply write the check and provide the creative materials, then not fully leverage the sales and visibility opportunities that are available. Most effective sponsorships require hands-on nurturing to gain maximum effectiveness.
Realistically, effective leveraging of sponsorships may require additional out-of-pocket expenditures of 2 to 3 times the amount of the sponsorship fee.
Many de-centralized organizations find that differing regions and product units have initiated sponsorships across a whole range of sports and levels of teams from amateur clubs to collegiate to professional. The company should quickly work to consolidate and consider a limited number of sports that best fit the business goals. The company will gain more market benefit from having a concentrated presence in soccer, basketball, and ice skating, for example, than smaller presence with 5 differing teams/sports depending on the market.
When the company takes the trouble to audit the expense going toward sports-related sponsorships across the corporation, the dollar total is often sobering. But, this is the first step to reducing the wasted expenditures and moving sports marketing into a strategic light.
Too often, sponsorships decisions are based on company tradition, school or geographic loyalties, personal preferences and friendships rather than sound marketing analysis and principles. As a result, there may be no standards for:
- The type of sport that best fits the company’s business and marketing strategy
- The most advantageous sponsorship elements
- program ads
- television and radio sponsorship
- venue signs
- venue product sales (e.g. product sampling, credit card
- VIP seats
- visits/autographs from star players
- opportunities to take clients to visit team practices, etc.
- Sharing of event tickets among business units
- Use of tickets for clients versus internal audiences
- Reporting the results from the expenditure
Each decision to sponsor a sport association or team
should be based on core marketing objectives such as:
- Building awareness and affinity with a key audience
(team ownership or loyal fans)
- Modifying key corporate attributes (appeal to younger
affluent adults, older conservative adults)
- Building business with team players (professional
- Selling product (ability to distribute brochures and
applications in sports programs)
Once objectives are in place, there are means, with varying degrees of precision, to estimate monetary value of the sponsorship elements before making the decision to sponsor. Advertising or advertising-like elements can and should be compared with similar advertising opportunities outside of sports. For example, the cost of television spots should be compared with other programming that reaches the same or similar audience.
By extrapolating the length of time the audience views a sign in the stadium, it can be compared with the cost of billboards that reach the same number of viewers. “Sports are a means to a marketing end.”
Fictional Soccer Sponsorship by a Financial Services Company
Start with the marketing need and find a sports sponsorship to fit it, not the reverse: Assume you have decided to make a major new product push (financial planning) to affluent young people (25-45) with X$, per average household, in savings and disposable income. General data on the audience for soccer tells you that fans that attend live matches, watch on television, and listen on radio are 60% comprised of such affluent young people.
Also assume that research from your sister commercial insurance businesses identifies that many of the business decision makers for commercial policies are big soccer fans. With this information you know that soccer fans are a good audience. Furthermore, you have data that suggests soccer fans are very loyal in purchasing the products of the companies that sponsor their favorite sport. The team offers you a choice of the following options:
- Television sponsorship: (2) 30-second spots during the telecast of each match, plus an opening broadcast “billboard” announcing the Company as one of the sponsors
- A full-page four color ad in the program for each game
- A private box in a great stadium location that seats 12 (for 15 home matches)
- A VIP pass to get player autographs prior to the matches
- Access to the coach and some players for special events (e.g. speeches to sales force, autograph events at bank branches)
- A large stadium sign
- The ability to have a portable ATM at each match
- The ability to distribute credit card applications at 3 home matches
- Your logo on beverage cups
- Gather audience data (use educated estimates where data is not available). The team owner should have this data readily available:
- Number of average attendees at each match
- Number of home matches
- Number of home matches to be televised or broadcast on radio
- Average audience viewers/listener ratings for
- Average number of programs distributed/sold for each match
- Gather comparative media data:
- Cost of non-sports radio/television program that reaches similar audience
- Cost of outdoor boards that reach similar numbers of people each day
- Other data:
- How are your competitors involved with the team? In what specific ways?
- How does the market image of the team match with the sponsoring company’s desired image?
- What is the difference between the costs of a TRP (target rating point, or other general measure) for the sponsorship broadcast vs. comparable broadcast?
What’s the premium you will pay to be “associated” with the team?
- What is the cost of the stadium billboard (per 1,000 potential viewers) vs. that of similar outdoor boards? What’s the premium for being in the stadium with a captive audience?
Note, it is generally accepted that a sign in a sports venue can be more valuable than a billboard because: (1) The audience is fixed for several hours at a time vs. simply passing by in a car (2) the sign can be shown on television during matches, thus gaining a wider audience.
- For televised games, what is the value of the Company logo (from the stadium sign) appearing occasionally during each broadcast? Take a guess and determine that, for example, it will get 30 seconds of airtime
during each broadcast game, then give the sign additional value (getting a 30 second TV spot free).
- What will it cost to bring in an ATM for home games? What are the expected usage rates? What is the cost/benefit relationship (ATM fees vs. cost)?
- What’s the value of the program ad vs. other similar magazine advertising?
- What are the costs of VIP tickets in your package vs. good seats that can be purchased by calling the ticket office? Do you really need that many seats? Are your agents and managers prepared to not only invite clients
and customers to attend, are they willing to take and entertain clients for the number of games covered by the sponsorship?
- How can you use access to the coach and players for business benefit? (Can the coach speak to your agent conference on winning and motivation?) Can you take clients before games to meet the players and get autographs for the client’s children? Will the coach and players be available for other promotions, such as in-branch autograph appearances?
- Can you pass out product applications or provide demonstrations at the venue?
Hopefully, this example shows how considered and analytical sports sponsorship review should be. These numbers illustrate a baseline analysis. Invariably, this comparison will show that you will pay a premium for
value of “associating” with a sports team.
The art of the process is to determine and negotiate pricing with the team that narrows the premium. The analysis gives you concrete numbers from which to negotiate.
- Centralize sports marketing for any expenditure above a dollar threshold (e.g. $5,000). Local markets can use their own business development funds for smaller items.
- Set up a review counsel to help decide if a sponsorship opportunity exceeds the threshold.
- Make sports marketing decisions a coordinated business effort with consideration for the impact the sponsorship has on enhancing revenue.
- Understand the cost-value relationship before committing
- Understand the ways to leverage the sponsorship to directly affect business needs
- Understand the manpower and additional dollar commitment needed
- Appoint the marketing group as the clearing-house for review, negotiation and ultimate decisions on which sports to sponsor (with consideration given to the needs of senior management). The marketing
group should also lead negotiation on pricing and
- Create a corporate sports marketing philosophy and focus on a few key sports. Concentrate on the benefits of the sponsorships on customers and
clients, and not on internal benefits to managers and employees.
- Do not agree to any sponsorship for which you are unable to rally management commitment to use the tickets or other elements that require your company to dedicate hands-on participation. Be wary of programs that only require that you send a check and an advertisement for the program.
- Scott Obsniuk and Scott J. Smith Big League Deals: A Descriptive Study of Sponsorship Levels in Grassroots U.S. Baseball and Softball Programs
- Price Waterhouse Coopers Sports sponsorship: total revenue worldwide from 2006 to 2015
- David K. Stotlar Sponsorship Evaluation: Moving from Theory to Practice
About The Bedford Group
The Bedford Group is an Atlanta based Marketing Management Consulting firm that has been in operation since 1986. It has built its reputation on marketing organization support, agency search and relationship management and strategic marketing consulting. Unlike traditional advertising consultants, The Bedford Group looks beyond traditional marketing disciplines to solve complex, enterprise-wide issues for efficient resource management and improving marketing ROI. For more information about our services, please contact Kerry Kielb at 404.237.4565 or email@example.com.