Themen > Sponsoring > The Process of Sponsorship (EU-Conference, Madrid, April 2002)

Contribution to the Seminar on Sponsorship and Patronage
Madrid, April 2002


1. How sponsorship is achieved

A sponsorship results from a number of approaches and processes. Most commonly an artist, act or event will actively solicit a sponsor. Sometimes sponsors will recruit an attraction, usually in response to a specific need or stimulus: a competitor's action, a weak geographic market or when introducing a new product. Emotional factors linked to sponsoring are to arouse people, to inform people, to involve people plus reward and recognize for the sponsor.

Prior to the actual solicitation of a sponsor, sufficient research must be done to ascertain who the most appropriate sponsors are and to compile the necessary supporting information. The demographics of the audience that the attraction will draw must strongly coincide with those of the target market for the sponsor's product and should be one of the first areas of development. By providing potential sponsors with an in-depth analysis of demographics, an event or attraction will be able to document why this kind of involvement will permit the sponsor to reach its target markets.

In addition to demographic analysis, a breakdown of the specific program should be done, including all specific details and other ways in which the sponsor will benefit from this association. The more substantial the information, the easier it will be for the sponsor to decide on the relative merits of the program. This data, accompanied by additional background information concerning the attraction, its producers, anticipated attendance and other relevant facts, is usually set forth in a written proposal. Ideally, this proposal will be directed to the marketing or advertising director of the appropriate corporation. The approach will vary considerably from company to company and the proper person may be a public relations director, brand manager, public affairs director, corporate communications manager or special event coordinator. Regardless of the title, the point is to deliver your proposal to someone as high in the corporate structure as possible.

Before soliciting an attraction, the corporation must also research the appropriate type of entertainment or event to sponsor. In doing so, a marketing strategy is developed around the sponsorship with specific objectives in mind or else an existing marketing plan is used. The potential attraction is contacted, a comprehensive package of benefits for the sponsor is developed and ultimately a contract is negotiated. The agreement or contract between the attraction and sponsor delineates the package of benefits each will receive as well as their respective responsibilities.

Marketing services firms frequently play an integral role in arranging as well as implementing sponsorships. They are in an ideal position, for they are familiar with the needs of both parties and can act and react accordingly. Many major advertising and public relations firms with special events departments also function in this capacity.

Some of the services an agency or marketing firm might provide include program and concept development, logistical planning, production and distribution of promotional materials, arrangements for media coverage, coordination of complimentary tickets, hospitality receptions and any of a multitude of related details. Other contractors, including advertising and public relations assistance and a production company to manage the physical aspects of an event -- staging, lighting, sound, security, etc.-- will also frequently be involved.

There is no one set pattern into which the process of sponsorship falls. Each case is unique but in general, a typical sponsorship will be arrived at through a process similar to the one described above. Specific details generally remain confidential; a program may also change drastically from its original proposal due to negotiated changes or improvements and suggestions made by the key parties.

2. The sponsorship proposal

Although a sponsorship may begin (and be closed) with a simple phone call, a formal written proposal is usually the principal vehicle for communicating a request for sponsorship. The actual format of the proposal can vary considerably and is not as important as its content. It is wise however to include an executive summary, a brief summation or outline, prefacing the proposal itself. Corporations receive literally hundreds of proposals annually and a corporate manager will want to know quickly if this is indeed an appropriate proposal to consider. Proposals can be of any length depending on the event and what is being requested and can run the gamut from a simple letter or outline on company letterhead to slick, glossy, color presentations and multi-paged kits.

One option regarding format is to have the proposal structured in the form of a contract. In this way, if the proposal is accepted, it will not be necessary to draft a separate agreement, saving time and legal fees. It will also provide an immediate basis from which to negotiate.

Regardless of the format chosen, it is the information contained within the proposal that is of utmost importance. The proposal should be weighted toward the buyer (sponsor), emphasize the unique and special benefits the attraction has to offer and present multiples of what the sponsor can get for their dollar, i.e. $X in sponsorship = $3X in return. Identifying the sponsor's needs and catering to them is a wise approach. If a particular problem or inadequacy exists in the market in which the proposed event is to occur, the proposal should address that specific problem; each proposal can and should be customized to the potential sponsor. Using concise, pertinent facts and figures, detail your proposed program's benefits and measurable values.

The structure of a proposal should include the following basic components: General introduction. What the sponsor will get. What the act or attraction wants. Conclusion/Summary.

3. How to develop effective sponsorship programmes

Prerogative for effective sponsorship programmes are the following areas:

· Why and how sponsors choose sport or the arts to promote and enhance corporate image and reputation and to build brands?

· What contribution does the sponsored event or property make to brand awareness, brand building and ultimately to sales for the sponsor?

· How relationships between the property and the sponsor are influenced by internal and external factors?

· How to make sure the property is effectively promoted by both owner and sponsor?

· What is the return on the investment model?

· How does the model compare with that of more traditional communications media?

· How to exploit and then value the special relationship that sponsorship confers beyond simple brand visibility?

· How is the internet an integral part of the sponsorship strategy?

· How can the qualities of this medium be improved by sponsors to underscore and add value to their sponsorship deals?

4. Proposal analysis

Within this basic structure the following subjects should be addressed in detail:

Demographic Compatibility
A detailed presentation of demographic research and analysis citing similarities between audience and product demographics.

Market Analysis
Where attendees come from, how often have they attended this event or this type of event in the past?
Economic impact on the area as result of this event.

Event History
Traditional event or new event.

Feature Attractions
Strong indicator of draw and attendance. Their history (will indicate potential problems, if any).

Previous Attractions
Acts or attractions that have appeared at this event in past years (will indicate appropriateness).

Timing can be an important consideration to a sponsor, for the activity must coincide with other marketing elements and not compete against other events.

Price, Hours, Schedule of Activities
Details of other performers if any, times and how much admission will be charged.

Special Awards or Accomplishments
Cite outstanding accomplishments or awards.

Biographical and performance information.

History of previous execution.

Problems from previous experiences should be mentioned as well as how they were remedied.

Description of the facility in which the event is to be held, including capacity, location, amenities, management, etc.

Estimated Attendance
Figures of projected attendance (Previous Attendance).
Documentation of previous attendance figures (Box Office Performance).
Box office figures for paid performances (Media Exposure).
Documentation of previous (and/or estimates of anticipated) media coverage, both print and electronic, such as video clips live television coverage or news broadcasts, and clippings of feature stories, interviews, listings, etc.

Types of Sponsorships Available
Full exclusive, "Presenting" sponsor.
Official product or service.
One day, stage or event.
Specific opportunities.

Exclusive sponsor of the event, stage, etc. Within product category (i.e. the only soft drink sponsor).

Advertising and Promotion
How sponsor will be included in all advertising and promotion-mentions (outline advertising and promotional plans).

On-site signage, banners, etc. including sponsor's name.
Quantity, size, design and location.

Verbal Acknowledgement
Sponsor's name as "Presenting" or "special thanks" when appropriate.

Promotional Opportunities
Cross-promotional tie-in opportunities to extend the overall promotion and its impact.
Merchandising opportunities including licensing of product logos for event paraphernalia.

Sales Opportunities/History
On-site opportunities to sell or sample products.
Past sponsor's product sales at this event.
Number of sales/sampling locations on grounds or facility.

Hospitality Events/Entertainment
Complimentary tickets to performances.
Special receptions, parties or entertainment.

Other Sponsors
How diluted will their sponsorship be?

What will it cost the potential sponsor for a set degree of involvement (i.e. full sponsor -
€ 100.000,--; official product - € 25.000,--; participating sponsor - € 10.000,--, etc.).

Estimated budgets for all expenses including supplies and materials, services, insurance, legal and labor.

Realization of Objectives
How will this sponsorship help the sponsor realize its goals and objectives?
How will this tie-in achieve image enhancement, generate?
Goodwill and good public relations or other similar goals and objectives.

Past Sponsors
Companies which have found this to be an appropriate sponsorship application in the past?

Contact Person
Who should be contacted if the sponsor is interested (name, address and phone number)?

Specify when an answer is needed (i.e. within two weeks).

One final and very important consideration to note is the time at which a proposal is presented to a potential sponsor. Corporations operate on a fiscal year that in most cases begins January 1.

The proposal should be presented for consideration well in advance of the new fiscal year; generally six to nine months is recommended.

The above proposal considerations should not be regarded as pertaining to any one type of sponsorship or attraction. Obviously certain considerations that apply to an artist or tour sponsorship might not apply to a special event, sporting event, festival or state fair. Rather, these are general considerations and a proposal should include only those that are most appropriate and applicable.

The following outline summarizes many of these points and provides a basic structure for a sponsorship proposal.

5. Corporate sponsorship package and proposal outline

· Cover Letter
Identify yourself, the organization you represent, the purpose of your proposal and possibly selected highlights

· Executive Summary (one page)
  - Introductory paragraph.
  - What the attraction has to offer.
  - What the attraction is seeking.
  - Summary/Conclusion.

· The Proposal
   - Introduction or foreword
   - Description of attraction to be sponsored
   - Statistical Information
     - Demographics
     - Anticipated reach
     - Anticipated exposure (live plus via print and electronic media)
   - Documentation of previous success and media coverage

  - Opportunities for the Sponsor
    - Title Sponsor
    - Co-Sponsor
    - Total name identification
    - Full or partial association with all advertising and promotion
    - Product endorsements
    - Personal appearances
    - Commercial appearances
    - Name/logo in merchandising items
    - Sales/sampling rights

 · Sponsorship Requirements
  - Full Title Sponsor (exclusive):
  - Co-Sponsor
  - Other packages

· Summation and closing

· Supporting information and materials
  - Clippings, articles, reviews
  - Budgets
  - Recordings, video tapes
  - Colorphotos
  - Biographies
  - Programs
  - Demographic studies
  - Economic impact studies
  - Itinerary, schedule of activities
  - Previous media placement/ exposure
  - Logo, advertising, stage designs, etc.

6. Sponsorship pricing

The price of a sponsorship is very simply the amount of money a corporation is required to pay to sponsor an event or attraction and be entitled to a corresponding degree of involvement. Almost as many ways of arriving at sponsorship prices exist, as do types of events being sponsored. There is unfortunately no one set formula for computing exactly what a particular sponsorship is worth to a sponsor and therefore how much a producing organization should ask. Some prices are set almost arbitrarily according to what the market will bear or the sponsor will pay, while others involve a great deal of planning and research. General guidelines, as well as histories, statistics and trade publications that document what has transpired in the past, do exist and can be used to help determine a relative sponsorship value.

Contributing to the difficulty in setting prices is the fact that most corporations are reluctant to release sponsorship figures to the public. Sponsorship is after all part of an overall marketing or public relations plan or strategy, and this type of information is often regarded as confidential. This is due in part to prevent competitors from knowing what they are doing, as well as to keep those seeking sponsorship from knowing how much has been paid in the past.

As sponsorship has become more popular as a supplement to traditional advertising and marketing practices, sponsors have also become more educated and no longer enter blindly into such programs. They want to know what it is they are getting and if it will be worth the money being asked. When attempting to determine a sponsorship price, many of the basic criteria as discussed in Chapter Two should be kept in mind. In essence, the more the event or attraction can address these criteria and realize certain benefits for the sponsor, the more it will be worth to them.

The number of live exposures or persons in attendance at an event is one of the foremost considerations. It stands to reason then that the greater the exposure an event or attraction can offer, the greater the price that sponsorship can command. Naturally, a one-time rock concert that attracts only a few thousand people cannot be priced as high as a state fair which draws several hundred thousand people or a major league baseball team which will draw millions. Research has shown that sponsor recall at some live events can be substantial, leading many sponsors to evaluate a sponsorship's worth on the number of live impressions alone.

Large numbers of media impressions, particularly television, will dictate a higher sponsorship price. Every second of television exposure essentially becomes free advertising and its value can be compared to the cost to buy an equivalent amount of commercial time. Although the impact of these impressions is not as direct or as strong as straight advertising, the greater the numbers that can be anticipated, the higher the price for the sponsorship. When combined with large numbers of live impressions or exposures, the cost per thousand (cpm) impressions becomes much more reasonable. In as much as advertising and marketing are very numbers-oriented businesses, the better an event or attraction can document past numbers of impressions and accurately estimate anticipated impressions, the better its position in asking a higher price for that sponsorship.

Exclusivity, when requested by or offered to a sponsor, should command a premium price. The reason is simple. Permitting one corporation to be the only sponsor, either in a product category or for an entire event, precludes the sale of additional sponsorships, which in turn reduces the potential revenues the attraction will generate. As an example, a major festival with four entertainment stages might seek sponsors for each stage at a price of € 25.000,-- each for a total gross of € 100.000,--. An exclusive sponsor of the festival should be charged the same € 100.000,-- plus a premium of 10-25%. As exclusive sponsor, the corporation will not suffer the dilution of multiple sponsors and all impressions created will have a much greater impact, which is worth a premium.

Product sampling rights as part of a sponsorship package is an unusual and sometimes difficult component to assign a dollar value. Sampling creates a very strong impression with a consumer, for it is a one on one type of promotion. It not only creates an impression with each sample distributed, but it also puts the sponsor's product in a potential consumer's hand (or mouth in the case of food products). This has a much more powerful impact than straight advertising and may result in conversions to that product, which of course ultimately means greater sales.

Although the number of persons in attendance coupled with the number of samples the sponsor plans to distribute are important factors, sampling involves a variety of other more subjective considerations as well. For example, a sponsor may buy booth space at a fair or festival for as little as € 1.000 - € 2.000,--. But in some cases it may not cost anything to have someone on the grounds distributing samples, for the sponsor could just as easily station samplers on the street or outside the fair gates for free. In general, for an event or attraction putting together a sponsorship package, it is wise to simply include the right to sample. It costs the event nothing and may attract sponsors who might not otherwise have been interested.

One basic approach to setting sponsorship prices is to first analyze an event or attraction and break it down into its component parts: talent, production, site, maintenance, security, advertising and promotion, etc. Then, using cost figures for each component or major line item in the budget, assign a sponsorship price to selected items based on that amount plus an additional percentage. While it is good to have a sponsorship basically pay for the net cost of one part of the event, it is also a good idea to include an additional amount to help offset general overhead and operating expenses.

Sponsorships will sometimes consist of product or in-kind services in lieu of cash. A sponsor may contribute soda (free or at wholesale cost) which may then be marked up and sold at retail, provide media time or space or provide transportation such as free or reduced airline fares or perhaps shuttle bus services. Although any product or service contributed helps offset expenditures which would have to have been paid otherwise, it is again a good idea to request an additional amount or percentage in cash as part of the sponsorship. Perhaps a ratio of product or services to cash could be established -- € 3 product/services : € 1 cash or some similar ratio. One should keep in mind that sponsorship monies are income just as gate receipts are, and should be thought of in this light with regard to profitability. Not all events make money or break even for that matter. To protect themselves from a potential loss, producers might consider including sponsorship to cover any projected shortfall in revenues. While this is of course speculative, it could make a big difference in the success or even future of an event.

Regardless of the size of the event, a multi-tiered structure of sponsorship presents opportunities for sponsors to become involved at a variety of levels and receive benefits according to their desired degree of financial involvement.

Prof. Dr. Gerhard Feltl is Adjunct Faculty Member of the University of Salzburg and Managing Director of "Wiener Stadthalle", which is the leading sports & entertainment center in Austria. In his capacity as member of the Executive Board of IBM Austria he also managed comprehensive sponsorship programs of IBM Austria and of then IBM ROCEE (Regional Office Central Europe and East).

G. Feltl / The Process of Sponsorship - April 2002