The Impact and Benefits of Sponsorship Marketing

Sponsorship can be the most effective form of marketing when handled well. It can become a nightmare when handled badly! Read here about when your sponsorship is actually something else, and how you can clarify your understanding.

The public relations literature hardly mentions sponsorship, partly because it may be considered more of a marketing responsibility than PR. However, many sponsorships are based largely on PR objectives and are therefore a responsibility of the PR department. In fact, sponsorship is often one of the largest budget items in annual public relations plans.

The modern commercial use of the term requires both the sponsorship giver as well as the receiver to treat the sponsorship as a business activity with measurable value in marketing or communication terms.

Three alternative definitions of sponsorship

1. Sponsorship is the purchase of the right to associate the sponsor’s name, products or services with the sponsored organization’s service, product or activity in return for negotiated benefits.
2. Sponsorship is an investment in sport, the arts, a community event, individual, venue, broadcast, institution, program or cause, which yields a commercial return for the sponsor.
3. Sponsorship is the relationship between a sponsor and a property, in which the sponsor pays a cash or in-kind fee in return for access to the exploitable commercial potential associated with the property. (A ‘property’ is defined as a unique, commercially exploitable entity – typically in sports, arts, events, entertainment or in the activities of worthy causes.)

Three main types of sponsorships

1. Corporate sponsorship – designed to enhance relationships with the organization’s key stakeholders; usually not linked directly to the sponsor’s normal business.
2. Marketing sponsorship – directly concerned with exploiting a situation to promote the sponsor’s products and services in order to increase sales and therefore profits in the short and long term.
3. Philanthropic sponsorship – intended to give something back to the community and generate goodwill towards the sponsor. Such cause-related sponsorships are increasingly structured to provide a more direct return to the sponsor.

What isn’t sponsorship

Where the benefit offered does not provide genuine marketing or communication value, the activity is not sponsorship in a commercial sense. In other words, the ‘sponsorship’ that is entered into merely as a token of support or goodwill, but which could not be justified in terms of genuine marketing or communication results, is really a donation rather than a sponsorship.

Donations

Sponsorships are often confused with donations. A donation is a gift of product or cash with little or no expected return. It is ‘free money’ with no strings attached, and no return benefits or favors expected. Organizations are often asked to advertise in the program, catalogue, etc, whether online or offline, as a form of ‘sponsorship’. These types of advertisements provide no commercial return and therefore are actually donations.

The sponsorship has to provide a measurable dollar value to the sponsor – a measurable return on investment just like any other financial commitment. The sought-after outcomes of sponsorships may also be enhanced relationships with key stakeholders – these need to be measurable as well, although they may be difficult to quantify if the expectation is of a tangible future return.

Cases become a grey area where there is a limited commercial return expected from the sponsorship – there is limited genuine marketing value – but the gesture may at least be providing some degree of commercial return. Probably a compromise is the best way to view these cases. The commercial return to the sponsor could be quantified as one component while the other component could comprise an agreed proportion of the sponsor’s financial commitment, which is written off as a donation. The sponsorship therefore offers a lower financial return than the overall amount invested by the sponsor.

Not sponsorship

Each of the following activities is not sponsorship because there is no reciprocal marketing or communication benefit to the sponsor, or because the activities require more than mere association between sponsor and the sponsored organization:

• Advertising, online or offline, in support of an activity
• Paid guest posts and other paid content in websites
• Joint ventures, consultancies or partnerships in which the sponsored organization shares ownership and responsibility for the ultimate outcome or product
• Displays and exhibitions in which the sponsor does not receive genuine and measurable value for money
• Grants, gifts, donations, bequests, endowments and prizes
• Scholarships
• Research projects
• Hospitality (eg a corporate box at an event)

Hospitality is the provision of entertainment, food and beverages for existing and potential clients in expectation of a closer relationship and a future commercial return. This does not involve the purchase of the right of association as defined in the term ‘sponsorship’.

To complicate matters, some of the above activities may be included as part of an overall sponsorship package in which other direct sponsorship benefits are provided.

Where sponsorship is inappropriate

There are circumstances in which sponsorship dealings are not recommended for ethical or other reasons. If you intend to seek sponsorship in any of the categories listed below, the final decision should be made only at the highest level – by your executive committee or board of directors (in the private sector) or Minister (in government), where:

• Proposed sponsorship by tobacco brands (this is illegal in many countries). However, sponsorship may be acceptable from a different, non-tobacco entity within a diversified group of companies that produces tobacco products.
• Careful ethical consideration has been given to alcohol-related sponsorship that can be justified as a suitable fit with the sponsored product, service or activity.
• There is an unacceptable risk of public controversy.
• It is probable that the potential sponsor may seek to unduly influence the sponsored organization.
• Staff are seeking to be sponsored. Potential sponsorship of staff is a difficult issue but should be assessed according to the organization’s normal criteria and procedures. Staff should not receive preferential treatment unless there are special circumstances, which should be documented and justifiable. If provided at all, staff sponsorship should be provided to groups, not individuals. Staff sponsorship can rarely be justified for genuine commercial reasons. In reality, support of staff involves a donation of funds for a good cause rather than genuine sponsorship.
• The sponsored project will duplicate existing projects or organizations.
• Potential sponsors have not fulfilled previous sponsorship commitments.

My eBook, How to successfully seek corporate sponsorship, gives more guidance.

This article also gives further usefu,  insights into sponsorship, especially if you are seeking support in the creative arts.