How you can use leverage to increase your sponsorship value
The dollar amount a sponsor gives to an event is only the starting point. Usually a sponsor will spend an amount over and above the sponsorship fee to maximize the return on their investment in the sponsorship property. This is called “leverage.” Widely accepted practice is for a sponsor to spend at least the equivalent value of their sponsorship fee in their own promotional activity relating to the sponsored event.
Some people even advocate spending two or three times the fee in promotional activity in order to maximize the return on the sponsorship investment. Although this expenditure is not the sponsee’s responsibility, astute sponsees (sponsorship recipients) certainly encourage it. The sponsor’s promotional activity would help the event as well as the sponsor.
Yet industry surveys of sponsorship decision makers show they spend surprisingly little on leverage. Around 30% of sponsors spend less than $1 for every dollar they paid in the sponsorship fee, 40% pay about dollar for dollar, 15% paid $2 to $1, and only 10-12% pay around $3 to $1. Those who spend less than dollar-for-dollar in promotional efforts relating to the sponsorship are heading for inevitable disappointment.
Sponsorship is a great integrating mechanism for a sponsor. It can be used to improve the results obtained from the sponsor’s other marketing activities. A good sponsorship can be used to create more excitement for existing activities such as advertising, merchandising, product packaging, trade and retail promotions, loyalty programs, employee involvement and web-based promotions.
If you are seeking sponsorship, you can give thought to maximizing the return for the sponsor when you are researching what the sponsor normally does to promote a sponsorship, and you can discuss it more fully during negotiations leading up to a signed agreement.
Astute sponsees keep around 10-15% of the sponsorship fee on hand to spend on activities to help the sponsor leverage the benefits from their commitment. Quite often this amount can be the ‘icing on the cake’ to make the sponsor feel they have a switched-on sponsee who really wants to help them to maximize the value of their sponsorship investment.
You should always ask the sponsor representatives to think of the ways the sponsorship can be used to extend their current marketing and public relations activities. If the representatives are slow to realize the ways in which the sponsorship can be leveraged, ask to meet people from the sponsor’s various operational divisions and talk to them about ways you could use the sponsorship to help them meet their objectives, especially if they are involved in PR or marketing.
You can summarize the sponsorship arrangement for them including the target audiences, the sponsor benefits and some ideas on how they could use the sponsorship to assist them in their own areas. Outline case studies of leveraging in action. As the ‘early adopters’ within the sponsor organization start to respond to your ideas, you can use these as examples to sell the concept of leveraging to others.
You can consider getting some of your sponsors together with each other to cross-promote their products or services in relation to your event. For instance, you might suggest to a tennis racquet manufacturer that they team with a sports bag manufacturer or tennis shoe manufacturer who also sponsor your tennis event. You can do this on a smaller scale if you are running a smaller event. A joint promotion would benefit everyone (especially your event!).
Internal promotions to employees and shareholders are another possibility. You could engage in merchandising activities, incentive programs, volunteer programs, contests, family days, celebrity appearances etc.