Should We Hire a Sponsorship Valuation Service?

HoaxSeeking sponsorship is hard. Even if you do it perfectly, you’ll still hear “no” more than “yes”, and if your skills are less than best practice, you’re probably not hearing “yes” very often.

If you’re struggling, you probably want some way to demonstrate what great value for money you’re going to provide. That’s when some of you consider hiring a valuation service. These are consultants that use some methodology or another to put a price tag on what you offer, and at first glance, this can seem like a great idea. You can point to the valuation and tell sponsors, “We’re offering $120,000 in benefits for only $80,000!” If only it worked that way.

Seriously, I can understand the appeal. Getting a “valuation” seems like instant credibility and justification for the dollar figure you are trying to raise. But in reality – especially 2016 reality – it’s not.

Valuation is based on mechanisms, not actual value

There are two ways of doing a valuation: Valuing individual benefits; or, valuing entire packages. Either way, this entire methodology is deeply flawed.

The basic premise is that each benefit, or some set of benefits, will have a specific value. But in doing this, you are pricing the mechanisms, not what value the relationship has to a sponsor and what they could do with it. And that’s the real rub, here: Sponsors don’t get their value from the benefits you sell them, but from what they are able to do with those benefits to achieve their objectives.

There are also valuation services that will assess the value of media exposure you provide, add that to the tickets, hospitality, and other commodity benefits, and give you a figure. Pay close attention to this: Anyone who tells you media equivalency is a legitimate component of the value of what you’re selling is a bottom-feeder, whose skills stopped evolving in 1991 – the year that the first of many major university studies showed no link whatsoever between logo exposure and changing perceptions or behaviours around a brand (AKA “marketing”).

The same benefits won’t have the same value to different sponsors

Following on from the first point, valuation assumes that the same benefits, or sets of benefits, will have the same value to every sponsor. That couldn’t be further from the truth.

You can provide a set of benefits for your festival to a single, independent grocery store. They could get a good result from it, but those same benefits would be worth far more to a regional chain, as long as you can demonstrate how they can use the sponsorship across that region.

Sponsorship of a sporting team by a merchant bank that works strictly with enterprise-size businesses will be worth less than those same benefits for a major bank that has relevant B2B and B2C markets.

Again, you’re selling leverageable assets. The value is driven, in large part, by what they can do with those assets. Their size, scope, and many other factors will go into the value of the sponsorship.

Sponsors don’t need the same things

In addition to sponsors not doing the same things with their benefits, most sponsors don’t actually need the same benefits as each other. So, if your valuation is about packages – gold is worth $X, silver is worth $Y, etc – you’ve got a problem with customising offers. Customise, and you’re back to guessing what the sponsorship is worth, which makes valuation a moot point. Don’t customise, and sponsors won’t find your offer compelling.

Establishing vision is more valuable than any set of benefits

I’ve said a couple of times already that sponsors get their value from what they can accomplish with the benefits you provide, not from the benefits themselves.

Smart sponsorship seekers don’t sell benefits, they sell vision. The focal point of the whole proposal is about how the sponsor can use the investment to achieve their specific marketing objectives with their target markets. You create that vision by getting creative on their behalf, mapping out a leverage plan for them.

This makes sponsorship more valuable, as you can put a bigger price tag on something when they can clearly see the value to their brand. Even if you are offering the exact same benefits, if one proposal creates a vision and the other proposal doesn’t, the “vision” proposal is going to be worth much more money to you. It also makes it easier to sell, as the primary goal of your proposal is for your contact to sell it internally – to spread that vision.

Supports bargain-based thinking

There are still some dinosaur sponsors out there, who love that a la carte pricing. Even if the sponsor is in that mindset, it’s still not in your best interest to provide it.

Why? Because it will buy into that dinosaur practice of lining up bad, mechanism-based offers and trying to figure out which one is the best bargain. We get 200 tickets and a ten-seat hospitality suite and 60 metres of signage for $X, but we get 250 tickets and an eight-seat hospitality suite and 32 metres of signage for $Y. You’re turning yourself into a commodity, not an opportunity, and that’s a terrible idea.

Even if a dinosaur asks for a valuation, or some other benefit-by-benefit breakdown, don’t give it to them. You will do yourself a disservice. Instead, build them an offer that is based on ideas and creating vision and watch that dinosaur evolve.

Isn’t the valuation certificate worth something?

“Valuation certificate? Hahahaha… man, you’re killing me!” That’s what any sponsor with even a modicum of sophistication is saying when you present them with a valuation certificate. They’re rolling their eyes and laughing.

“Valuation certificate? Hahahaha… man, you’re killing me!”

That’s what any sponsor with even a modicum of sophistication is saying when you present them with a valuation certificate. They’re rolling their eyes and laughing.

Establishing your professionalism and credibility as a marketing partner is a huge part of the sponsorship sales process. You may think a valuation certificate helps your cause, but it does the exact opposite.

So, what should you do?

First off, don’t pay anyone to “value” your sponsorship. It’s money down the drain and it hurts, not helps, your credibility with sponsors.

If you want to create compelling, best practice offers – and you really need to – your pricing strategy needs to be best practice, as well. It’s part art and part science, and experience helps a lot. Importantly, there is no formula, although it would be so much easier if there were!

There is a methodology that will help get you there, particularly if you’re new to offering fully customised proposals that can’t be directly compared to what you’ve done in the past. Here are a couple of blogs you should check out:

For the whole process of offer development (creating the vision!!), formalising the proposal, pricing, who to send it to, etc, you might want to get a copy of The Sponsorship Seeker’s Toolkit 4th Edition.

Finally, there are sponsorship consultants who can assist you with pricing, but it will be about pricing individual offers for individual sponsors, not putting some arbitrary figure on benefits or packages, which will then be presented to whomever (it’s all the same to them!).

Need more assistance?

If you could use some additional support, I provide sponsorship coaching, sponsorship consulting, sponsorship training, and if you need a fast, cost-effective start, you might look into the Jump Start program. If you’re interested in any of these services, please review the materials and drop me a line to discuss:

Kim Skildum-Reid
admin@powersponsorship.com
AU: +61 2 9559 6444
US: +1 612 326 5265

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