Most of my blogs address issues and opportunities presented by individual sponsorships or overall approaches. It isn’t often that I address sponsorship at the portfolio level in this blog, and it’s probably about time to address portfolio structures that work, and a few that don’t.
Fewer, bigger sponsorships
As the importance of leveraging your sponsorships in a creative, meaningful way has gone mainstream, so has the realisation of how much time and effort goes into doing it well. Many a sponsor has looked at their vast, fragmented portfolio and thrown up their hands in exasperation, realising that they will never be able to do them all justice with the resources they have.
Enter the “fewer, bigger” mindset. There has been a definite trend toward rationalising and streamlining portfolios so sponsors have fewer investments, and shifting toward larger sponsorships, They’re looking for the Swiss Army knives of sponsorship, that can be used across many objectives, business units, and target markets.
This structure can make your life a lot easier, and can certainly be effective, but unless you are very selective about what you invest in, it can lack in flexibility.
If you’ve got a collection of related sponsorships – such as grassroots community sponsorships or music – it is often easier and more effective to strap them together under one, themed “umbrella”. This way, rather than trying to leverage dozens or even hundreds of individual investments, you leverage them as if they were one, larger investment. You are, in a sense, creating a leverageable brand.
Jack Daniels does this with their live music portfolio. Ergon Energy does this with their community portfolio. And there are many, many more examples.
Many of my clients arrange their portfolios into two or three “umbrellas”. Some of those portfolios include a few larger investments, which can be leveraged individually and as part of the larger portfolio.
Aside from economies of scale, one of the other great reasons to take an umbrella approach is that none of the individual sponsorships needs to be perfect, so long as they fit as part of the larger whole. The umbrella gives you a lot of flexibility, covering both strategic and tactical investments, investments driven by marketing, staff, local management, or any number of divisions. It can be created out of almost anything, so long as it makes sense with the theme.
Another great benefit is that the umbrella provides for consistency across a longer period of time – often all year – with many opportunities for leverage focal points.
A vertically integrated portfolio is a type of umbrella sponsorship. Rather than a simple collection of related sponsorships, however, a vertically integrated portfolio features sponsorships in one category – one sport, for instance – from grassroots all the way to the elite or professional level.
A vertically integrated portfolio has all of the positive attributes of an umbrella portfolio. It also offers a multi-level conduit to the target markets, providing the ability to leverage individual components of the portfolio, such as a national team or league, to target markets ranging from elite-level fans to local clubs and players.
Some companies take a decentralised approach, allowing regional or local areas, as well as different business units, control over the selection and management of their sponsorships. This works particularly well if your brand operates across a number of geographic areas, where the interests and needs of your target markets are different from one area to another.
The key with making this work is to have a strategy with a firm direction and guidelines, but allow for flexibility and empowerment on the local or regional level. It also helps to provide quality training, tools, and templates, ensuring that both the mindset and method is consistent. Without that framework, this approach is destined to the ignominy of a poorly thought out, ad hoc portfolio (see below).
With few exceptions, most of my clients’ portfolios represent a combination of the above approaches. For instance, a portfolio could look like this:
- 200+ community and cause investments (umbrella)
- Professional hockey league, most teams in that league, state associations, a few tournaments (vertical integration)
- Formula 1 race (big)
- Pink Ribbon campaign (big)
- $15,000 per region allocated for local, summer events to support summer retail push (decentralised)
I am not saying your portfolio has to look like that, or that you have to take a combination approach, simply that it’s okay if you do. In fact, it’s okay to take any of the approaches outlined above. They all have their roles and one or more will suit almost every brand.
That said, there are a few portfolio structures (or lack of) that I don’t recommend.
This approach is very typical, and represents the starting place for many of my clients. The basic idea is that they are choosing individual investments to work for specific situations.
While that’s better than making investments for no good reason, at all, it is destined to underutilise the sponsorships. Why?
- If your investments are all unrelated, it means you have to leverage them all individually, which is a lot of work.
- If your investments are all unrelated, you may be providing too many or confusing messages about your brand.
- If your investments are chosen only for a concise situation, they may or may not have any relevance across other business units, across time or other geographies, or for other objectives. Even if they do, it’s unlikely it’s being accessed, making this type of portfolio a chronic under-performer.
Having a fragmented approach is a bit like having an unsolved jigsaw puzzle. It lacks cohesion, and without that, doesn’t tell a clear, consistent story about your brand. A well thought-out sponsorship portfolio is that jigsaw put together, with all of the pieces interrelating between multiple business units, objectives, and target markets.
While the fragmented portfolio is like having an unsolved jigsaw puzzle, an ad hoc portfolio is like having a pile of random puzzle pieces from a dozen different puzzles. Not only are they not working together, they never will.
Most ad hoc portfolios need a major overhaul, and the best place to start is with a zero-based audit, which will get you focused on the possibilities. Read more about zero-based sponsorship audits here.
Based on percentages
Every month or so, I get an email asking me what are the appropriate percentages of sponsorship spend on various categories. In other words, what percentage of the sponsorship budget should be spent on sports, what percent on the arts, etc.
I am all for applying rigor to the sponsorship selection process, but putting arbitrary parameters around the percentage to be spent in the various sponsorship categories is counterproductive. This is not grant money, it’s marketing money, and your goal needs to be to invest in the most effective sponsorships possible for your target markets and objectives.
This is my least favourite type of sponsorship portfolio: One that is built primarily around blocking competitors, not creating gains for your brand.
Come on, people! Play your own game! Investing $100,000 in an event that is wrong for your brand, just to keep your competitors out is a colossal waste. You may stop them from benefitting from that sponsorship, but they have literally thousands of other options, and you can’t block them all.
Imagine, instead, that you could spend that $100,000 on something that was absolutely perfect for your brand, and that you created a fantastic leverage program around it. I can guarantee that the benefit to your brand will far, far outweigh any benefit your brand may enjoy by blocking your competition.
The exception to this is when you are really buying sales. If your sponsorship of the local lawn bowls club provides you with exclusive pouring rights for soft drinks, and the profit on the litres poured is more than the cost of the sponsorship, then you’re not really blocking your competition. You’re just buying sales.
One of my favourite tools for the sponsorship selection process is the Sponsorship Guidelines template. Download it and follow the instructions. In about an hour, you’ll have a tool that will make your selection job easier and reduce your admin workload, and who’s going to argue with that?
Need more assistance?
For all you need to know about best practice sponsorship selection, leverage, measurement, management, and more, you may want to get a copy of The Corporate Sponsorship Toolkit.
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This blog was originally written in 2010, but was fully updated in August 2016.
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