How Much Should You Budget for Sponsorship Leverage?

There has been a fair bit of chatter online about what the standard sponsorship leverage ratio should be. That is, how much incremental money should you budget for your leverage program, as a ratio to the sponsorship fee paid.

People have offered up 1:1 (spend one dollar leveraging for every dollar spent on a sponsorship fee), 2:1, and 3:1 in the discussions. And there are plenty of that media hail big leverage spenders as being at the vanguard of sponsorship.

I disagree with all of that. Vehemently. Spending that much, incrementally, flies in the face of everything that makes sponsorship so powerful:

  • It’s meaningful and resonant to your target markets.
  • It is supremely flexible – like sculpture, you can make sponsorship into anything you want and out of anything you want, so long as it is structurally sound.
  • It’s integrateable across all other marketing media.

Even if you’re only spending 1:1, you’re spending too much, and you’re probably doing too little.

When I started in this industry, 1:1 was being hailed as the new thing. In a sense, it was good, as it made people understand that sponsorships needed to be leveraged to provide a return. But the proportion was totally arbitrary, as is 2:1, which was the supposed answer to sponsorship clutter.

The best sponsors now spend the least amount on leverage, incrementally – 10-25%, not 100-200%. This is because they…

  • Centralise sponsorship in their portfolios. It’s no longer a piece of the pie, but a catalyst that makes already budgeted marketing activities more effective.
  • Work cross-departmentally, getting input from across the company before negotiation, ensuring that every department gets the benefits they need to have an appropriate platform for leverage, and integrating sponsorship across those existing activities, or replacing already budgeted activities that won’t be as effective.

If this approach is taken, the incremental funding required will drop considerably –although the effective value of the marketing impacted by the sponsorship may be many times the sponsorship fee – and your results will skyrocket, as you wring every last drop of value out of the investment.

The exception that makes the rule is big, quadrennial events (Olympics, World Cup), as the platform for deepening relevance and relationships often outstrips the amount of existing activities. In other words, even if those sponsors integrated it across everything they do – which they should – they still wouldn’t have exhausted the potential. In that case, war-chesting some money and spending up is entirely appropriate.

Sponsors who spend as much or more on leverage, incrementally, are doing so needlessly. If you take on board a best practice approach and moved sponsorship out of the sponsorship “box” and into the realm of “marketing catalyst”, you will get much better returns at a much lower cost.

Corporate Sponsorship Consulting with Kim Skildum-Reid BrochureFor more on this, you may be interested in my white paper, “Last Generation Sponsorship“.  It’s been downloaded over 850,00 times.

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.

Need more assistance?

If you need any assistance, I am available for consulting and strategy sessions. Just drop me a line and we can discuss your needs and what I can do for you.

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

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