In the past, I’ve tackled a lot of aspects of negotiation, but I haven’t really blogged about the basics of the whole negotiation process before. It’s probably about time.
Many of us remember a time when negotiation was seen as largely a win-lose prospect. It was adversarial, with the ultimate goal to get as much as you can for as little as you can, without thought for the other side. In many circumstances, we still see negotiation that way. We’re not going to offer more for a house that we have to, just because we know the seller is under financial duress. No, we’ll offer even less, hoping for the bargain of a lifetime. We don’t care about being equitable or playing nice when we buy cars.
While I’m not a person to advocate being an adversarial jerk when you negotiate for anything, in sponsorship it is a particularly bad idea. Why? Because unlike buying a house or a car, after you’ve done the sponsorship deal, you still have to work with that partner to make the sponsorship happen. Is that really how you want to start a relationship that could well span years? No, you really don’t, because a sponsor’s ultimate goal is to get the best possible result for the brand, and the rightsholder’s ultimate goal is to have a sponsor that adds value to the marketing plan, advocates sponsorship of their properties to others, and renews, and neither of those thing can be achieved without the cooperation and support of your partner.
So, here are a few tips for sponsorship negotiation. They are all pertinent to both sides, although the application may be different.
The most important party to the negotiation is the target markets – the fans, customers, etc – but they are the only party not at the table. Why are they the most important? A sponsor is trying to connect with them and nurture their relationship and relevance to them. They’re trying to align with them, building advocacy. And for rightsholders, this is the audience and potential audience for the property. If either side does the wrong thing by those target markets, everyone will lose. Aim for win-win-win… always.
Rightsholders: Never, ever offer or agree to sponsorship benefits that will make your property less pleasant, less relevant, or otherwise diminish the experience. Your fans will see you as a sell out and your reputation will suffer.
Sponsors: Your absolute best strategy for getting a return is to add value to that experience. If you use money or a rightsholder’s desperation to negotiate benefits that you will use to diminish the target markets’ experience, you are doing the exact opposite of best practice. If you have to, put yourself into the audience’s position and ask, “if I’m there to see the band/game/festival/exhibition, does this add to or detract from the experience?” If it detracts, try again.
Many perfectly reasonable people lose their minds when it comes to negotiations, and take every chance they have to come out on top. Some sponzillas ask the world for a pittance, demand unrealistic changes to events, and treat rightsholders like peons, not peers. Then, there are rightsholders who threaten to go to the competition, create unrealistic urgency, or start moving a sponsorship forward without agreement – all insidious forms of bullying.
There are times when all reason goes right out the window, and the whole thing stops being about a sponsorship and starts being a competition. If either of you think there is any chance that’s happening, you need to call a halt to it, and state categorically that you won’t be a party to any negotiation like that. It’s just not worth it.
Sponsorship requires a lot of analysis, on both parts. But when it comes right down to it, negotiation is often a very creative process. If the basic building blocks of a good sponsorship are there, let that creative process flow.
Sponsors: Don’t think it’s the benefits on offer or nothing. If the property is relevant and meaningful to your target market, and you have enough time to leverage it, you may be able to negotiate benefits that will make it work for you.
Rightsholders: You have a lot of benefits you could offer – probably a lot more than you think. If it starts to go pear-shaped in a negotiation, stop and reassess what the sponsor is trying to accomplish. Chances are you have options that will help them achieve their goals. Download the Generic Inventory template for a huge running start on what you can offer.
Stinginess benefits no one. In a negotiation, if you can provide something that will help your potential partner achieve a goal – and there’s no downside to you – just do it.
Sponsors: Ask your potential partner what their biggest marketing, or even operational, challenges are. You may be able to provide access to markets, expertise, infrastructure, or a wide range of other benefits.
Rightsholders: If a benefit is easy to provide, and providing it wouldn’t devalue your other sponsorships, go ahead and do it. For instance, providing access to intellectual property – or allowing a sponsor access to create their own content – is among the easiest and most valuable things you can provide.
Following on from being generous, both sides should consider contra/in-kind as an option. It can allow sponsors to get more benefits for a lower cash outlay, while rightsholders get a higher overall investment than they would have.
I have a range of recommendations in another blog, entitled Valuing Contra vs Cash Sponsorship. Do read it, as valuing contra correctly is key to opening up this payment option.
Sponsorship negotiation isn’t really that difficult, but being realistic is important. This includes being realistic about both the price and the lead-time.
Sponsors: You need to respect that sponsorship is a big revenue stream for many rightsholders, and you shouldn’t screw a potential partner down from a realistic price, just because you can. You also need to be up-front to the sponsorship seeker about lead time. If you don’t have enough time to make a decision, plan, and implement a leverage program, don’t waste their time.
Rightsholders: If the sponsorship is wildly overpriced, compared to the market, it doesn’t matter how relevant or creative the benefits offered, it’s not going to happen. You also need to ask the hard questions about lead-time, because again, you could make the best offer in the world, but if they can’t leverage the opportunity, it’s worth nothing to them. For more on the critical importance of sponsorship lead-time, read Sponsorship Lie #212: There’s Still Time.
You may also be interested in my white papers, “Last Generation Sponsorship Redux” and “Disruptive Sponsorship: Like Disruptive Marketing, Only Better“.
I’ve also got self-paced, online sponsorship training courses for both sponsors and rightsholders. Get the details and links to course outlines and reviews here.
Rightsholders, for all you need to know about sponsorship sales and servicing, you may want to get a copy of The Sponsorship Seeker’s Toolkit 4th Edition.
If you need professional assistance with sponsorship, I offer sponsorship consulting and strategy sessions, sponsorship training, and sponsorship coaching. I also offer a comprehensive Sponsorship Systems Design service for large, diverse, and/or decentralised organisations. Please feel free to drop me a line to discuss.
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