Over the years, I’ve had so many people ask whether it’s better to have a diversified or focused (non-diversified) sponsorship portfolio that I figured I should address it head-on. The short answer is that it depends on a lot of factors, including objectives, target markets, human and other resources, and more.
Below, I’ve outlined some of the most important pros, cons, and furphies** of diversified and focused sponsorship portfolios, and the single most important thing you can do to ensure you get a good result from your portfolio.
**“Furphy” is Australian slang meaning an absurd story or falsehood. Excellent word.
A focused sponsorship portfolio could take a few different forms. Some sponsors go down the track of having just a handful of large sponsorships, which could all be in different categories. Other sponsors focus on just one category, and could have a few or literally hundreds of sponsorships under that category. I’m addressing both options here.
One of the top reasons you may want a focused portfolio is efficiency. This is huge. Sponsors need to leverage every single sponsorship, in order to get a result against objectives. A focused portfolio allows for a relatively small sponsorship team to manage and leverage every sponsorship effectively, ensuring that no investment goes wasted.
Even if you have a big portfolio, but investments are clustered around one or two overarching themes, there are ways to structure that portfolio so that it behaves more like one or two big sponsorships than dozens or hundreds of individual sponsorships.
Following on from the above point, if you’ve got a focal point around a specific category of sponsorship – literacy, live music, ice hockey, etc – this gives you heaps of options for using them collectively to achieve your marketing and business goals. Here are just a few:
Then again, if your portfolio consists of a very concise number of sponsorship, this aligns with an industry trend of having fewer, bigger sponsorships. Those bigger sponsorships are then very comprehensively leveraged in different ways for different markets or timeframes.
Finally, if you’re only sponsoring within a very limited number of categories, over time, you’ll develop a lot of category expertise. You’ll understand the nuances of the fan experience. You’ll unearth novel ways to leverage. The benefits you negotiate will get better and more leveragable every time.
If you’re going to go all-in on one property or category, there’s a lot of pressure to get it right, and this stops a lot of sponsors from considering this option. Rather than doing something very tightly aligned with their brand or target markets, they go for least-common-denominator options. Things that are ubiquitous and/or no one hates.
In this case, sponsors will often go for one giant event, like the Olympics, which has even non-sports lovers riveted by curling every four years. Where, if all else fails, patriotism and all the storytelling around it pulls people in. Other sponsors go for a property/category that no one could possibly not support, like children’s hospitals or animal welfare.
What I like to look for are sponsorship multi-tools. The Olympics, children’s hospitals, and animal welfare definitely qualify, but so do many other properties – big and small. The key is that the property and larger themes around it have broad relevance, and that you can negotiate benefits that can be meaningfully leveraged in many ways, for many markets, across a long timeframe.
For more on sponsorship multi-tools, check out Sponsorship Multi-Tools: The Holy Grail for Sponsors.
Some industry pundits would tell you one of the benefits of focusing on one sponsorship property (or category) will net a sponsor greater “association” with the property, so when people think about the property, they think about the brand. Spare me.
Person derision aside, this misses one of the biggest planks in the best practice platform, which is that the most important connection – the most important “association”, as it were – is between the sponsor and the fans. Going all in on “association” with one property (or category) may create a degree of ubiquity over time, but just being there – even for a long time – isn’t going to achieve marketing or business objectives without meaningful and consistent leverage.
This leads me to another big furphy about a focused sponsorship portfolio, which is that they lack scope and flexibility. The fanbase is limited. The geography may be limited. The timeframe is limited. While there is a kernel of truth, multifaceted, creative leverage can mitigate all of these concerns, provided the property/category is well-selected.
Many of my consulting and training clients come to me with diversified sponsorship portfolios. They’re usually a mix of strategic, tactical, and ad hoc investments, although the proportions can be all over the map.
The biggest pro for a diverse sponsorship portfolio is that you can pick up sponsorships that meet very specific needs. Need something in Tulsa to drive consideration by high net-worth individuals? Need something in Italy to introduce a brand extension? Need something tactical in Western Australia to keep a few enterprise clients happy? You can do all of that with a diversified portfolio.
You can have literally dozens or hundreds of sponsorships that hit the bullseye for whatever your disparate needs may be. You have amazing flexibility, and that can be appealing, but if you are anywhere near best practice, this comes at a huge cost.
The biggest con of a very diverse portfolio is that, while individual sponsorships may all make sense on paper, a diverse portfolio can be super-inefficient. If there’s no overarching theme or other glue holding them together, they all need to be leveraged individually. For big, diverse portfolios, that can be a herculean undertaking, and all but impossible for most sponsors.
You may be thinking that the way to solve this is to prioritise what gets leveraged, but that’s missing another big plank in the best practice platform. That is that a strong leverage program is what turns the opportunity you’ve invested in into the results you need against your marketing and business objectives. No leverage = no results. So if your portfolio is so diverse that some of it is languishing unleveraged, you’re wasting opportunity. You may as well not be doing those sponsorships at all.
Another con is that the diversity tends to turn into an unhelpful permission structure. If the portfolio looks haphazard and under-leveraged, it invites more haphazard and unleveraged sponsorships. It becomes the way you do sponsorship, and that’s not good.
There are some who equate a diversified approach with microtargeting digital ads, but that kind of thinking misses the point of sponsorship completely.
Those ads are finely targeting the exact right people with the exact right messages dropped right in front of them – at least in theory. If you dig deeper, the people arguing that sponsorship can be used in the same way as microtargeted ads are talking about using the visibility of these diverse sponsorships to get logos or short taglines in front of very narrow groups of people.
Key words here are “in front of”. This is visibility-driven, first generation sponsorship. Best practice is miles ahead of that kind of thinking. And while logo and tagline slaps are still an expected benefit, its importance in the sponsorship equation has plummeted in favour of building alignment to the brand, engendering advocacy, and adding value to fan and customer relationships.
For more on sponsorship generations, download Last Generation Sponsorship Redux.
There is another furphy around risk mitigation. It’s sort of a don’t put all your eggs in one basket approach. The basic idea is that, if you have a diversified portfolio, and one sponsorship or event falls over, it won’t be catastrophic to your overall results.
Here’s the thing. If you’ve done your job as a sponsor, one sponsorship falling over isn’t going to be catastrophic, even if you only have a handful of sponsorships. This is because you should be:
And in case you’re thinking that an event cancellation, controversy, or other catastrophe could reflect negatively on your brand, it really won’t. It may reduce your marketing platform, but fans understand that sponsors were as blindsided as they were, and will generally work with you on your Plan B.
So after all of that, you’re probably wondering where I stand. Here’s the thing… I really only have one hard-and-fast rule:
A sponsorship portfolio needs to be efficient enough that every single sponsorship is well-managed and fully leveraged.
This has less to do with the number of sponsorships than it does with the structure of the portfolio, because you can use various sponsorship structures – such as umbrella or vertically integrated – to make big collections of related sponsorships operate like one large sponsorship.
If you do that, you could have a portfolio that has, for instance, a couple of big multi-tool sponsorships, one or two themed umbrella portfolios, and a vertically integrated portfolio, turning a collection of dozens or hundreds of sponsorships into a half-dozen leveragable opportunities.
Your challenge now is to get real about your organisational capacity to effectively and creatively leverage your current portfolio. If that’s not happening, can you find efficiencies – related sponsorships that can be pulled together under a theme? Failing that, you’re going to have to undertake a sponsorship audit, getting rid of any dead wood and building a portfolio that is manageable.
Your second challenge is to work the word “furphy” into your vocabulary – LOL! It’s a great word.
For more on portfolio structure options, read How to Structure a Sponsorship Portfolio.
There’s some good advice on sponsorship audits in this blog: Sponsorship in a Recession: A Sponsor’s Guide.
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