“How many tickets to the event should we get for a silver package?”
“What proportion of our sponsorship portfolio should be made up of sports, arts, community events, etc?”
“How much should we spend on leverage for an $X sponsorship?”
“What should our target ROI be for this sponsorship?”
I get questions like this all the time. In fact, I’ve had every one of these exact questions in the past month.
On the surface, they seem perfectly reasonable. The problem is that each and every one of these assumes that there is a “right” answer – some formula that will distil the complexities of modern sponsorship into a neat, little number. There is no such thing. Modern sponsorship is complex. That doesn’t mean it is difficult to understand, but you have to be prepared to ask different questions and be prepared for multifaceted and nuanced answers.
The above questions aren’t useful to you, and the answers will take you further away from best practice and your maximal results. It’s like using a meat grinder to tenderise a steak, or as Oliver Wendell Holmes put it much more eloquently…
“Life is painting a picture, not doing a sum.”
Below, I’m addressing these questions (and those of the same ilk).
How many of [benefit] should a sponsor get at X level of sponsorship?
There are so many things wrong with this question, my head wants to explode. First off, it assumes that it is appropriate to structure sponsorship into set levels. It’s not. (For more, see “The Problem with Sponsorship Levels”.) Then, it assumes that what you offer a sponsor should be dictated by some formula, usually comprising some number of logos on things, tickets to things, some kind of hospitality, and an official designation. Both of those assumptions are limiting your creative options, limiting your revenue, and sending potential sponsors to sleep.
The right questions are the ones you ask the sponsor about their objectives and target markets. The answers to those questions will give you the information you need to structure a customised proposal that meets their specific needs. How many of any given benefit you provide comes down to one answer: Enough. Enough to provide a platform for them to achieve their objectives with their target markets.
A tool you can use: The Generic Inventory is a list of all of the benefits (or at least a huge running start) that you can sell around a sponsorship. Download it. Customise it. Your potential sponsors will thank you.
What proportion of the sponsorship portfolio should be made up of different categories of sponsorship?
That is like asking how much flour to put in the bowl without telling me what you’re making!
A sponsor’s job is to achieve objectives. The sponsorship portfolio should be made up of exactly the sponsorships that will provide the raw materials for a sponsor to leverage to meet those objectives. Instead of trying to achieve some mythical balance, you should be seeking out sponsorships that:
- Are relevant to your target markets.
- Help you to achieve at least five overall objectives for your brand.
- Show some understanding of your needs, some creativity, and are professionally presented.
- Have internal buy-in.
- Are feasible – within budget, enough lead-time, enough human resources, etc.
A tool you can use: Sponsorship Guidelines. This template will help you create an external document that will help sponsorship seekers create strong, creative proposals for you, while keeping them on a firm strategic track.
How much should we spend on leverage?
You’ve heard the formulas – we all have – the ones where you are supposed to spend a set percentage of the amount spent on the sponsorship fee (aka, the rights fee) to leverage the sponsorship. Some believe dollar-for-dollar is the right proportion. Some believe you should spend more – two or three dollars on leverage for every dollar on sponsorship.
I have to tell you, most of them could spend less and get more for their sponsorships, if they were to take a holistic approach, get buy-in early in the process, integrate the sponsorship across many already budgeted activities, and get creative. Some of the best sponsors in the world are spending 20-25% incrementally, not 100-200%.
Of course, there are exceptions. If a sponsor makes a major investment – such as a quadrennial event (World Cup, Olympics, etc) – there is every chance the opportunity for achieving objectives will outstrip the currently budgeted activities. That is, even if they integrate it across every single thing they have budgeted, there will still be unexploited opportunity. In those cases, it is entirely appropriate to war-chest some budget and extend the spend substantially.
The upshot is that there is no formula. Most sponsorships can be very well leveraged at 25% or less, but not all. Sometimes, investing in a piece if infrastructure, such as a micro-site, will cost more in the first year, but create enormous value over the course of several years. Stop looking for a set number.
What should our target ROI be?
You want a ratio. I know you do. You (or your bosses) want to know how much money you’ve made vs how much you’ve spent, and you want to know what that ratio should be. Wanting that is fair enough. Unfortunately, it’s unrealistic.
You are trying to achieve objectives, all of which fall into one of the following two categories:
- Changing people’s perceptions
- Changing people’s behaviours
How do you reflect the objective of increasing trust in dollars? How do you reflect the objective of increasing loyalty or evoking advocacy in dollars? You can’t, unless you just throw an arbitrary number on it – which plenty of sponsors try, but is hardly accurate.
So, what is the answer? First step, accept that you will never be able to reflect a multi-faceted, multi-objective sponsorship in terms of one, neat ratio. Second, figure out ways to measure against the objectives you’ve set. In fact, many sponsorship pros are now relating results using the term ROO – Return-on-Objectives.
Yes, some things are measurable in dollars, some in percentages, others in sheer numbers, and there are a few (only a few) things that rely on more subjective measures. In the end, you’ll end up with many measures and a complete picture.
For more on how to measure against objectives, and create a measurement report that is both complete and defensible, check out my free tutorial, “Sponsorship Measurement Basics in About 10 Minutes” on the Power Sponsorship YouTube Channel.
Need more assistance?
For sponsors, 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. Sponsorship seekers, you’ll find all you need to know about sponsorship sales and servicing The Sponsorship Seeker’s Toolkit 4th Edition
AU: +61 2 9559 6444
US: +1 612 326 5265
© Kim Skildum-Reid. All rights reserved. For republishing information see Blog and White Paper Reprints.