I’ve had this question a few times lately. More often than not, it’s a brand manager who asks the question, after a senior executive has indicated interest in a major naming rights. That right there raises a red flag for me, as when the idea for a big naming rights comes from the top, it is – more often than not – corporate ego talking.
There are some compelling reasons why naming rights sponsorship is worth the money. There are also some big pitfalls.
First and foremost, naming rights sponsorship gives you a dominant platform for leverage. No one else in the sponsorship roster will have access to what you do. No other sponsor will have the control to create the perfect benefits package that you do.
If you want this huge platform, however, you have to be prepared to bloody use it. When you buy any sponsorship, you are buying opportunity, not results. It is leverage that provides the results. This is no different for naming rights, except the opportunity is that much bigger, and if you don’t make something of it, the opportunity wasted is massive.
Which brings me to a downside of naming rights: It’s like buying a license for corporate laziness. It’s big. It’s visible. It’s just so easy to get self-congratulatory about it and forget that it has to be worked. Think I’m wrong? Start paying attention to naming rights sponsors of the events and venues you attend. Put your civilian (non-industry) hat on and try to pick out the meaningful impact those sponsors have on you. Have they made the experience better for you – amplified the good stuff, ameliorated the bad stuff? Have they understood and respected the experience? Have they made you change your perceptions or behaviours at all? I have lost count of the times I have walked into a venue or event, to see the naming rights sponsor get all of the visibility, but be totally out-marketed by lower level sponsors who can’t rest on that visibility.
Another upside for really big naming rights (think: stadiums) is that there are a number of studies that have shown that, upon announcement of a naming rights, the company’s market capitalisation increases significantly. That said, those same studies also show that, in most cases, those increases are not sustained for very long. In any case, I know it’s a factor in some decisions, and if you look at stadium naming rights in America, the fact that a large proportion are held by brands in industries that have been under the most pressure in the past few years – I don’t think that’s a coincidence.
The upshot of all of this is that I think you should only go for naming rights if you are absolutely sure it’s not just corporate ego, you use that buying power to grab lots of amazing, strategic benefits (not just visibility), and you’re fully prepared to use what you’ve got. If you do these things, it’s probably worth the premium.
Then again, most naming rights sponsors are terrible, leaving a huge amount of room for you to take up a lower-level sponsorship and ambush the hell out of them.
When it comes to naming rights, there is no messing around and no middle ground. Either you’re in it, boots and all, or you’re a money-wasting chump.
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 a self-paced, online sponsorship training course for sponsors, covering the whole process of sponsorship strategy, selection, negotiation, leverage, measurement, and management, with lots of inclusions. Interested? Check out the Corporate Sponsorship Masterclass.
Want to build your sponsorship skills and strategies fast? I’ve got comprehensive online sponsorship training for both sponsors and rightsholders. Get the details and links to course outlines and reviews here.
If you need additional assistance with your sponsorship portfolio, 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 decentralised organisations.
Please feel free to drop me a line to discuss.
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