This is another of my vintage blogs, reworked and updated to reflect changes in best practice, and new angles.
How to value contra, otherwise known as in-kind, sponsorship is a question I get almost every day. What is most interesting is how differently sponsors and rightsholders view contra, and they both overcomplicate what is really quite a simple equation.
Rightsholderss take contra for granted. Well, okay… most rightsholders take contra for granted. The attitude is, “those airline seats would be empty anyway, so why do we have to put a value on them?” Newsflash: If you didn’t get those seats through contra, you would have to pay someone for them, so they do have value.
I also hear a lot of rightsholderss complaining that their contra sponsors expect as much as their “normal” sponsors. They are clearly making the assumption that contra sponsors are second-class citizens in the sponsorship universe. They couldn’t be more wrong.
Sponsors, on the other hand, tend to value what they offer at full price, whether that’s what a rightsholder would have to pay for those goods or services on the open market or not. Media sponsors are among the biggest offenders, valuing every spot in a contra deal – no matter how crappy – at rack rates, even to rightsholders who would normally get a discount on media deals with them (eg, local governments).
So, with sponsors overvaluing contra and rightsholders undervaluing it, what is the answer? How do both sides value contra appropriately? It all comes down to one thing:
Contra is worth what a sponsorship seeker would have to pay
for those goods or services. No more. No less.
If a rightsholderr needs two new computers and has a budget of $3000 for them, even if a sponsor offers two top-of-the-line computers worth twice that much, the contra value is only $3000. Air tickets are worth what a sponsee would have to pay for them. A media package is worth what the rightsholder would have to pay for the same package.
The words “have to” are important. If the goods or services are not in the rightsholder’s budget, the contra has no value. I once had a sponsor offer to pay for a sponsorship with $25,000 worth of socks. I kid you not… socks. Those socks had value to somebody, but not to me, so the offer was roundly knocked back.
There is an exception. Sometimes, what a sponsor offers in contra isn’t in the budget, or is more than a rightsholder needs, but can add value to other sponsorship packages. For instance, if a radio sponsor offers a bigger package than a rightsholder needs for promotion, some of the excess spots can be included in sponsorship packages, increasing their value.
Socks didn’t fit into this category, either.
This is a question I really hate. Don’t get me wrong, it’s a valid question, but I hate that it needs to be asked at all.
Sponsors, listen to me very carefully: Pull your bloody heads in. What you do to leverage your sponsorships is developed specifically to reach your goals, add value to the fan experience of your markets, nurture relationships with your staff and customers, and create authentic, meaningful content for your channels. If that also benefits the rightsholder, good. Mutuality is what being a partner is all about.
At every stage of sponsorship, you need to keep foremost in your mind that the fans love this property – if people didn’t have passion for it, you wouldn’t be sponsoring it, right? – and if you are so shortsighted that you can’t see the benefit to your brand of being fair to the rightsholder, then you can expect your results to suffer.
Rightsholders, feel free to borrow the above argument, as required.
The upshot is that rightsholders need to treat contra sponsors with the same respect, and offer the same level of benefits and servicing, as an equivalent cash sponsor. And sponsors, overvaluing your contra offerings simply isn’t fair.
Valuing contra isn’t rocket science. You just need to strip it back to the basics.
You may be interested in my white papers, “Last Generation Sponsorship Redux” and “Disruptive Sponsorship: Like Disruptive Marketing, Only Better“.
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 capacity-building service for large, diverse, and/or decentralised organisations. Please feel free to drop me a line to discuss.
© Kim Skildum-Reid. All rights reserved. To enquire about republishing or distribution, please see the blog and white paper reprints page.