The Best Kept Secrets In Sponsorship Marketing

Secret #2: The actual value of a sponsorship opportunity

Rumor has it that the metrics for how companies derive the value of a sponsorship have been hermetically sealed and stashed away in a drawer somewhere. It’s a major conspiracy by all who hold the title of CMO.

That’s probably a bit of a stretch. But I think there are three flawed factors at play in determining the value of a sponsorship opportunity:

1. While a company or an agency may evaluate a property, it’s likely they’re using traditional advertising metrics to determine “value.” Often times the company fails to measure the value associated with an integrated consumer activity and other factors linked to a personal connection with event. Limiting value to just the potential impression or reach removes that “relationship factor” that sponsorship creates (find Derek T.Y. Poon and Gerard Prendergast study, A New Framework for Evaluating Sponsorship, International Journal of Advertising, 25(4).)

2. The vast majority of fees for smaller sponsorships are derived solely from where the dart landed on the board. Many of these sales efforts are led by volunteers who have little background in marketing and advertising but they make up for it through the passion of supporting “their cause.” These skewed dollar figures become the basis by which other sponsorship requests are evaluated.

3. Relationships and trust. The Farrelly –Quester study in the Dec. 2003 Journal of Advertising Research confirmed that the antecedent for sponsorship renewals are based primarily on the relationship between buyer and seller, rather than from empirical, quantifiable values derived through evaluation and benchmarks. So, if a sponsor is paying too much for a property because of the relationship with that property – that’s going to affect how your proposal is evaluated.

A logical solution for these misguided efforts might be in the creation of an association that could provide some framework for industry standards to guide the valuation process. A professional sponsorship association could be the catalyst that outlines the parameters for these values and establishes a more common, disciplined approach. The result would be enhanced understanding and credibility for sponsor seekers and truer valuations of properties for marketing executives.

We also need to keep in mind that part of the “intangibles” associated with sponsorship marketing comes from buyer intuition and seller creativity. It’s what makes sponsorship such a unique marketing vehicle. To evaluate the value of a relationship based solely from number crunching would be a mistake.

Unfortunately, until standardized guidelines are established and implemented for the whole industry, the value for a sponsorship opportunity and how it's evaluated will remain secret, eluding property holders and potential sponsors. Dart board anyone?