CHAPTER 1
Internal Planning
Before your organization begins the sponsorship acquisition process, it is essential to consider your organization’s ability to enter wholeheartedly into a marketing partnership with a corporation. Too many organizations turn to sponsorship as a last-minute resort for raising much-needed funds. Sponsorship, however, is no longer a fundraising activity but, rather, a joint marketing activity involving both your organization and a corporate partner. If you are not prepared to be part of a win-win partnership and share the “ownership” and glory of your programs, your sponsorship efforts will fail. You may be successful in raising sponsorship, but retaining your sponsors will be very difficult.
Understanding Your New Role
Your job as a sponsee has changed dramatically over the past few years, driven primarily by sponsors’ increasingly sophisticated expectations. They want to achieve multiple objectives, integrate sponsorships across a myriad of marketing activities, and, more than anything else, truly connect with their target markets. That last one is often a hard pill to swallow for sponsorship seekers, but it is true. Sponsors are no longer interested in being “associated with” your event. They don’t want to connect their brand with football or the arts or whatever. They want to connect with the target markets on a personal level, fostering relationships and creating a degree of relevance that a less passionate marketing medium, like television, could never equal.
Historically, sponsorship has been all about connecting a brand with your property, and the very clear focus of negotiations and sponsorship leverage has been about enhancing that connection—bigger logos, more signage, players using the brand on TV commercials, event logos on product packaging, on and on and on. The assumption that went along with all of this was that if the two organizations were connected in a highly visible, thorough way, then the target market would just get it—that the guy in the pub watching football would say to himself, “That’s my favorite team, and it’s sponsored by XYZ Beer, so I should drink XYZ Beer” (Figure 1.1). That delusion was nice while it lasted, but a lot of research has shown that this approach is only minimally effective.
Figure 1.1 Traditional sponsorship model
Don’t believe us? Ask yourself, or better yet, a friend, the following questions:
• What was the last major sporting event you attended in person (with which you weren’t professionally associated)?
• How many logos do you think you saw that day?
• Just give me a number—how many do you think you could name right now?
• Okay, name them . . .
• Of the sponsors you’ve named, have any of them changed your perception of their brands? Have any of them made you behave any differently with their brands—trying the brand, becoming more loyal, telling other people about it, or whatever?
We’ve asked these questions hundreds of times, and the answers are virtually always the same: people claim to have seen somewhere between 15 and 100 logos, think they can name 8 to 10, can actually name 2 or 3, and none of the sponsorships by those brands have affected their brand perceptions or behaviors in any way. That’s traditional sponsorship thinking at work, and it’s not very effective.
Modern, best-practice sponsorship turns this thinking on its head. Best-practice sponsorship starts from the premise that sponsors don’t want to connect with you, they want to connect with your audience, and they want to use their sponsorship of your property to deepen their connection with their audience. Given that, the new model of sponsorship looks like Figure 1.2.
Figure 1.2 Best-practice sponsorship model
Best-practice sponsorship makes the relationship between the sponsor and the target market the primary focal point and changes the sponsor’s goal from getting “in front of” an audience to adding value to the target market’s experiences with the event and the brand, demonstrating their understanding of and alignment with the target market’s values, motivations, and passions, and deepening their relevance and relationships with key markets.
Your role as a sponsee has changed from being a flag-waver to being a conduit, providing a variety of benefits and opportunities that will help your sponsors achieve that level of connection. They now also count on you to help them understand your audience’s values, motivations, and desires in a much deeper way than ever before. They don’t just want to know age and gender any more, they want to know why people attend your event, join your association, or donate to your cause, what are the drawcards and downsides, and how they, as sponsors, can improve or enhance that experience.
This does mean more work for your organization, but this is not such a bad thing. Back when sponsorships were selected based on the amount of exposure they could deliver or the exclusiveness of the hospitality program, there was always another event that could deliver more. Events, teams, causes, and all of the other sponsorship options were interchangeable commodities, making your sponsorship income very unreliable. The new model of sponsorship is based on partnership and produces strong, multifaceted results that any sponsor will find difficult to leave.
How Sponsorship Fits with Brand Marketing
Before you will be successful in selling sponsorship, the very first thing you need to know is how it fits with brand marketing. Every brand has a life cycle—some short, some long—and for each, what the brand needs from sponsorship at different stages in its life cycle is different (Figure 1.3). Understanding this will help you to understand brand priorities and find the focal point of your sponsorship offer.
Figure 1.3 Sponsorship priorities at each stage of the brand life cycle
When brands are brand new, they need to tell people they exist. But nobody buys, or considers buying, anything just because it exists, so they need to immediately start building relevance—Why should someone consider their brand? How will it benefit them? What does it say about you if you choose this brand?
Once they have established their relevance, and most of their target market knows and understands their brand, their primary objective is to build relationships. It’s far easier for a brand to nurture its current relationships, figure out ways to sell them more, and create avenues for advocacy than it is to chase new business. Of course, sponsors are still trying to develop relevance with new or emerging markets, but what they’re not trying to do is create awareness. Think of this next time you promote “exposure” as your biggest benefit to McDonald’s or Sony or Ford.
Brands also have a customer cycle, representing their relationships with customers and their increasing value as that relationship deepens.
The entry point is simply being aware of the brand, but lacking any understanding or context. This is very low value. Slightly higher is someone who understands the relevance of the brand, but hasn’t really considered it. An example might be most of our relationships with Ferrari. We get it, but we really haven’t considered buying the car.
Trying a brand is a big step up because it represents the first time a person moves toward the brand under his or her own power. This can be actually buying the brand or checking it out online, test-driving a car, comparison shopping, or liking/following on social media.
At that point, some of those trialers will add that brand to their repertoire in the category: the collection of beers brands they drink, the financial services providers they use, the cereal brands they buy, etc. This is an even bigger step up because the customers have now decided they like and trust the brand, and the brand can now set about to increasing their preference within that repertoire.
The next level is generally thought to be loyalty, and while some categories do get 100 percent loyalty, most don’t. So, instead of engendering loyalty, most brands concentrate on both increasing preference and driving advocacy, so their customers are creating relevance in a more credible way than any amount of ads could ever achieve.
Why do you need to know this? Because most sponsorships are sold only on the basis of creating awareness, delivering some kind of relevance message, and driving people to try the brand—impacting only the least valuable customers of a brand. What brands really want are sponsorships that work all the way around, with advocacy being a must-have feature (Figure 1.4).
Figure 1.4 Customer cycle
Creating a Sponsorship-Friendly Organization
If you want to succeed in modern-day sponsorship, it is important that everyone within your organization understands that sponsorship is about creating a win-win-win partnership. It used to be just win-win, with you and the sponsor achieving your objectives without undue strife. Best-practice sponsorship has introduced the third “win”—the target market. They must get a meaningful benefit, however small, from the sponsorship if it is going to really work for anyone.
This shift from the neediness of a fundraising mindset (just one “win”) or the objective orientation of a traditional sponsorship (“win-win”) and into a holistic, market-driven approach is the major point of difference from sponsorship programs in the seventies through to the midnoughties, to the best-practice sponsorship in today’s marketplace.
Throughout this book, there will be ample case studies that showcase this thinking, and it will be critical for you to engender this win-win-win mindset within your organization if you want to position your organization to take advantage of the vast opportunities that best practice can present.
The majority of organizations that seek sponsorship do so from a position of need—the need for funds is continual and ever pressing. Many organizations are concerned that corporate partnerships and sponsorship will threaten their credibility and integrity. And this is just the tip of the iceberg. In fact, there are often several hurdles that you will need to overcome in order to gain the support of your staff and board.
Some typical areas of concern with sponsorship include
• Being seen as “going commercial”
• Perceived ownership of an organization or event
• Selling out to the corporate sector
• Compromising the integrity of programs and services
• Placing financial objectives before programming objectives
• Allocation of much-needed resources to marketing activities
• Placing consumer needs ahead of staff needs
• Lack of recognition as to the value of sponsorship to the organization
• Refusal to deal with particular industries or specific companies
• “Government should fund this program, and we should not be seen to be absolving them from their responsibility.”
• “We tried it before and it didn’t work.”
As a sponsorship manager, you will need to determine what the critical issues of concern are within your organization and devise strategies to deal with them. Interviews with staff throughout your organization, as well as interviews and surveys with board members, clients, and customers, are efficient methods for determining the critical issues of concern. Many of these issues may not appear to be legitimate to you. However, perceptions and issues are always real, even if they are not accurate. You will need to address these perceptions nonetheless.
Often you will need to phrase your questions or lead the conversation in order to pull out the specific area of concern or the exact nature of the issue. Reluctance to engage or support sponsorship activities is often highly emotive. Exercise great care, compassion, and consideration in your interviews. As a start, you may want to consider asking the following questions:
• How do you feel about corporate sponsorship, generally? Is it a good or bad thing?
• Do you think it is appropriate for our organization to be working with corporate sponsors?
• How is sponsorship currently affecting what you do? How involved are you in sponsorship? How much do you know about what we do in sponsorship?
• Are you having any sponsorship-related challenges? Have you in the past?
• Which of our sponsors reflects the best partnership? Why?
• Describe the ideal sponsorship for our organization.
• Sponsors provide funds, but can provide a lot of other things, as well. Is there anything besides money that a sponsor could provide that would make your job easier, cheaper, or more effective?
• Is there anything else I should know?
We should acknowledge that most sporting organizations have long held a commercial outlook on sponsorship. If you are in the sporting area, you will probably have a much easier time garnering internal support for your activities. This does not make you immune from internal dissension and questioning, particularly if you are expanding your sponsorship program to include grassroots or community service activities.
Once you have determined what issues are relevant to your planned sponsorship programs, you are better able to develop and implement strategies to confront them or to take corrective action.
In order to develop a sponsorship-friendly organization, we recommend a multipronged approach:
• Stay in contact with your staff and board.
• Educate all internal stakeholders.
• Provide reports, case studies and so on to all staff.
• Create a sponsorship team.
• Ask better questions.
Stay in Contact
Just as you need to keep in close and constant contact with your sponsors, you also need to communicate continually with your staff, members, and board. You want to cultivate an appreciation of sponsorship marketing principles and create an organization that will fully maximize every partnership.
Educate Staff
We have found that conducting staff workshops, explaining sponsorship marketing principles and organizational approaches to sponsorship, is an effective strategy for engaging staff in a sponsorship program. Regular presentations to the board outlining policies, strategies, and results are not only effective but also politically necessary.
Report Results to All Staff
Regular case studies, progress reports, and interviews with sponsors should be included in all staff communications. Remember to involve all staff, not just marketing and public relations people, in your communications program.
Create a Team
Creating a sponsorship team of decision makers from across departments and outside resources is a great step in creating a shared sense of responsibility for sponsorship across your organization.
Monthly meetings with your sponsorship team are almost guaranteed to provide you with additional opportunities for building a commitment to sponsorship within your organization, while maximizing your sponsorships and minimizing your costs. For the investment of a couple of hours and a tray full of sandwiches, you will gain insight into many untapped resources and unearth potential trouble spots that could cause problems further down the track. Most important, though, you will gain the support, cooperation, and understanding that it takes to create a fantastic sponsorship program.
When putting together your team, remember not to overwhelm the group with “marketing people.” The point is to create a multifaceted think tank. Consider including representatives from the following areas:
• Advertising agency
• Media partners
• Social media
• Corporate communications
• Customer service
• Human resources
• Market research
• Merchandising
• Tourism
• Packaging/production
• Product management
• Public relations
• Membership
• Ticket and group sales
• Concession sales
• Sales promotion
• Program or event production
• Sponsorship consultants
Remember to keep the team up to date on all developments throughout the process—a one- or two-page update a couple of weeks after each meeting should be adequate.
Ask Better Questions
Our guess is that you will have a lot to say to your colleagues about sponsorship as you go through this book, and by all means, share. Just as important, however, is using every appropriate opportunity to ask a few key questions. For instance:
• “Great idea! Now, how can we turn that into a win for our sponsors?”
• “How can we make this a win for the fans?”
• “How does that get Sponsor X closer to their target market? Is there some way we can tweak this so it’s more about that relationship?”
These aren’t difficult questions, they are just different, and if you ask them enough, your colleagues will start asking them, too.
Planning Your Sponsorship Programs
As is the case with any successful program, outstanding sponsorship programs require thorough research, careful planning, and flawless execution. There are two critical strategic planning documents that should be the linchpin of your sponsorship activities: a sponsorship policy and a sponsorship strategy. Both documents dovetail with your organization’s mission statement and business plan. See Figure 1.5.
Figure 1.5 Internal planning process
Sponsorship Policy
Find out if your organization has a sponsorship policy in place. If it has, ensure it is updated to reflect your current situation. If not, start developing one as a matter of urgency.
A sponsorship policy is a necessity for every organization seeking sponsorship, even traditional sponsorship seekers such as sporting groups. It is one of the most often overlooked components of a sponsorship program despite compelling reasons for having one. For example:
• Any program generating or distributing substantial funds should define the principal objectives and administrative processes of the sponsorship program.
• A sponsorship policy will ensure that your organization has a uniform approach to sponsorship.
• A policy outlines accountability and responsibility. This point is particularly important if your organization is in receipt of government funds or enjoys nonprofit status.
• A policy outlines specific issues that are relevant to your organization’s approach to sponsorship and details exclusions and limitations.
Components of a Sponsorship Policy
A sponsorship policy should contain certain information as outlined here.
Background
The background outlines the history of sponsorship within your organization, as well as your organization’s approach to sponsorship.
Definitions
The definitions state what does and does not constitute sponsorship (this is particularly important if you receive government funding and/or philanthropic donations). They also define the internal stakeholders in the sponsorship program.
Situational Analysis
The situational analysis identifies all current issues that may impact on your sponsorship program.
Exclusions
The exclusions section clarifies and describes fully what companies and industry sectors you will not engage with in a partnership arrangement. For example, many health-related organizations will not accept funds from alcohol or tobacco companies, and environmental organizations may be opposed to working with oil-companies.
For each exclusion, provide a rationale as to why a partnership with this company or industry sector is unacceptable. You may find over time that the issues prohibiting partnerships are no longer valid. You will also be prepared to answer questions from the board and members of the public as to why partnerships with these companies are unacceptable.
Processes and Procedures
The processes and procedures that your department will use to secure sponsorship agreements and manage your sponsorship programs are specified here.
If your sponsorship acquisition process is to be centralized, explain why. Outline the processes by which you will follow up sponsorship leads or provide comments and progress reports to the senior management, financial management, and auditors. If you are an organization with a national office and state branches, describe how information and leads will be shared and benefits negotiated across the organization as a whole.
This section will describe how you are actually going to manage the sponsorship acquisition program and service your sponsors.
Delegations
Delegations describe who within your organization is delegated to sell, receive, and approve sponsorships, and to what dollar level.
Many organizations are required to have board approvals on delegations related to the distribution of organizational information and financial transactions. Preapproved delegations can certainly make the audit process smoother for everyone involved.
Approvals and Contracts
This section explains who can approve a sponsorship and clarifies when a contract is required.
Accountability and Responsibility
Accountability and responsibility describes who within your organization is responsible for your sponsorship programs. Responsibilities will include seeking and reporting sponsorship funds; processing, banking, and investing funds; and servicing sponsorship relationships.
Unrelated Business Income Tax (UBIT)
A special note for US-based nonprofits: It is critically important that you work with your finance officer and legal team to determine if sponsorship income will attract unrelated business income tax (UBIT). The IRS can tax nonprofit organizations on proceeds from business activities that generate unrelated business income if the activities fail to relate sufficiently to the tax-exempt purpose of the tax-exempt organization. It is very important that your organization is aware of UBIT and the implications it may have on your sponsorship revenues.
For additional information, please refer to IRS Publication 598, Tax on Unrelated Business Income of Exempt Organizations.
Review and Evaluation
Review and evaluation defines when the policy will be reviewed and evaluated. Review your policy at least every six months. Publicize the results of the review process and encourage input from staff and members.
Frequently Asked Questions About Sponsorship Policy
Who Should Create the Sponsorship Policy?
If your aim is to create a policy that your staff and members feel they own, involve as many of the staff and members as possible.
Some smart sponsorship managers create a draft policy after discussions with staff, sponsors, and members and then present the draft policy to staff for comment. Other managers form a working party to develop the draft document. Whatever method you choose, ensure that you involve your chief executive officer, as well as your financial and human resources managers. Without their backing, your policy is going nowhere. Finally, you will want to have your policy formally accepted by your board.
Alternatively, secure the services of a sponsorship consultant to guide your organization through this process. Sometimes it can be easier and far more effective to have a consultant do the work for you. Ensure that the consultant works closely with your organizational stakeholders, or the organization will not feel ownership for the policy.
How Long Should the Policy Be?
Your sponsorship policy should be as long as is required to outline your organization’s sponsorship principles, processes, and accountability procedures. Some sponsorship policies are as short as 2 pages, while others are closer to 10 pages.
Is a Sponsorship Policy Necessary?
Shouldn’t you be concentrating on getting the money in and not worrying about documenting processes and systems? Nonprofit organizations, in particular, are under increasing scrutiny from their boards, their members, the media, auditors, and government departments as to their source of funds. The time you invest in creating and documenting your guidelines, systems, and processes is never wasted. A policy, endorsed by your board, ensures that your organization is credible, legitimate, and strategic. You have a responsibility to your stakeholders to ensure that your processes and accounting procedures are as transparent as possible. Taking the time to plan and document today may save you significant time and heartache in the future.
How Do You Motivate Staff to Create a Policy?
Staff in your organization may have been through many of these exercises previously. How do you motivate them to go through one more of these planning sessions?
If the issue is important to them, they will participate. You need to listen carefully to what issues are of concern and be prepared to engage in a relevant discussion of these issues. The bottom line is increased revenue and marketing expertise for your organization. Staff might not be particularly interested in how you obtain expertise and funds, but they are bound to have ideas on how to distribute the proceeds. Find the sweet spot and work from there.
Sponsorship Policy Questionnaire
Go through the following sponsorship policy questionnaire to ensure you have covered all issues. At the end of this process, you should be ready to draft your sponsorship policy. Take the time to consult as widely as possible before drafting your policy.
List the key stakeholders that will be affected by this policy, and then ensure you speak with a representative from each stakeholder group. Include staff and union representatives, marketing and public relations staff, front of house staff, sales staff, finance and resource officers, auditors, board members and senior staff. Also include program staff and recipients of sponsorship funds, along with members of your organization if appropriate.
Background
• Why does your organization want to engage in sponsorship?
• Do you see sponsorship as a fundraising exercise or a marketing activity?
• Do you want to develop long-term win-win-win partnerships?
• What are the overall principles of your approach to sponsorship?
Definitions
• How does your organization define sponsorship?
• How does this differ from philanthropy, cause-related marketing, and/or government support?
• Who are the internal stakeholders? (Board, sponsorship department, marketing department, etc.)
Situational Analysis
• How many people are currently engaged in seeking sponsorship for the organization?
• Is this their only responsibility, or are they responsible for several other major activities?
• Where does the sponsorship office fit into the organizational structure?
• To whom do the sponsorship staff report, and how frequently?
• What resources are presently allocated to the sponsorship department? Are the funds sufficient?
• What training and professional development are available to the sponsorship department?
• Have there been any changes to the organizational structure or staff changes that impact on the department?
• Are there any political issues that affect your programs?
• How does our business strategy or organizational plan affect the sponsorship?
• Does our organizational culture embrace sponsorship and win-win-win partnerships, or does work need to be done in this area?
• What issues will affect your sponsorship program?
• What issues do staff and your board need to be aware of?
Exclusions
• What companies and industries does your organization refuse to work with in a partnership? List each company or industry sector and provide a detailed rationale as to why they appear on the exclusion list. Indicate when your organization will review or repeal this decision.
• If corporate responsibility is important to your organization (e.g., you run an environmental education program), consult ethical investment firms or corporate social responsibility (CSR) advisors to get up-to-date information on companies’ CSR policies, practices, and risk assessments.
Processes and Procedures
• What are your organization’s principles guiding the selling of sponsorships?
• How will your organization ensure that sponsorship does not influence tendering processes and program activities (in the case of government and nonprofit organizations)?
• How will your organization manage sales rights within your purchasing processes?
• How will your organization ensure that a sponsor does not exert control over your organization or sponsored event?
• How will your organization protect and maintain its integrity and credibility?
• How will your organization value in-kind or contra sponsorships?
• How will your organization keep staff and other departments or sponsors informed?
• How will your sponsorship manager train staff?
• How will your sponsorship manager report to the board and to staff, and how frequently?
• How will your organization evaluate sponsorships for your organization and for your sponsors?
• What procedures are in place for:
• Selling sponsorship?
• Maintaining and servicing sponsors?
• Evaluating the effectiveness and return on investment for sponsorship activities and programs?
• Determining what projects will attract sponsorship?
• Ensuring that all funds are accounted for?
• Distributing funds?
• Ensuring that the public interest is best served?
• Reporting on the program to the board, members, and staff?
• Handling inquiries from auditors, accountants, taxation officials, media, and the general public?
• How will your organization handle a controversial sponsorship?
Delegations
• Has your resource management section ensured that the relevant financial delegations are in place for receiving, selling, and approving sponsorships?
• State the specific delegations and approvals within the policy.
Accountability and Responsibility
• Who is responsible for:
• Selling sponsorship?
• Maintaining and servicing sponsors?
• Analyzing the effectiveness of sponsorship activities?
• Determining what projects will attract sponsorship?
• Ensuring that all funds are accounted for?
• Distributing funds?
• Ensuring that the public interest is best served?
• Acquitting sponsorship funds?
• Reporting on the program to the board, members, and staff?
• Handling inquiries from auditors, accountants, media, and the general public?
• Determining UBIT implications?
Approvals and Contracts
• Who determines what benefits are available to potential sponsors?
• How is this determined?
• How often do you review your benefits list?
• Who can negotiate a sponsorship deal?
• Who can approve a sponsorship?
• What is the process for approving sponsorships?
• Who can sign final contracts?
• Will your organization use a letter of agreement or a contract?
• When will your organization consult a lawyer?
Review and Evaluation
• When and how often will this policy be reviewed?
• Who will be involved in the review process?
• How will the policy be reviewed?
• How will your organization communicate policy amendments to your stakeholders?
Sponsorship Strategy
Your sponsorship strategy is, very simply, the process that you will take to gain and retain sponsorship, and the attitude you take with every aspect of your sponsorship program.
The bulk of this book is about sponsorship strategy. When you finish the book and all of the exercises in it, you will have developed an approach—a personalized system that works for you. Document it—this is your sponsorship strategy.