Sport Sponsorship 1
Sport Sponsorship 1
Sport Sponsorship 1
CONTENTS
Purpose of this booklet Introduction The Sponsorship process Step 1: Brand management Step 2: Property identication and development Step 3: Identifying the sponsor target market Step 4: Matching product and sponsor Step 5: Selling the product Step 6: Servicing the partnership Appendix 1: Summary of key risks and mitigations Appendix 2: Recommended reading 3 3 5 6 8 11 13 14 17 19 20
PURPOSE
This guide provides a framework for sports organisations in securing, developing and retaining valuable commercial partnerships. The framework is not intended to be a one size ts all approach and sports organisations should adapt the process to suit their needs and experience. This guide should be used in conjunction with other sources of expertise on sponsorship such as consultants, board members or other sports.
INTRODUCTION
The collective marketing budget of New Zealand businesses is large and their use of sponsorship as a marketing tool is growing. Sports organisations have an abundance of properties with sponsorship potential and some generate substantial revenues from these sources. Many do not, however, and few take a strategic approach to securing sponsorship relationships, relying instead on contacts and inside information. Major sponsors are becoming increasingly sophisticated and more demanding in terms of the return on investment they seek from their sponsorship. Some receive thousands of proposals each year and only those that capture their attention and offer real value are even looked at. Once under consideration, a sponsorship proposal must clear several hurdles. Proposals that succeed are those that show clear value for money, a unique or distinctive opportunity and a clear t between the brand promoted by the sponsor and the brand of the sport property. The greater the investment required, the more these factors matter.
PRODUCT IDENTIFICATION
PRODUCT DEVELOPMENT
Appeal: If a sports body approaches a potential partner who has no real awareness
of them, or regards them in a negative light, then that sports bodys prospects of securing a sponsorship are very limited. Sponsors are increasingly concerned with sports reputations and governance.
Fit: Two factors are important: market and values. Does the sports body or its property (e.g. its national elite competition) attract the attention of the market that is of interest to the sponsor? Importantly, what values do the sport and/or its property represent? Are these values consistent or aligned with the values espoused by the sponsor and/ or their products and services? For example, if the potential sponsor is promoting a product with brand values of excitement and daring, does the sport property have a natural connection with these values? Value: A well-managed brand has greater commercial value. Two soap powders may
be identical, but the soap powder with the more powerful brand can command a higher price. The same applies to a well-managed sports brand.
A sports body should have a clearly dened brand and brand values. Some of its properties may also have brands and brand values. These brand values could be: courage, air, endurance, friendship, strength, agility, fun, family. These concepts reect strong, positive human values that are attractive to sponsors. They are why sport itself has appeal and attracts thousands of participants and many more followers and viewers. When you know what your brand stands for, you can understand how it might appeal to and t with potential sponsors. 2 What makes us compelling (brand positioning)?
Given all the other sports bodies out there, and all the other worthy causes, what makes us (or our property) a compelling proposition to a potential funder? The answer to this question may be something like: because we (or our property) are the original, best, largest, fastest growing, newest, toughest, most appealing to youth, families etc. Sponsors receive many approaches from organisations each month, sometimes each week. If your organisation or proposal isnt compelling, it wont attract investment and sponsorship.
Online credibility
This is a crucial consideration. The credibility of any organisation today depends to a large extent on its online presence. Sponsors are increasingly sophisticated in their use of online and social media to build connections with their target audience. Many sponsorships now market themselves online as a key promotional channel. Engaging, interactive and regularly updated websites that incorporate active social media such as Facebook and Twitter are more than just shop windows. They are a communication channel to a target audience and they are commercial and marketing platforms. A SportBusiness Group research report published in 2011* reported that 91% of sponsors of sport properties declared online and social media were of increasing importance to them as a means of promoting their sponsorships. This trend can be seen in New Zealand. Sponsors know that many sports bodies do not have large sums to invest in promotion and do not expect to see an expensive online presence. But they do expect to see competence in this area and commitment to it (as do participants and followers).
Checklist
Are we clear about our sports brand and the brands of our key properties? Are we clear about why our organisation or properties are compelling to potential sponsors? Do we promote our brand(s) and brand values? Is our online presence active and current? Are we committed and capable?
Sponsorships are business partnerships where two parties add value to each other through their association. Sports organisations must be able to satisfy the marketing needs of a sponsor with a brand and/or property they own or control. Central to property identication is determining those properties that will best meet the needs of potential sponsors and are thus attractive. Examples of such properties and sponsor benets are given below. A sports organisation owns a property and holds the rights to that property when: All nancial obligations are met by the organisation All decisions are approved by the organisation A contractual arrangement which outlines ownership issues is in place No other party can lay claim to ownership.
Sponsor need generally exists within one or more of the following areas: Support for brand position: A fast-food chain sponsors key athletes to support the new brand offering of healthy alternatives in the menu. Exposure of brand: A phone company sponsors a high-prole sport to achieve higher television exposure of their brand or a new product or service. A charitable trust funds an event to demonstrate how it supports its local community. Corporate social responsibility (CSR): All sorts of businesses and funders seek to be seen supporting positive causes as a method of managing their brands prole in the community. Increased access to target audience: A nance company sponsors a sport because the demographics of the sport match their target audience and the sport provides opportunities to interact with that demographic. Employee engagement: A bank sponsors a sport event in part because many of its staff play the sport recreationally and they will stage fun days for employees and their families around the event.
* Privacy law requires that all members have approved use by a third party of their personal data contained on a membership database.
2: ASSESS EACH OWNED PROPERTY IN TERMS OF THE PARTNER NEED IT MAY SERVE
Position all owned properties into each of the ve funder needs. Example:
Brand support
National ofce Contracted athletes National tournament/championship
Brand exposure
Contracted athletes Television coverage agreements Website
Employee engagement
Regional events Hospitality opportunities Contracted athletes
Checklist
Are we clear about what properties we own? Have we assessed each property in terms of sponsor need? Are we clear about who follows our sport, and why? Do we consider new market trends and the development of existing and new properties?
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A suitable business is one that has one or more of these qualities: A brand image (or product brand image) that appears to have a t with your brand image Suitable size and prole Already uses sponsorship as a marketing tool (therefore has some expertise and systems). This information is often available on a companys website.
While creating this list also bear in mind the organisations that are new in the market, or launching new products to consumers. Sponsorship is a key tool for businesses that are raising their prole or targeting new consumers.
This can be difcult. At one level, value is determined by the market; that is, it is worth what someone will pay. Unlike television rate cards which calculate audience reach and apply consistent costs, sponsorship does not have a standardised valuation system accepted by the marketing industry. To establish a credible sponsorship value for your product, it is vital to use a credible methodology that a potential sponsor will respect. For premium properties, consult with sponsorship experts or other sports bodies. Note that if your property is new, or previously unsponsored, it is unlikely to have a high value in the sponsorship market. It takes time to develop the value of a property. Sport NZ may be able to provide advice on sport property and rights valuation.
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Revise the list to include only those businesses you believe have the potential to afford to sponsor your property
Fish where the sh are. It is important to make a preliminary assessment of a sponsors ability to pay a sponsorship fee and undertake associated leverage activity. Leverage can take various forms including advertising to promote the sponsorship, promotional campaigns utilising athletes, the team or other property being sponsored, online competitions, product promotions and many more. Most successful sponsorships are fully integrated into the sponsors overall marketing activity. As a rule of thumb, a company will normally need to spend at least one dollar on leverage for every dollar of sponsorship. Most companies will normally spend around 10% of their annual turnover on marketing activity, and sponsorship rarely exceeds 20% of the marketing spend. In short, take the price you seek and multiply by 100. Businesses with turnover of less than that amount should not be on your nal list. Another aspect of affordability is timing. Large sponsors will have a sponsorship portfolio with several arrangements in place, which expire at different times. Knowing when sponsorships are due to expire or be reviewed can enable you to present a new opportunity at a time when the sponsor is most receptive. There are low-cost sponsorship advisors that keep records of sponsorship portfolios.
Using the web, newspapers and business magazines, build a brief prole of each business on your list, including: Their products Their competitors Their services Their customers/target market Upcoming events Marketing strategies Product releases Key personnel.
Result: a pre-qualified list of businesses with an appropriate fit and scale operating in your area.
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Matching process
1 Is there partnership potential?
Given what you have considered about your sport, property, business and brand, is there a strong case to be made that you can meet a potential sponsors needs? Put yourself in the shoes of the marketing manager. Would you consider investing in your sport as opposed to advertising or any other form of promotion? Make a list of three to four compelling reasons why the sponsor should seriously consider your property.
This is to be an information gathering meeting, not a selling meeting. It may be useful to give a background to your sport and property, but trying to sell a specic sponsorship at this preliminary phase may lead to more questions than you can answer fully, and this in turn may limit your credibility. This meeting is to establish a friendly relationship (because nothing is at stake yet), and gather some critical information needed to qualify the potential for a partnership. You want to learn: What are the specic marketing goals and challenges over the next 12 to 24 months? How has sponsorship been used previously and with what results? When does the company do its planning and set its budgets? Are there any new products or regional expansions planned? What is the size of the marketing or sponsorship budgets?
And crucially What criteria do they set before they consider approving a sponsorship? How do they like proposals to be packaged and presented?
Now you have met with one or more prospects and qualied some prospective sponsors, you are in a position to develop a customised proposal. That will offer a modication of your sport/property that best reects the needs of each prospective sponsor. On a case-by-case basis, build an offering that specically addresses the compatibility of your offer with their needs. This may involve grouping properties together to provide more value. Some sports properties may have little value on their own but may make a formidable property when bundled with other properties/rights. A good example of this is a sponsorship for a national elite team travelling to the world championships. On its own it may offer some value, but bundled into the entire junior programme of the sport, with website and social media rights, the opportunity becomes more compelling and valuable.
Result: an active shortlist of potential sponsors and specific offers packaged for each prospect. Time to move into the selling phase.
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The pitch
The pitch is a meeting with the potential sponsor where the proposal is presented. The aim is to introduce the product, clearly express how it can meet their needs, and motivate the potential sponsor to seek an involvement and move into a negotiation. Larger and integrated sponsorships will require detailed proposal and presentation. A sponsorship of $10,000 may require only a brief document. A sponsorship of $100,000 will require a more sophisticated approach. No matter what the size of the sponsorship, the proposal should always be laid out in writing. Some large companies have guidelines that lay out their key questions that any proposal must satisfy as a rst step to being considered. Ensure you use this format if it exists. If there is no proposal template, there are still some minimum standards for any proposal. Every proposal should have the following components:
Introduction
A brief outline of the sports body, its background, participation and following.
Executive summary
Introduce the product: the event, the competition, the programme, the team etc. Also include the proposed term, value and cost of the sponsorship.
Detail the specic sponsor needs that will be met, and how they will be met (e.g. degree of exclusivity, media coverage, contact with consumers, structures in place for support, platforms for communication such as online and social media etc).
Detail the sponsorship package offered. The package must focus on what value the funder will receive, and may include all or some of the following: Naming rights Rights to associate athletes with brands (a growing activity) Print advertising (newspaper, yers, posters, T-shirts, stationery, event programme, tickets etc) TV and radio exposure and the right to use footage in the future
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Event on-site recognition (banners, booths, sideline signage, eld or playing surface signage, screen signage, banding on competitors, support crew or other personnel etc) Pre-event promotions (media launch, advertising, publicity, online competitions, Facebook page, Twitter campaign, website etc) Event promotions (sampling, booths, competitions, product sampling etc) Entertainment opportunities (special seating, hospitality, free tickets, car parking, meet the athelets session, celebrity guests etc) Public speaking opportunities Product placement Consumer promotion exclusivity Mobile phone content Merchandising rights Database access Online community building (Facebook page, Twitter campaign, competitions, push emails, ticket sales etc) Webcast rights (live stream or on demand).
The package you present must represent value for money to the sponsor. Note that your proposal is a starting point for negotiations and may end up very different when the nal terms are determined. The proposal should specify your target market and how you plan to reach them and engage with them. Specically, the sponsor will expect to see a promotional opportunity for the proposed partnership, outlining activities and timing. In developing the promotional opportunity the importance of online channels and social media cannot be underestimated.
The costs
All costs associated with the sponsorship should be listed: The sponsorship fee; what the sponsor must pay directly to the sport in exchange for the rights on offer Signage costs, logo costs, website costs etc. All the items associated with branding the sport, team, venue etc with the sponsors message Leverage or activation costs. Leverage may take many forms and it is possible that the sponsor may be able to achieve discount rates for various media products. However, you should list a budget allocation for leverage as part of the proposal.
Prepare a clear plan with critical dates for moving forward if the sponsor is interested in the opportunity. Important note: Ensure that all elements offered in the pitch are deliverable by you. Avoid making any claim if you are not certain you can commit to it and deliver it.
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The negotiation
The negotiation phase is the opportunity for the two parties to further develop the product and the relationship to better suit both their needs. The aim is to create a completely customised product that will represent a unique opportunity and great value for money for the sponsor. The customisation may take many forms, such as change of uniforms, innovative social media promotions, venue changes, date changes or anything that will draw attention to the product and the sponsor. It is important that the negotiator, the CEO and the board are all clear on what things are up for change in the negotiation process. Limits on price and what can and cannot be changed should be established from the outset.
The close
This is the writing and signing of a contract. Some sponsors have contract templates they will offer, but nothing should be signed without advice from legal counsel. If the sponsorship is complex with a broad range of rights involved, it might take some time to get a contract drawn up and signed. In such cases a heads of agreement should be considered to legalise the sponsorship until a full contract is signed.
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Sponsor servicing starts before the contract is signed. It involves ensuring that the assumptions, promises and objectives are clearly understood and recorded.
In conjunction with the sponsor, create a timeline, roles and responsibilities for how and when each element of the sponsorship will be achieved. Remember that responsibilities are a two-way street.
Throughout the sponsorship ensure you communicate with the sponsor and inform them of all relevant activity.
As each element of the sponsorship is fullled, ensure the sponsor is informed about what was done and what the result was.
Develop an in-house plan to meet expectations, and ensure someone has a clear focus on delivering every aspect of the agreement, on time and to agreed specications. It also pays to identify an area where you can over-deliver to demonstrate your commitment to the partnership. Ensure you tell the sponsor where you have gone beyond the terms of the contract to benet them.
Consider ways to engage the sponsors senior management and staff in your product, or any other approach that will foster widespread goodwill in your sponsors organisation. (This will help secure the relationship in the event that the marketing manager leaves and the sponsorship is reviewed).
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Keep the sponsor informed on all developments related to the sponsorship. They are a stakeholder and partner and need to be informed.
Do all you can within your power to prevent a sponsor competitor from marketing themselves around your product. Ensure your partner knows what you are doing to protect them. This can be a complex area and if there is risk of ambush marketing that may result in a direct or indirect nancial loss to a sponsor or encroachment of a sponsors rights, then legal advice should be sought.
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APPENDIX 1:
Summary of key risks and mitigations
Key Risk
Potential sponsors are not clear on what your key objectives are, what your brand stands for and where you see yourself in the market. Proposals fail to get any traction with potential sponsors.
Mitigation(s)
Ensure you have a clear brand proposition and a strategic plan (whole of sport plan), which is supported by the whole sport.
Ensure a good understanding of the sponsors strategic objectives, priorities, budget, business cycle, and key products, and ensure key people have been met. Ensure you have a range of integrated rights packages to offer potential sponsors.
Potential sponsors cant assess your credentials as a business partner. Potential sponsors perceive your sport as being poor at marketing and promotion. All aspects of the sponsored or proposed property/rights package are not owned or controlled.
Include endorsements from current and previous sponsors in your proposal. Demonstrate ability to reach audiences. Ensure website and social media are of a good standard.
Ensure that all key elements of the sponsorship are legally owned. Ensure sponsor expectations are realistic and uncontrolled aspects are understood in advance. Develop or review an event and participation strategy including new opportunities for events outside traditional activities. Understand sponsors budgets and marketing expenditure. Seek independent professional advice on the value of property.
Other parties raid your sport with events in which your organisation has no part or benet. Property is over-priced.
Property is undersold.
Ensure proposal includes signicant value for the sponsor, and itemise all the activities to be used to promote the sponsorship and potential benets to the sponsor. Seek independent professional advice on the value of property.
Under-delivery.
Ensure sufcient staff and budget allocation to service the sponsor relationship and meet expectations. Produce a summary of all rights for relevant staff. Ensure all staff and volunteers understand their roles in meeting sponsor expectations. Avoid promising anything that cannot denitely be delivered.
Non-renewal.
Ensure all commitments are met. Measure and report value to the sponsor. Co-manage promotion of the sponsored property. Maintain close relationship. Meet regularly. Exceed delivery expectations where you can. Be proactive rather than reactive.
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APPENDIX 2:
Recommended reading
Recommended reading for further insights. There is a vast amount of literature on sport marketing and brand marketing. The recommended texts offer excellent logic and practical advice. However, given the introduction pace of new online products and services, these texts are not comprehensive guides to current online marketing tactics. The Routledge Handbook of Sports Sponsorship: Successful Strategies Ferrand, Torrigiani, Povill. Published by Routledge, 2007 Developing Successful Sports Sponsorship Plans (3rd Edition) David K Stotler. Published by Fitness Information Technology, 2009 Likeable Social Media: How to delight your customers, create an Irresistible brand, and be generally amazing on Facebook (and other social networks) Dave Kerpen. Published by McGraw-Hill, 2011 Brand Vision How to energize your team to drive business growth David Taylor. Published by John Wiley & Sons, 2006
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ISBN: 1-877356-28-5 JUNE 2012