This was a question I came across in the blogosphere this week. To be fair, the person who asked wasn’t that blunt, but had definitely seen a lot of headaches from sponsors who didn’t pay their fees, didn’t do what they had promised, and generally bullied the event. After a nightmare like that, it seems perfectly a perfectly logical question to ask!

In that situation, the answer is a simple: Those sponsors were not worth the headaches.

Why seek sponsorship?

Before looking at counting the cost of having sponsors, it’s probably worth going through why you would want sponsorship in the first place.

The downside to having sponsorship is that raising and servicing it is a lot of work and some sponsors can be real headaches (thankfully, rare). The upside is that most sponsors are great, and what they bring to properties is multifaceted and well worth the effort to seek sponsorship and do it well:

• Increase in revenue
• Enhancement of the event experience to your audience through sponsor leverage activities
• Ability to achieve your own marketing goals through strong sponsor leverage
• Introduction of your event to the sponsor’s target market, which may be larger than your own reach (or what your marketing budget will cover)
• Provision of infrastructure, expertise, merchandise, and services that will help you run your event

There is plenty more that a sponsor can bring to the table. The key is knowing how to structure it so it’s win-win-win – you win, the sponsor wins, the target market wins. There’s plenty more on win-win-win all over this blog.

Has it been worth it?

If you’re in the run-up to your event, or maybe it’s just happened, and you are feeling used and abused by your sponsors, that’s not good. The thing is, sponsorship is hard work, so feeling some degree of sponsor fatigue is normal and will pass once you’ve had a chance to decompress. On the other hand, some sponsors really are users and abusers. The trick is, figuring out which category you’re in.

To find out whether a given sponsor – or your whole sponsorship program – has been worth having or is just a toxic drain, you should ask yourself these questions:

Contract

• Did you have a contract or comprehensive letter agreement in place, signed by both parties and outlining all rights, responsibilities, and payments?
• Did the sponsor pay the full contracted fee, with all instalments paid reasonably on time?
• Did the sponsor comply with guidelines you set forth regarding the use of your intellectual property or benefits, or their conduct on-site?
• If the sponsor was denied permission to carry out an activity, did they comply?

Behaviour

• Did the sponsor behave in a professional, respectful manner toward you and your colleagues at all times?
• Did the sponsor make unreasonable demands? For instance, they demanded that you change your event or program in a way that suited them, but disadvantaged your organisation or audience?
• Did the sponsor have entitlement issues? For instance, they were constantly requesting more benefits than contracted?
• Did the sponsor try to bully you into doing something you were not obliged, nor were compelled, to do?

Cost

• Did the cost of servicing exceed 10% of the contracted fee?

The cost of servicing is not the cost of delivering contracted benefits, but the cost of providing added value benefits and support to the sponsor, for which you should budget 10% and build it into the price.

Revenue

• Did the cost of delivering the contracted and added value benefits exceed one-third of the fee charged? One-half?

As a rule of thumb, you should endeavour to build sponsorship packages that are worth to the sponsor at least three times what it costs to deliver and service them. This is NOT the exact amount you should charge, but a baseline you can use as a starting point to ensure a sponsorship is going to be worth the time and effort put in. If you start at that baseline, and whether through negotiation or other market factors, the price falls to only twice the cost of delivery – so half of your revenue is going toward making the sponsorship itself happen – you are at the point where even the perfect sponsor may not be worth having.

Sponsor added value

• Did the sponsor undertake any leverage activities that extended your marketing plan? An example would be using your event in their advertising, promotions, or other marketing in the lead-up to the event.

It’s not looking good… Now what?

Some of these are not drop-dead deal-breakers – it is possible to have a great sponsor who doesn’t extend your marketing plan, for instance. But as you go through this list, a clear picture of the real value of a sponsor or sponsorship program should appear. If the picture is bad, I’ve got a few tips.

Have a contract

If everything goes pear-shaped and you never see a cent from a sponsor, will you miss the money? If so, you need either a comprehensive letter agreement or a contract in place, and it needs to be done by a lawyer. This not only protects all parties, it outlines expectations in black and white. Gray areas are the enemy of sponsorship. (Concerned about the cost? You will find an agreement pro forma in The Sponsorship Seeker’s Toolkit 3^rd Edition that will make the process much easier and cheaper.)

Hold up your end of the bargain

Before you can improve your sponsorship situation, you need to ensure you are delivering absolutely everything that your sponsors are entitled to. Making sponsors abide by a contract will not work if you’re breaching it, too.

Take a stand

Do not ever let a sponsor bully or take advantage of you. Ever. If a sponsor is out of line and (important) you have delivered everything you’ve promised, they don’t have a leg to stand on. Just tell them “no”. If they try to bully you – and some will – you need to be prepared to get a lawyer involved.

This is particularly important if you have more than one sponsor taking advantage. Make an example of the first one that does the wrong thing. Chances are, they will pull their heads in before you get far into the process, and it shows all of your sponsors that you do indeed have a spine.

Dealing with nightmare sponsors is never fun, but as those self-help gurus seem so fond of saying, you teach people how to treat you. If you let your sponsors push you around, pay months late, or treat you disrespectfully, many of them will.

You are peers – equals – and what you are offering has real value to their brands. If they can’t see that, dump them. Life is too short for that crap.

I’m delighted to announce that I’m doing Sponsorship School again in 2010 – yay!!

This intensive, six-month program of corporate sponsorship training, coaching, and peer support was first run in 2003 for twelve people from six Sydney-based charities. It was very successful for the participants and their organisations, but I wanted to go bigger.

Finally, technology has made it possible to do Sponsorship School on a global scale!

A select number of charitable organisations will be chosen from the applicant pool to participate in this groundbreaking program, designed specifically to build capacity in the area of corporate sponsorship. It kicks of at the end of April and runs through September.

Want more information? You can…

• Download the Sponsorship School 2010 Information and Guidelines (PDF)
• Visit the Sponsorship School 2010 page
• Check out the Sponsorship School 2010 Application Form

Don’t delay. Applications close 19 March 2010.

Drop me a line with any questions on this: school@powersponsorship.com.

After hundreds of thousands of downloads, I thought it was high time to give my white papers a format that is as professional and well thought-out as I hope the content is. While I was at it, I also did some updates and revisions.

Want to have a look? The download links are below. All are in PDF form and most are around 250kb. “Last Generation Sponsorship” is around 1mb, as it has a lot of diagrams.

You are welcome to share these documents around, but please do not link directly to the PDF download (called “deep linking”) without my permission. You are more than welcome to link to this blog or our Sponsorship Articles and Tools page.

Sponsorship white papers

• “Last Generation Sponsorship” – My blockbuster white paper on best practice sponsorship, downloaded almost 400,000 times, reprinted in many, many industry publications in eight languages. Download it for yourself. Download it for your partners. Download it for your boss, board, or colleague. This article is guaranteed to get anyone thinking more strategically about sponsorship!
• “Sponsorship in a Scary Economy” – A very topical paper with practical skills for both sponsors and sponsorship seekers.
• “Survival Guide for the New Sponsorship” – Practical things you can do to shift your organisation’s approach into best-practice.
• “Don’t Go to Another Sponsorship Conference Until You Read This” – All sponsorship conferences are NOT created equal. This great guide will help you sort the good from the bad (and make organisers of the bad ones really miserable, if you want to).
• “Sponsorship and the Public Sector” – A wake-up call for all government sponsorship seekers.
• “Top Ten Tips for Sponsorship Seekers” – Short and sharp, this is a must read for sponsorship seekers, particularly if you’re new to the game.
• “What Every CMO Needs to Know About Sponsorship” – Aimed at corporate chief marketing officers, this white paper offers advice about the high-level decisions and directives that will impact on sponsorship results.

Sponsorship cheat sheets

• “Cheat Sheet: Questions to Ask Before You Hire a Sponsorship Broker” - This is a compilation of questions that will allow great brokers to shine, expose the shonks, and clarify the weaknesses and strengths of all the brokers in between.
• “Cheat Sheet: Marketing Terms a Sponsorship Seeker Must Know” – This is a list of some of the most common, but confusing, terms that sponsors use when describing their objectives and target markets. If you want to ensure you know what sponsors are talking about, be sure you know all of them!

Please, tell me what you think!

Have you read any of these white papers or cheat sheets? Got a comment? Please, add your comments below. I’d love to see them!

Please note, comments are moderated, but we get through them quite quickly. Spammers just get sneakier and sneakier!

I have recently started getting involved in discussion groups on linked in and wow, what a lot of great questions there are! Today, I addressed a question about the top five things a sponsorship seeker should bring to a presentation to a sponsor.

Before I found the question, many people had answered, but those answers had a lot more to do with how sponsorship has been sold in the past than how it should be sold, and how the world’s most successful sponsorship seekers sell it. And when I talk about the world’s most successful, I’m not talking about the biggest. No, I’m talking about the sponsorship seekers who increase their sponsorship year-on-year, even in really tough years. I’m talking about sponsorship seekers who deepen and extend their relationships with sponsors, until they become one of the highest-performing sponsorships in those sponsors’ portfolios. I’m talking about sponsorship seekers who engender such fierce loyalty and support from their sponsors that they actively advocate the property to other sponsors.

If that’s what you want, you need to drop all the crap about “impression rates” and ROI. Impressions and visibility as sales tools are about 20 years out of date. And as a sponsorship seeker, you are in no position to be able to tell a sponsor what the sponsor’s returns are against their many and varied objectives. While you’re at it, drop all the overt, self-important hoo-ha about how great or needy or worthy you are. You’re selling. It’s about the sponsor’s need, not your need or your ego.

That said, this is what I recommend you bring/discuss/incorporate into your offer:

1.

Evidence that you understand the sponsor’s brand (attributes, values, personality), target markets (psychographic more than demographic), and objectives. This is actually quite easy to get, if you know where to look.

2.

Creative ideas for leverage. Your proposal must be anchored on creative ideas you’ve come up with for them to leverage the sponsorship. Put yourself in their shoes. If you could do ANYTHING what would you do with the sponsorship. The best several ideas will form the core of your proposal.

3.

Examples of how your other sponsors have achieved a commercial return, defined as changing the perceptions and/or behaviours of their target markets. This can include financial data, but much of this can be measured in other ways, such as increasing propensity to try or trust. This shows that you know how to be a partner and know it’s not about you and your need.

4.

Market research from your most recent event. Bonus points if you have asked what the three best and three worst things are about the event, as it shows you are a) asking the right questions; and b) have some opportunities for your sponsor to amplify the good stuff and fix the bad stuff, creating added value for the audience.

5.

Short case studies about how other similar sponsors have done amazing, creative things around sponsorships like this. This shows how astute you are and gives the sponsor a high comfort level about working with you. Again, this information is not hard to find, but you have to know where to look.

If you need a rundown on the whole sponsorship sales and servicing process, complete with numerous checklists, brainstorming exercises, and templates, you may want to get hold of my book, The Sponsorship Seeker’s Toolkit 3rd Edition.

Almost a decade ago, when our event was brand new, we really struggled for sponsorship. One sponsor really stepped in with some much-needed cash. The problem is that we are now doing well and have grown a lot – in size, revenues, and sophistication – but this original sponsor hasn’t grown with us. They are now one of our smaller sponsors, never leverage, and keep exercising their right of first refusal, which includes category exclusivity. We could get a lot more money and find a much better sponsor in this category if they were gone. We have had two of enquiries from their competitors in the past couple of years. How do we get rid of this sponsor?

Quick primer on “first right of refusal”: This is a right that is often provided as a benefit of sponsorship and means that the sponsor has the first right to say “yes” or “no” to a similar contract at the end of the current agreement.

Many sponsees seem to believe that offering first right of refusal to a sponsor obligates you to offer them a similar contract at the end of the current one. Not so! All it does is prevent you from offering a similar contract to another sponsor without giving them a chance to say “yes” first. So, if your sponsor isn’t getting it, it’s time to raise the bar and see if they jump.

Create a brand new, more comprehensive, five-star proposal. Make it all about their target markets and objectives. Include lots of fantastic ideas for leverage. Make the package realistic, but commensurate with the type of sponsorship you should have in that category. Present it to them as a rethink and a great opportunity. Tell them that you want to continue to work with them, but it is inappropriate to continue with the relationship, as it currently stands. Do not back down if they want to renew the old contract instead. Make it clear that is not an option.

This is important: Be sure to go through this process in good faith. You never know, they may rise to the occasion and let’s hope they do.

Equally important: In case they don’t rise to the occasion, be sure to go through this process with a lot of lead time. There is no guarantee one of your prospects will say “yes” straightaway, so you may need time to sell to another sponsor in the category. Plus, they will need time to plan and implement a leverage plan.