Developing your sponsorship offers and sponsorship sales are two very big subjects - closely linked, and together, the key to increasing your sponsorship revenue. To do these subjects justice, we need more time than the standard 60-90 minute webinar, so have broken it into two webinars that work very well together. You are also welcome to register for just one.

For complete information on both of these webinars, click on the registration link, below, or download the full PDF brochure.

21 July – Best Practice Offer Development: Who to target, what to offer

This 90-minute, live webinar will take you through the mindset and process for developing compelling, value-packed offers that will capture potential sponsors’ attention and differentiate you from the competition. There is no guarantee a potential sponsor will say “yes”, but using these techniques will considerably increase your chances. This is a perfect compliment to Best Practice Sponsorship Sales on 4 August. Topics include:

• Creating a well-targeted hit list
• Prioritising: Who are your most promising prospects
• Getting the background information you need to create a great offer
• When to contact the sponsor and what to say
• The critical importance of getting to the big ideas
• The creative offer development process. Note: This process will be delivered in case-study form, enabling participants to see an offer develop
• Creating a benefits list that works

4 August – Best Practice Sponsorship Sales: Turning your sponsorship vision into revenue

This 90-minute, live webinar will show you how to formalise your offer, get it to the right person, follow up, negotiate, and close the deal. This webinar is the perfect compliment to the Offer Development webinar on 21 July, covering topics such as:

• What must be included in your proposal
• Proposal “extras” that can make a big difference (and what to avoid)
• Structuring your proposal for maximum impact
• Making it easy for the sponsor to sell the offer internally
• Pricing your offer correctly
• Protecting your creative ideas
• Getting your offer to the right person (and who to avoid)
• Must-know negotiation tips, tricks, and what you should never do
• Valuing in-kind sponsorship
• Formalising the agreement

Both webinars are offered twice, to accommodate different time zones. Below are some indicative times. Please be sure to check the time and date in your region. I recommend http://everytimezone.com. Please indicate your preferred session when you register.

I get more questions about sponsorship pricing than any other aspect of sponsorship. I wish there were an easy answer – a magic wand I could wave – that would make the right number appear out of thin air, but I’m afraid it’s just not that simple.

That said, it’s not rocket science, either, and there are some definite rights and wrongs.

Getting sponsorship pricing wrong

First off, don’t try to add up the value of each of the benefits, as sponsorship really is a case of the whole being worth more than the sum of the parts. You’re not selling benefits, you’re selling marketing opportunity, and a comprehensive opportunity is going to provide a valuable platform for sponsors – much more valuable than the sum of the benefits a la carte.

Trying to price as some derivative of the potential equivalent media value of the logo exposure is also not going to work. Equivalent media valuation was debunked almost 20 years ago and only the industry’s dinosaurs put any stock in that as a measurement tool. Given its lack of credibility, basing your pricing on media equivalencies is building a house on very shaky foundations.

Finally, if you’re looking for some kind of formula, you can stop now. There is no formula for pricing. Anyone who says there is a formula is trying to sell you their formula.

Getting sponsorship pricing right

There is no formula, but there is a methodology, and here are the basics…

First, calculate your baseline fee. This is NOT what you’d charge for a sponsorship, but the keep-your-arse-out-of-a-sling number – the number that keeps you from selling too low for it to be worth it. This is the number for everyone who has ever sold a sponsorship for less than it cost to deliver, or not enough more that it was worth the headaches – and we’ve all been there.

The starting figure I like to work with is:

3 x (cost to deliver benefits + cost of sale + cost of servicing) = baseline fee

I generally also do the red zone fee, which is the fee at which you may be getting into the not-worth-it territory:

2 x (cost to deliver benefits + cost of sale + cost of servicing) = red zone fee

Note: For both of these, the “cost of servicing” is your budget for adding value to the relationship – providing extra benefits, sponsor training or networking, or other extras. Best practice is to budget at least 10% of the gross value of the sponsorship – including any in-kind – for servicing. For this exercise, put your starting cost of servicing at 10% of the cost to deliver benefits plus the cost of sale, as it will grow appropriately as you multiply your baseline fee. If required, you can make minor adjustments later.

Then you apply market influencers to your baseline fee. These include:

• What the market will bear – You need to do some research, use your network, and if you are inexperienced, get feedback from trusted colleagues outside of your organisation.
• Lead time before the event – Short lead time doesn’t give the sponsor long enough to implement the leverage plan that will turn the opportunity you’re selling into the results they need.
• Other activities in the marketplace that may be sucking up sponsorship money (ie, Olympics, World Cup).
• Uniqueness of what you offer and its position in the marketplace.
• Issues or trends that make what you do more or less appealing – For instance, if there has been a string of scandals in a particular league, the price you can charge for a team sponsorship may be lowered as a result of the perceived risk.
• Economic situation and trend.

You will also be able to charge more if you provide creative leverage ideas to the sponsor and if you are creative with the benefits you provide. Sell only logos on things, tickets to things, hospitality, and some kind of official designation and you commoditise yourself – reducing the amount you can charge.

There is more to it than that, but you’ve got the basics. For a whole step-by-step on offer development, pricing, and the whole sponsorship sales process, check out The Sponsorship Seeker’s Toolkit 3rd Edition.

I’ve spent the past few weeks touring around doing workshops. They have all gone very well – great reviews, lots of “thank you” emails, etc. I will say, though, that there is one part of the workshop that I don’t think people like very much. It definitely elicits a moment of shock, bordering on panic. That’s the part where I tell them to ditch sponsorship levels. (Cue expression akin to the Psycho shower scene.)

The basic idea behind levels is that 1) the sponsor can right-size their own sponsorship; and 2) you just need to create the set packages without customising. They are generally based on varying numbers of logos on things, tickets to things, some kind of hospitality, and some kind of official designation. I actually saw a conference proposal once that had 14 levels pre-printed – no customisation there! – into the glossy presentation folder. They spanned every precious metal and a lot of precious stones!

I can see the appeal: Levels are less work for you. But honestly, sponsorship levels are Commoditisation 101. Why would you want to do that to yourselves? They are NOT going to help you to sell more sponsorship. In fact, most sponsors will gravitate toward the lower end of the spectrum. Only sponsors with a major corporate ego will gravitate higher.

Best practice now requires all significant sponsorship offers to be highly customised to your sponsors’ specific needs. You should do the investigation – both in the marketplace and with the sponsor – to know what their needs are and who they are targeting, and then create one offer for them. It will be specific and powerful, and if they need to negotiate the price down or up, you can always rework the package to reflect their needs. You’ll send far fewer proposals with a much higher strike rate.

Rather than levels, I recommend bands. Realistically, there is a sponsor hierarchy and you need some way to refer to them. Creating broad bands of sponsors allows for both that hierarchy and a lot of flexibility. As an example, your bands could look like those outlined below. Note, these numbers are arbitrary and used as examples only – you’ll have to set your own.

• Principal – Premium level sponsors of our entire organisation or biggest events. Generally valued at over $400,000 pa in cash and/or contra.
• Major – Major partners using the sponsorship to achieve a wide range of marketing and business objectives. Generally falling in the range of $100-400,000 pa in cash and/or contra.
• Supporting – Lower level sponsors usually using the sponsorship to achieve a more limited number of marketing and business objectives. Generally valued at sub-$100,000 pa in cash and/or contra.

This gives you a lot of flexibility, but still some strata.

You don’t need to worry about sponsors comparing notes, as you will have moved right away from the commoditisation approach that invites comparison to an approach that is focused on the individual needs and goals of your sponsors.

The other thing to keep in mind is that the sponsorship category that you confer is a benefit that is part of the offer, not the definition of a certain dollar level.

If you want more on what you can offer, including a rundown on many of the common designations that can be part of that offer, you are welcome to download the Generic Inventory, an MS Word template that will give you a huge, running start on all the things you can possibly offer a sponsor as part of a customised sponsorship package.

The whole offer development process – including targeting, pricing, proposals, and sales – is also outlined in detail in The Sponsorship Seeker’s Toolkit 3rd Edition.

Want more hands-on information and training? I’ve got workshops coming up in Melbourne, Stockholm, and Los Angeles. The links for more information are below.

Melbourne

• Sponsorship Seekers – 20-21 April, Sponsors – 22 April
• Click here for more information and to register for Power Sponsorship Workshops in Melbourne
• Click here to download the Australasian Power Sponsorship Workshops Tour Brochure (PDF)

Stockholm

• Sponsorship Seekers – 18 May (half-day), Sponsors – 18 May (half-day). I’m also doing a keynote on best practice sponsorship and experiential marketing and a breakout session on ambush marketing on 19 May.
• Click here for more information on Scandinavian Sponsorship & Experiential Days

Los Angeles

• Sponsorship Seekers – 25 May, Sponsors – 26 May
• Click here for more information and to register for Power Sponsorship Workshops in Los Angeles
• Click here to download the Los Angeles Workshops Brochure (PDF)

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.

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!

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