Sponsorship spending statistics do not reflect the cost of ancillary activities, events, and programs developed to leverage a sponsorship. Typically, a company will budget anywhere from $0.50 to $1.50 for each sponsorship dollar spent, in order to “activate” their programs. By that rule of thumb, Visa—which spent $80 million on sponsorships in 2002—was likely to have spent an additional $40 million to $120 million to activate its sponsorship programs. Activation programs include many elements:
Contests. Offering a free trip to an event is a strong draw for customers. Visa and Sovereign Bank of Boston upped the ante by offering free trips to five events in conjunction with Visa’s “Be There” promotion in the fall of 2002. Local and national publicity surrounding the contest was enhanced by the nature of the prizes. The winners, limited to Sovereign Bank Visa card users, received all-expenses-paid trips to Visa-sponsored events, including Super Bowl XXXVII in San Diego, the 2003 Daytona 500, the 129th Kentucky Derby, the 57th Annual American Theatre Wing’s Tony Awards in New York City, and the 2004 Summer Olympic Games in Athens.
Giveaways (premiums). These are items such as balls, caps, and other products with the sponsor’s logo. To amplify the effect of American Express’s sponsorship of the 2002 U.S. Open tennis tournament, the company created an on-site promotion called American Express Radio. Spectators were provided with special radios that provided audio feeds of the tournament.
Corporate entertainment. Luxury boxes at sporting events and concerts fall under this category.
Opportunities to meet the stars. Introductions to professional athletes, artists, and other celebrities are another successful tactic.
Advertising tie-ins. As a sponsor of the 2002 Winter Olympics, Bank of America invested $49 million in related advertising. The campaign featured bank employees “competing” in skiing, skating, and bobsledding—with slapstick results. The voice-over began, “At Bank of America, we really wanted to participate in the Olympic Winter Games,” and continued, “but we decided to stick with what we know best.” Pre- and post-Olympics surveys showed that unaided awareness of the sponsorship increased from 3 to 13 percent, and the campaign ranked highest among all advertisers in unaided awareness. The campaign also led 94 percent of bank employees to say that the sponsorship made them proud to work there.
Client communications. These can take the form of statement stuffers, newsletters, or membership magazines. The communication can be targeted (for instance, sent only to customers who will be able to take part in the event), or it can be disseminated to the entire client base, particularly when it supports a charitable cause. Letting clients know about such activities builds goodwill.
One of the benefits offered by sponsorships that other marketing tactics can’t hope to achieve is the ability to provide an extraordinary experience— something the client will remember for a lifetime. Sponsor a team, and you can bring clients onto the field just before the start of the game or fly them with the team to a game of their choice. Sponsor a racecar, and a client can experience first-hand the feeling of going 170 miles per hour around a racetrack.
Sponsor an exhibit, and guests can see it before it opens to the public. If concerts are more to your purpose, your clientele can meet the musicians, sit in the best seats during the concert, and go backstage afterward. A New York Stock Exchange specialist firm has invited clients to equestrian events featuring horses owned and trained by one of its senior executives. Going to the winners’ circle is an event not easily replicated.
Planning to Maximize Sponsorship Value
Whereas companies once determined the success of an event based on attendance or the thank-you notes sent to the CEO from grateful guests, today, return on investment is the measure for success. As marketing programs come under increasing scrutiny, it is critical to maximize the value of a sponsorship event. Unless you plan thoroughly and manage the sponsorship, you can do more harm than good. Poorly executed events will damage your company’s reputation, alienate your guests, leave potential clients with a poor perception of your company’s capabilities, and negatively impact other sponsors, event organizers, and related vendors.
Before you agree to become a sponsor, understand the implications associated with being a major sponsor versus a smaller sponsor. Take a hard look at your budget. Does this sponsorship restrict the company’s ability to participate in other sponsorships? Can you do what it takes to activate the sponsorship? These two questions need to be asked regardless of the sponsorship level and cost. To determine if a sponsorship is right for you, here are some additional questions to consider:
Building internal support for an event is a key element for success. Garnering the necessary support should begin only after you are satisfied that the event fits strategically with the company’s objectives and a clear set of metrics has been identified to measure the event’s success. Once this is accomplished, a number of other tasks lie ahead:
Measuring the Effectiveness of Sponsorship
When planning a sponsorship, you should set both short- and long-term objectives for awareness building, increased market share, increase in customers and revenues, and profitability. Also, set criteria for evaluating how the event will help achieve desired marketing objectives. Most important, make sure the event has a strategic fit with your company’s image, position, products, and services. The success of an event can be measured by the value gained minus the costs. Value is assessed in relation to the following factors:
Revenue. This is measured in terms of sales associated with the event. These numbers must often be estimated using “close ratios” and “average value of sale” applied to the number of prospects seen at an event and committed to a follow up activity.
Cost reductions. Reduced expenses can be achieved through efficiencies in selling and operations accomplished through an event. For example, cost savings may derive from shortening the sales cycle or reuse of collateral and properties developed for an event.
Direct Connection between Sponsorship and Sales Increases
J. P. Morgan Chase has segmented its Asian (primarily Chinese and Korean) client base in the New York metro region and has developed a number of special events for high-net-worth members of this group. Research showed that this particular segment was very supportive of classical music. Chase therefore became a sponsor of the Chamber Music Society of Lincoln Center, which designed events to maximize value for J.P. Morgan Chase. One event featured new work by well known Chinese composer Tan Dun, who attended a pre-concert reception with clients. A post-concert dinner, which included several Asian musicians who had participated in the concert, was an enormous success. From this one event, for some sixty attendees, Chase traced several million dollars in new assets from the invited customer base.
Equivalent value. This is measured by applying a budget number to the value of the pre-event publicity or direct marketing; event-based promotion such as banners, workshops, or seminars; or other marketing tactics that are run in conjunction with an event. The impact of these tactics has a value equivalent to the cost of advertising, public relations, or other marketing activity normally required to accomplish similar awareness or brand development goals.
“Successful event managers gather all examples of payback,” notes Ed Jones, of event-marketing firm Nth Degree. “They should include performance-tracking ratios, such as cost per visitor, average cost per sales lead or sales call, average cost of adding a new prospect to the marketing database, and other relevant metrics when reporting progress to management.” Tracking and measuring outcomes not only lets you know whether your event was successful but also enables you to make necessary changes to enhance future results.
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