Not often talked about is sponsorship marketing. It can be a blessing or a curse if not properly planned out. This article will tackle the pros and cons of sponsorship marketing for your organization.
I was meeting with a client the other day and they mentioned that they pulled or changed their sponsorship of a few conferences that they attended for the last few years. They had a variety of reasons after reviewing the metrics for their conference sponsorship over last few years. I thought nothing about it, as many businesses have to make those tough decisions everyday.
When I got home, the story about corporate sponsors withdrawing their support from Team Canada was on the news. Canadian Tire, Telus, Scotiabank, Chevrolet Canada and Tim Hortons have pulled sponsorship from the national organization following news that Hockey Canada had paid an undisclosed settlement to a woman who alleges she was sexually assaulted by eight players, including members of Canada’s 2018 world junior team. Hockey Canada has since confirmed it has paid out $8.9 million in settlements to 21 complainants with sexual misconduct claims against its players since 1989.
Scotiabank pauses Hockey Canada sponsorship
Sponsors skate away from Hockey Canada over sexual assault allegations
These two unrelated situations started me thinking about the importance of where an organization’s or business’ dollars are going. With inflation being so high following the COVID pandemic, every precious marketing dollar should be carefully scrutinized by diligent marketing managers, including sponsorships.
Oftentimes, sponsorship marketing is an underutilized marketing strategy. Corporate sponsorships are an important part of marketing strategy for many businesses. These sponsorships are typically in the form of cash or in-kind support of an activity, event or individual. Companies can generate brand awareness within their target customer group and help shape consumer perceptions of the brand through these partnerships.
There are many opportunities for sponsorship marketing, including sponsoring a local kids’ team or a charity event or a non-profit organization to bigger event like an industry conference or event. You might think that only big corporations can benefit from sponsorships due to cost or scale. However, small and medium-sized businesses can also use effectively in their marketing efforts.
When things go well, sponsorships and endorsements can be mutually beneficial, and the names go hand-in-hand. Think Nike and Michael Jordan; Adidas and David Beckham, and so on.
Benefits of Sponsorship Marketing
Unlike most traditional avenues of advertising (which generally shares specific messages about a company’s product or services in the hopes that it will increase sales), sponsorships improve a brand’s recognition and reputation because they support specific events that your target audience cares about. As a result, prospective customers associate your company with the event or activity. Here are some of the benefits associated with Sponsorship Marketing:
- Boost brand visibility
- Foster business relationships
- Build a positive reputation
- Engage niche markets
- Interact with prospects
- Generate leads & reach sales goals
- Increase return on investment (ROI)
- Gain valuable insights in your industry
- Expand your business’ content strategy
- Showcase your service or product
- Gain a competitive advantage
Possible Negative Risks
Sponsorship funding has become a main source of revenue for many sports, business events, conferences, community or general events. It is a great way to support the community and get visibility for your company or organization at the same time. However, there are two types of potentially negative outcomes for properties that may be associated with sponsorship: operational risk and reputational risk.
Operational risk occurs when sponsors insist on changing the rules or format of the event, or when they exercise undue influence on its content, timing, location or participants.
Adverse publicity in any form can tarnish a brand – even by association – and sponsors will be quick to distance themselves from actions that don’t align with their brand’s values. The primary source of reputational risk is increased public sensitivity to the negative health impacts of some product categories, most prominently those of tobacco, alcohol, gambling and products that are high in fat, salt or sugar that may make it contentious for a sport property to partner with companies in these product classes.
Similar controversy from public sensitivity may emerge around issues of corporate social responsibility, as expectations grow regarding the impact of a company’s actions on society. Sponsors need to be aware of ambush marketing and other activities by competitor brands that can undermine the value of a sponsorship. Coca Cola ended its endorsement of Brazilian soccer champion Ronaldinho after he appeared at a press conference with a can of Pepsi. This is also the case with the withdrawal of sponsors and hockey Canada due to the handling of sex abuse allegations in the organization mentioned above.
No guaranteed returns
As with all marketing strategies, there is no guaranteed on your return on investment (ROI). However, you can take steps to ensure that you get what you consider to be an appropriate amount of exposure for your support. Failure to do so could result with your company receiving no benefits at all.
How Can Your Organization Make Sponsorship Work?
If you want to make sponsorship work for your business or organization, you will need make sure that your marketing manager does their homework. Make sure to consider all the positives and negatives of the sponsorship deal. Here are some things to get you thinking:
- Find The Right Fit For Your Business – You want to sponsor something which adds value to your business, as well as, you adding value to theirs. Make sure to sponsor a brand that fits your business’s key values and services.
- Know All The Organizational Details – When you are asked for event sponsorship, get as many organizational details from them as possible. This dialogue starts with simple things such as when and where the event will take place or how long it will last. You should also ask for the detailed agenda. That way you will know what will be going on and you will also see how organized the event planners are.
- How will the event be marketed? Knowing how the event will be marketed can help you figure out how much press you’re going to get out of it. It will also let you get a better idea of how well the organizers know what they’re doing.
- Dot The I’s and Cross The T’s – Before you rush blindly into a contract for sponsorship, make sure that all parties involved understand and agree to the terms of the contract.
- Think ROI – If you are sponsoring an event or team or charity, you want to make a return on your investment (ROI). If they don’t get you the exposure that you are after, or you’re not able to capitalize on your sponsorship to secure your own exposure, then it may not be a worthwhile venture.
- Do you and the event host have a similar or shared target audience? If yes, then this could be a great chance to get your name in front of potential customers or business partners. Once you know the target audience, you should also ask about the expected number of guests. This will give you an idea of the exposure you would be getting (the more the better, of course) and also the amount of promotional material you might be needing.
- Check Their Reputation – This is important because it can directly affect your own reputation. If it’s a questionable company or organization, steer clear. Also, who is the host affiliated with? Any particular groups, political or religious parties? This can be a good thing because it could attract more of your desired target market, but it needs to be in line with your company values and standards as well. Knowing these things will make sure there are no unwanted surprises.
- Get Everyone On Board – If your business is a sponsor, it’s important to ensure that all of your staff are on board with the promotion, and realize the benefits your sponsorship can bring to them.
Jiffer & Roos have designed a model, which aids the decision when deciding for or against sponsoring, namely the A-ERIC model. The model is divided into four different sections, which examines the Association, Exposure, Relationship and the Intergraded Communication aspects of sponsoring. All these four parts are highly necessary to perform an in depth analysis and thus generate information about the different motivators which drives a company to invest in sponsoring.
If you have any questions regarding sponsorship marketing or anything marketing, feel free to reach out to Sirf Marketing anytime via our contact page.