Latest Thinking from IEG

I Will Sponsor You Forever

Ah, the words every property yearns to hear. Or not.

I have been struggling with what to think about the announcement this week that Staples has renewed its naming rights deal for the Staples Center “in perpetuity.”

My first thought was that since we’re talking about a venue in Los Angeles, maybe both parties expect “The Big One” to come along sometime soon—so the concept of perpetuity isn’t quite the same as it would be in less quake-prone parts of the world.

I’m trying to understand the rationale behind a “forever sponsorship” and who it benefits the most. The frustrating thing, as always, is that it is impossible to truly analyze a deal without knowing its particulars. But that won’t stop me from trying.

More >

Filed under: naming rights, negotiating, trends, venues, contracts

Should You Bother With Affinity Partnerships?

I pick on affinity partnerships a lot because, frankly, they deserve it. While many affinity partnerships are worthwhile, many more are not. Note: I’m defining an affinity partnership as a licensing arrangement where a property allows a company to use its brand (name, logo, etc.) and access to its audience to sell a product or service, in return for a royalty and/or a benefit to the audience (discount, donation to the organization, etc.). The most common type of affinity partnership is the affinity credit card, like the thousands offered by Bank of America. That said, there are countless categories that participate in affinity relationships.

Here are the questions properties should ask to decide whether to start (or even continue) to work with affinity partners.

More >

Filed under: cause marketing, contracts, how to get sponsorship, negotiating, nonprofit, non-traditional categories, research, associations

Takeaways: When and How to Include Sponsors in Social Media

In conversations over the last week—with an association client or two, a group of zoos and aquarium sellers, and a financial services sponsor—the appropriate use of social networks for sponsorship activation has been a hot topic. How do we take sponsorships—those that live primarily off-line and those that have a foot firmly in both worlds—to the social nets?

In keeping with the old mantra of “if one person has the question, probably a lot of people have the question”—here are a few takeaways from those conversations.

More >

Filed under: contracts, digital media, guidelines, negotiating, packaging, selling, servicing, activation

Do Performance-related Rebates or Make-goods Make Sense for Sponsorships?

You probably saw the news reports about the 24 thrill seekers who got stuck on the Invertigo roller coaster at California’s Great America Theme Park in Santa Clara on Monday. After I watched some coverage and let the wave of sympathetic nausea wash over me, I started to think about how situations like this impact sponsors. According to cagreatamerica.com, Coca-Cola and Almaden Press are currently Official Partners of the theme park.

Most partnership contracts have the minimum liability clauses to protect sponsors from any forthcoming lawsuits. But in a pay-for-performance world, at what point should a performance-related rebate or make-goods take effect? This may be an unpopular question, as it is certainly not something properties want to think about. How does one anticipate, let alone prevent, such things from happening? As California Division of Occupational Safety and Health spokeswoman Erika Monterroza said of the coaster, “These are machines and they do break down” (Source: Contra Costa Times).

More >

Filed under: negotiating, sponsorship ROI, theme parks, contracts

Central Intelligence: Cultural Considerations for Sponsorship Buyers

In my last post, I shared my observations on how culture impacts—and should impact—the way sponsorship sellers create their strategies. In this post, I’m taking a look at the buyers, for whom culture is a much different thing.

Buyers
To once again oversimplify, a company’s sponsorship selection (to buy or not to buy) and sponsorship evaluation (to renew or not to renew) strategy is a process that screens each opportunity against a set of criteria. Those criteria are built to measure a given opportunity’s likelihood to help the company meet its objectives. This includes opportunities where the company instigates the conversation and/or the property cold calls.

More >

Filed under: contracts, evaluation, guidelines, how to get sponsorship, negotiating, packaging, research, selling, spending, sponsorship measurement, sponsorship ROI, activation

A Rant on Post-Event Fulfillment/Sponsorship Recap Reports

After reading Bill Chipps’ recent blog on post-event fulfillment reports, I realized that I had a lot of opinions on what a post-event fulfillment/sponsorship recap report should and shouldn’t be.

I have to be upfront, as a Senior Valuation Analyst, I don’t write fulfillment reports and I don’t typically give a lot of advice on them (I leave that to our expert consulting staff), but as someone who reviews and sorts through boxes and binders of sponsorship information for both properties and sponsors, I have some pretty clear ideas of what types of information I like and what information makes my job easier. Additionally, as an objective third-party, I often hear sponsors’ gripes about their partnerships, which can include complaints about lackluster fulfillment reports. Frankly, sometimes I feel like a sponsorship therapist. Finally, I’ve seen quite a few fulfillment reports, some good and some not so great.

More >

Filed under: agency, ambush marketing, contracts, research, selling, servicing, activation

Fun with Category Exclusivity

Category Exclusivity is defined by IEG as: the right of a sponsor to be the only company within its product or service category associated with the sponsored property.

So what does category exclusivity look like in practice?

In a “best case” scenario, a sponsor would have category exclusivity that extends throughout a property. For example, a naming rights sponsor for a venue would have category exclusivity that covers all sponsor benefits, extends to any third-party event sponsors, teams, venue tenants, vendors, and any broadcast or on-site advertisers. On the other end of the spectrum would be zero category exclusivity, meaning the property could have multiple sponsors within the same category.

More >

Filed under: associations, contracts, events, nonprofit, soft drink, ambush marketing

Why Were Sponsors Passed By This Parade?

Those who follow the NBA may have picked up on this story about the Los Angeles Lakers championship parade’s being privately funded, with as much as $900,000 donated by wealthy Angelenos.

While I applaud the donors—including several successful businesspeople who might have an interest in currying favor with the government and public—I have to ask, “Where are the sponsors?” For the entire season, Lakers sponsors would have been positioned to fans as the team’s biggest backers. Now, at a huge celebration of the team’s accomplishments, those sponsors are overshadowed by business magnates getting all the press (though no sponsorship rights).

More >

Filed under: events, negotiating, sports, contracts

The Value of Free Stuff, Continued

In a post last week, I posed a couple scenarios where properties had to weigh the costs and benefits of allowing a sponsor to conduct certain activities.

From an outsider’s perspective, offering free samples to attendees or bringing volunteers for a day seems like a winning proposition all around. But the property often breaks even at best.

More >

Filed under: contracts, events, negotiating, cause marketing

Kindergarten for Sponsorship Pros: Sharing Is Good

In my previous blog post, I discussed why it would be a good thing for sponsorship buyers and sellers to be more open about what is paid for deals—specifically that it would provide the industry with guideposts to determine the relative health of properties, property segments and the overall medium.

But there is a bigger reason why transparency—to the extent it doesn’t divulge proprietary, competitive information—would be extremely beneficial. And this is not just the opinion of a sponsorship journalist with a need to know. I first heard this argument espoused by Stuart Schwartz, a Coca-Cola executive in the ’90s who was heading up the company’s early efforts at establishing a model to measure value and return on investment.

Here is the argument: For sponsorship to benefit both parties, it should be an “efficient market,” which is defined as a market where purchases and sales result in even exchanges of value. One of the four characteristics of an efficient market is: Price information is widely and cheaply available to buyers. The sponsorship marketplace does not have that characteristic, and thus is not efficient.

More >

Filed under: evaluation, sponsorship ROI, valuation, contracts