What If The Sponsor/Property Model Is Not Sustainable?
Oct 26, 2012
This is one of those topics that maybe I shouldn’t even be raising, as I can hear colleagues and readers shouting, “Are you trying to kill the golden goose?”
Believe me, I don’t want to put anyone’s livelihood in danger, least of all my own. And maybe each of you who read this should agree not to share it with your (or my) CEO, board, parent company or nervous spouse.
But it has always been IEG’s role, first and foremost, to be honest and provocative about sponsorship and to let the chips fall where they may. So here goes.
I had an interesting exchange the other day with the always-interesting Dan Schorr. Dan has been around this business nearly as long as I have, currently as proprietor of Boston-based Start2Finish Marketing. He shared that he was picking up on something for the first time in his nearly two decades in sponsorship: A “vibe” from rightsholders both large and small, that revenue from sponsorship was not as desired as it used to be.
Dan surmised two reasons for this: First, properties were making more money elsewhere, and second, that the effort needed to secure sponsorship wasn’t worth it.
I don’t typically raise a warning flag based on one person’s comments, even someone as involved in our industry as Dan. However, our conversation aligned with some of my own recent thoughts and observations, which can be boiled down and oversimplified to these two points:
- Sponsorship is a relatively small piece of the revenue pie for many different types of rightsholders, beginning with pro sports properties that rely far more on TV, tickets and merchandise than sponsorship, and continuing through to nonprofit organizations that still receive the bulk of their income from public support and private philanthropy.
- Sponsorship requires a not-insignificant amount of resources to create salable offers, identify viable targets, research their objectives, negotiate the deal, and then fully service each partnership through multiple deliverables, promotional execution and help with measurement.
On the surface, that is nobody’s definition of sustainable. It also explains why so many properties can’t seem to move beyond offering the “low-hanging fruit” of signage and other basic benefits; it’s the stuff that isn’t hard to sell and/or manage.
So does all this mean it is time to hang a tag on the toe of sponsorship and slip it into the deep freezer? No.
In looking at the body of work that my IEG Consulting colleagues do for a wide range of rightsholder clients—and the success those organizations are having—I am convinced there is a sweet spot that puts the proper amount of resources into a concerted sponsorship effort that will pay for itself many times over. And I know our clients cannot be the only examples of that.
What is required is that organizations take a realistic approach to sponsorship, from what their sponsorship packages are truly worth, to how much they can service and fulfill. Included should be an honest assessment of all revenue streams and the optimal allocation of resources that will maximize each. No doubt, there will be some organizations for which sponsorship may not be “worth the trouble.” But for many more, it definitely will be.
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