Taking The Guesswork Out Of Sponsorship Pricing

If you’ve ever guessed at what your sponsorship packages are worth, then you’re not alone. Our research shows that most organizations rely on instinct, educated guess or simply pull figures out of the air to determine the asking price for their sponsorship properties. The main problem with this approach is that it makes it difficult to speak confidently to a prospect about value. At the end of the day, most sponsorships are used to build more brand awareness or help sell a product. So having an accurate value for your sponsorship gives you more selling confidence and your prospective sponsor a better understanding of the value you can deliver.

It is important to remember that most sponsorship proposals are compared against other marketing options such as advertising or sales promotions to determine if the investment represents good value for dollar. For example, if you are offering sponsorship of a unique program that reaches a specific target audience (remember, in marketing there’s no such thing as “the general public”) savvy companies will ask a) is this the best way to reach my key target audience and b) are there more cost-effective ways to achieve the same or better result? If your sponsorship offering doesn’t offer a clear cut advantage, then you’ve likely lost them as a sponsor.

So how do you know if your sponsorship pricing is in line with current market values? While there are numerous factors that contribute to value or perceived value, there are two key elements that need to be considered in a sponsorship pricing strategy.

Tangible Value

Tangible benefits represent baseline values for most sponsorship agreements. These are quantifiable elements or transactions that can be counted and measured from a value perspective.In calculating tangible values, the number of impressions (transactions) received through any benefit is multiplied by a pre-determined dollar value to arrive at a total tangible value. For example, if a logo and link on a web site is exposed to 100,000 “unique visits” during a defined period, it would be multiplied by an assigned value (e.g. $.005) to arrive at a tangible benefit value of $500.00. The same principle applies to all other benefits that can be counted such as the number of people exposed to a banner, ad or logo, the number of samples or coupons distributed, logo placement on print ads and so on.

Tangible benefits without the associative or “relationship” element inherent in sponsorships is similar to other forms of advertising or promotion. If your sponsorship opportunity doesn’t present a strong link between the sponsor and the audience and/or their “experience”, your prospects will likely compare your offering against other traditional marketing options.

Intangible or Associative Value

The intangible or associative value is what separates an advertising opportunity from a sponsorship opportunity. While establishing the associative value of a sponsorship property is generally more subjective, this is where the real value of sponsorship is realized over other marketing mediums. The shift from “transactions” to “relationships” in today’s marketing environment has resulted in sponsorships becoming an increasingly important marketing tool. Research shows that consumers look more favourably upon companies that visibly positioned as supporters of activities or causes that are important to the customer. What woman doesn’t feel a little better about CIBC because of their association with Run for the Cure (Breast Cancer)?

Several elements go into measuring the associative value of any sponsorship property. Some of the more common intangible elements include level of exclusivity, amount of sponsor “clutter”, prestige of the organization / event, audience desirability, whether it’s a worthwhile cause and the relationship between the organization and the audience that can be leveraged to a sponsor’s benefit. These are the factors that turn your advertising opportunity into a value-added sponsorship.

The Intangible value of a sponsorship is established by identifying the top associative elements of the sponsorship opportunity and assigning a premium that is added to the tangible value to arrive at a total value for a sponsorship. For example, a sponsorship worth $10,000 in tangible value that is exclusive by industry sector (e.g. only one bank) could be assigned a 25% premium ($2,500) that would be added to the tangible benefits, making the sponsorship worth $12,500. Commonly, the top 3-4 associative elements (which essentially represent your USP) are assigned percentage premiums and combined with the assigned tangible value to arrive at a Total Value for the sponsorship.

The difference Between Pricing and Perceived Value

You may have the most thought-out sponsorship pricing strategy, but if a company has little motivation, the pricing becomes irrelevant. For example, if a company is new to your community and you present them with a unique opportunity to increase brand visibility in the market, the perceived value of the sponsorship could be high because it responds directly to an urgent need. In this case, you will likely get your asking price. Conversely, if you present the same opportunity to that company another year when they are not as hungry for profile opportunities, the perceived value will be low. This is why you need to be knowledgeable about the prospects you are approaching so that you can ultimately present them with a sponsorship opportunity that matches their needs (or “pain”), and thus, more likely to pay the fair market value you’ve established for the sponsorship.

Effective Pricing Helps You Speak Confidently About the Value of Your Sponsorship Packages

A clear pricing strategy works two ways. It will ensure that you are receiving fair market value for your sponsorship opportunities and it will give you the confidence to speak intelligently to a prospect about the offshore merchant account value that the sponsorship brings to their organization. Once you can speak confidently about the benefits and value of your sponsorship offering, the prospect will have more confidence in your program and their investment decision.

Welcome to my Blog on Sponsorship and Partnerships!

Welcome to the home page of my newly launched blog on Sponsorships and Partnerships.

The main reason I launched this blog is because the people I talk to through our consulting projects and workshops have expressed a need for an on going forum to ask questions about their sponsorship or partnership initiatives, share ideas and best practices and connect with like-minded people. I also generally have a lot to say on this issue.

Technology has made it possible to connect like no other way; but to make this work, I’m going to need your help. Here’s what each of you can do to make this forum a living, breathing community of sponsorship and partnership professionals.

  • Ask questions
  • Share your opinion
  • Share your knowledge and experiences
  • Post links of useful information

And one more thing…we all work hard (most times) and we’re all serious about being the best at what we do, but a little levity helps break up the constant pressure we put on ourselves, so let’s not be afraid to have a little fun with this and see where it goes….

The first thing I’d like to do is clarify what I think the difference is between “Sponsorships” and “Partnerships”.

In my view, partnerships are two or more organizations working together to achieve a common goal. Partnerships can be short or long-term and usually involve a sharing of responsibility, resources (financial or in-kind), risk and reward.

On the other hand, while the term “sponsor” has all kinds of meanings depending on your environment, sponsorships are essentially a commercial arrangement where one party receives cash or in-kind and the other party receives some form of tangible / intangible benefit in return for their contribution. In a sponsorship, you may be working together to fulfill an agreement but odds are, you don’t usually share the same objective. When’s the last time a sponsor of yours had the same goal?

Thanks to Gomery, the word sponsorship still has some kind of connotation to it, but the fact is that more and more people are turning on to sponsorships as a legitimate marketing tactic and/or means of generating revenue for their organizations. On this issue, I’d like to pose a question:

Is the term “sponsorship” still relevant in today’s environment or is there another term (besides the word sponsorship) we can use to describe the act of an organization contributing cash or in-kind in exchange for access to, and a closer association with a particular audience? It would be great to hear offshore merchant account some of your creative ideas around this.