Sponsor's Path to Enlightenment

Sponsorship is frequently misused, the money spent on it wasted, argues Raymond Bednar. Here, he outlines the progressive stages through which companies can create a rigorous and structured sponsorship program.

Level 0 - Basic involvement

Within the chart is an ascending hierarchy of Zen-like vision attainment. At the bottom, 0, is where the vast majority of companies dwell that use sponsorship, regardless of how much they are spending. These are the companies buying sponsorship to fulfill some perceived need. A common reason to enter sponsorship is to counter the competition. A simple litmus test for determining if a company is at this level is a quick analysis of the ratio of activation to sponsorship spending.

As an example, let's assume a company is paying $2 million for the naming rights at a professional sports stadium. At the same time, it is spending untracked token amounts on client entertainment (activation) in additon to the naming rights expenditure. If this ratio of activation spending to sponsorship spending is below 5%, we could say this company's enlightenment is characterized as "Level 0 - Involved". In this example, this would mean that entertainment spending is approximately $100,000. This seems like a lot of spending for just being "involved", not to mention the fact that it might be misspent money.

Now think about what can be realistically done with $100,000. A relatively minor golf outing connected to a major tour sponsorship will often carry a budget of more than $50,000 (including rooms, flights, meals, green fees, etc). Nearly the same objective can be achieved independently without spending the original $2 million for the naming rights simply by staging a world-class golf outing. The example highlights a hypothetical (and all too real) sponsor who is not connecting the sponsorship (and consumer passion) to business goals. Client entertainment may be a goal but why is sponsorship needed to achieve it?

Level I - Measurement of gross investment dollars

Just above "Involved" is the next level of measuring exactly what is spent on the sponsorship. The operative word is "exactly". Nearly all sponsors know what they pay for the right to sponsor. This may include incremental costs such as buying additional tickets, hotel rooms, etc. Few if any, track exactly what is being invested in the relationship because few understand why they are in the relationship. For the time being, let's leave this level with an understanding that someone at Level I is tracking "gross" - not exact - investment in the property/activity.

Level II

Ys are goals for a process as defined by Six Sigma. Many sponsorship managers think they are defining "goals" for their company's participation in a property by listing broad and mostly vague marketing and sales objectives, such as:

• Entertaining clients.
• Associating the brand with the property.
• Getting more business.

Since these do not reflect the underlying elements of the objectives, these are not Ys in the context of our process. Short examples: at minimum, "getting more business" could be broken into the underlying elements of "fewer cancellations" or "selling additional services". Entertaining clients could be broken into reaching "decision makers" or "salespeople".

To characterize the entire equation: Getting more business (Y) is a function (f) of x (the underlying elements). Or Y = f (x).

This report originally appeared in volume 12 of WPP's Atticus Journal, 2006


Download the full report here (pdf, 2.55 MB)