1. 5-1 Chapter 5 Sponsorship Foundation: Developing and Selling the Proposal Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

2. 5-2 Sponsorship Success Much Like Constructing a Building, a Sponsorship with a Solid Foundation Is More Likely to Endure – and Succeed – for an Extended Period of Time A Sound Foundation Does Not Guarantee a Successful Sponsorship; However a Weak Foundation Is a Precursor to Failure

3. 5-3 Sponsorship Success There Are 10 Fundamental Requirements (or Building Blocks) for the Construction of a Sound Foundation for Any Successful Sponsorship Program

4. 5-4 Building Blocks for a Sponsorship Foundation Sponsorship Should Be: –Defined Need to understand what a sponsorship Is –An Appropriately Selected Communications Medium Fit the target market and communications goals –Objective-Led Decision based on Organizational Goals

5. 5-5 Building Blocks for a Sponsorship Foundation Sponsorships Should Be: –Integrated Fits within and supports the sponsor’s IMC plan –Effectively Screened Selected based on merit –Contracted Written contracts help to avoid surprises and to provide recourse in the case of non-compliance

6. 5-6 Building Blocks for a Sponsorship Foundation Sponsorships Should Be: –A Long-Term Commitment Ongoing serial sponsorship over time tends to be more effective than a “once-off” sponsorship –Protected from Ambush Marketing Both the sponsor and the sponsee should engage in activities that identify and provide protection from ambush marketing

7. 5-7 Building Blocks for a Sponsorship Foundation Sponsorships Should Be: –Leveraged Sponsor should recall that sponsorship is not a stand-alone promotional tool and invest an adequate level of resources for collateral support –Evaluated Marketer will not know if the sponsorship succeeded or failed if there is no attempt to measure the results

8. 5-8 Sponsorship Commitment: The Two Key Questions How Much Will the Sponsorship Cost? What Are the Key Timelines Involved? –Payment Schedules –Event Timing –When Can Sponsor Publicize Relationship? –When Does the Sponsorship Begin and End?

9. 5-9 Cost: Cash versus Value-in-Kind Cash Outlay Required Value-in-Kind (VIK) Represents the Value of Goods and Services Provided by the Sponsor in Lieu of a Cash Payment Many Contracts Use a Combination of Cash and Value-in-Kind as Payment

10. 5-10Trends Rights Fees Escalating for Many Major Properties Not All Properties Exhibit This Inflation Many Sponsors Are Choosing to Forgo Long- Term Commitments in Favor of Property Hopping Many Contracts Cover a Defined Multiyear Cycle –Typically 4 Years with IOC and FIFA

11. 5-11 Factors That Provide Value By Providing Value, These Factors Increase the Rights Fees Expected by the Sponsee Increased Rights Fees Should Be Balanced by Increased Benefits for the Sponsor

12. 5-12 Factors that Provide Value: Tangible Factors Easier to Estimate Their Economic Value Examples –Value of free tickets –Value of free advertising –Value of signage at venue –Value of distribution rights

13. 5-13 Factors that Provide Value: Intangible Factors Difficult to Assign a Monetary Value to, but Must Still Be Taken into Consideration Examples –Number of sponsors –Attendance at event –Fit between sponsor/sponsee target markets –Right to use property’s trademarks and logos

14. 5-14 Factors that Provide Value: Geographic Reach Greater Reach Translates into Greater Value Drop in first six lines of Table 5.2 here

15. 5-15 Factors that Provide Value: Market Factors Cost of Similar Property in Other Markets Cost of Alternatives in the Same Market Demand for the Property Cost of Purchasing Advertising Time and Space in Traditional Media in that Market

16. 5-16 Factors that Provide Value: Price Adjusters Drop in Box 5.5 Here

17. 5-17 Price Determination Make the Sponsor’s Investment and Benefits Measurable –Prospect will likely perform some type of cost- benefit analysis prior to making investment –Perceived value should exceed the price charged by the sponsee for rights fees

18. 5-18 Establishing the Price for the Sponsorship Rights Fees Cost-Plus Approach Competitive Market Approach Equivalent Opportunity Approach Relative Value Approach

19. 5-19 Cost-Plus Approach The Cost Incurred by the Sponsee in the Delivery of the Sponsorship Components PLUS a Pre-Determined Fee. The Pre-Determined Fee May Be: –Fixed monetary amount –A fixed percentage based on the cost

20. 5-20 Competitive Market Approach Determined by Assessing Supply and Demand for Sponsorship Opportunities within the Market(s) Reached by the Sponsorship in Question Focus Is on Value Rather than Costs Considers Disparate Properties –For example, sports event vs. an art exhibit

21. 5-21 Equivalent Opportunity Approach Establish Cost of Sponsorship Based on the Cost of Attaining Similar Promotional Value through Traditional Media Advertising versus Sponsorship

22. 5-22 Relative Value Approach Comparable Value of Anticipated Exposure for the Sponsor Based on Forecasts of Exposure If Average Sponsor Has Its Logo on TV for 6 Minutes, What is that Exposure Worth?

23. 5-23 Recall the Methods of Payment Cash Value-in-Kind (VIK) Combination of Cash and VIK

24. 5-24 Sponsorship Level Many Sponsees Have Different Levels of Sponsorship that Have Varying Rights Fees Different Plan Components at Each Level Can Use to Overcome Price Resistance

25. 5-25 Sponsorship Level Illustrated Drop in Table 5.4 Here

26. 5-26 Timing Issues Duration of the Sponsorship Agreement –Once-off versus ongoing serial sponsorships –Variety of terms from one day to lifetime Timelines for Sponsorship Designation –Prior to Event –After Completion of the Event

27. 5-27 Timing Issues (Cont’d) Projected Schedule of Sponsee Activities that Identify Sponsors –When will ads be run –When will the sponsee’s Web site reflect the relationship with the sponsors –When will signage be erected & dismantled –When will press releases be disseminated

28. 5-28 Timing of Payments to Sponsee Date of Initial Payment Date of Interim Payments Date of Final Payment Date of Any Required Lump Sum Payment Delivery of VIK

29. 5-29 The Sponsorship Proposal Can Now Move on to the Development of the Actual Sponsorship Proposal It Is a Sales Tool for the Sponsee It Is Essential Information for the Prospect It Typically Includes Six Key Components

30. 5-30 Preliminary Actions (Before Developing the Proposal) Prospecting – Finding Potential Sponsors Gather Information –On Prospects –On Prospects’ Target Markets

31. 5-31 Sponsorship Proposal Must Match the Proposal to the Needs of the Prospective Sponsor Effort to Link Prospect and the Property Remember that It Is a Sales Tool It Is a Basis for Initiating Negotiations

32. 5-32 Six Elements of a Sponsorship Proposal Drop in Box 5.8 Here

33. 5-33Introduction A Written Handshake Create Positive Impression Help Get the Proposal Read by Prospect Include Basic Information; Specifics Follow

34. 5-34 History of the Event When Was Event First Staged? Has the Title Changed Over Its Life? Who Are the Participants? Is There Any CRM Overlay? Media Coverage Rudimentary Financial Information (Optional)

35. 5-35 Plan Components What Will the Sponsor Get from the Sponsee in Return for Its Commitment? Customize – Boilerplate Proposals Do Not Work Offer Components Such as: Category Exclusivity, Signage, Hospitality, etc.

36. 5-36 Value Enhancements Ways in Which the Sponsee Will Help the Sponsor Achieve Its Objectives Examples: –Leveraging Opportunities –Cross-Promotion Opportunities –Protection Against Ambush Marketing –Postevent Research Regarding Effectiveness –Fulfillment Report

37. 5-37Terms Rights Fees –Cash –VIK Timelines –Single Payment Due –Payment Schedule for Lengthy Contracts –When Does Sponsorship Begin & End?

38. 5-38 Executive Summary May Be at Beginning or End of Proposal Capture the Key Elements of the Proposal Important because Not All Executives Will Take the Time to Read the Entire Proposal May Be the Basis for Rejection

39. 5-39 Compliance with Prospect’s Guidelines for Your Proposal Some Large Companies Receive a Large Number of Sponsorship Proposals They May Have Staff Whose Primary Task Is to Identify the Good and Bad Proposals These Companies Often Have a Standardized Format That Must Be Used

40. 5-40 A Harsh Reality It Has Been Reported that Less than 10% of the Proposals Submitted to Prospects Are Given Serious Consideration Less than 1% of All of the Proposals Receive Funding from the Targeted Prospective Sponsors

41. 5-41 Selling the Sponsorship Convert the Prospect into a Customer Typical Business-to-Business (B2B) Marketing Strategies and Tactics

42. 5-42 Selling the Sponsorship Negotiating the Deal Proposal Represents an Offer by Sponsee Prospect Likely to Issue a Counteroffer Need Mutual Understanding –What Do I (the Sponsee) Have to Offer? –What Does the Prospect Need? –What Adjustments to Proposal Are Needed? Close the Deal

43. 5-43 Closing the Deal Typical Closing Techniques Examples: –Added Inducement Close (e.g. more signage) –Standing Room Only (SRO) (other prospects) –Balance Sheet Approach (list pros and cons) –Alternative Decision Approach (Want A or B?)

44. 5-44 Customer Relationship Management (CRM) Focus on Customer (Sponsor) Retention Focus on Sponsor Satisfaction and the Resolution of Problems that Emerge Focus on Communication

45. 5-45 Closing Capsule Successful Sponsorships Are Characterized by a Solid Foundation This Foundation Is Comprised of 10 Basic Building Blocks Task Is to Convert Prospect into a Sponsor

46. 5-46 Closing Capsule Key Element is the Sponsorship Proposal Will Likely Involve Meaningful Negotiations Sponsorship Requires a Commitment of Resources by Both the Sponsor and the Sponsee

47. 5-47 Closing Capsule Both Parties Seek A Fair Return on the Resources that They Commit (Win-Win) Sponsors Will Re-evaluate the Value They Received at the End of the Sponsorship Focus on Sponsor Retention