The world of sponsorship is a path tread lightly for businesses. Putting cold hard cash behind a person, team, or event, means taking a potentially big risk. The entity being sponsored subsequently becomes something that represents, and even can become synonymous with the brand backing it. Some very successful cases would be the Nike sponsorship of Michael Jordon. From the avid hoops junkie to the fair weather footballer, you'd be hard pressed to find a sports fan hasn't heard of Air Jordan. Then there is some of the less successful moments in sponsorship like the Rimmel sponsorship of model Kate Moss who was shown the door after being caught on camera indulging in some class A snoochy hooch.
We'd all love to be that guy, gal, thing who is so famous, talented, sexy that companies come banging on the door to hand you the keys to the champagne lounge. It's never gonna happen for most of us. Any fame we're likely to acquire is from doing something monumentally stupid on youtube which will have the opposite effect.
What I'm really progressing towards is the question of 'why do companies give sponsorships?'. Sponsorship isn't charity. Gillette isn't giving Roger Federrer a 7 digit golden handshake because they'd like to see him have the best training and play to the best of his ability or just can't stand to see him with a 5 o'clock shadow. It is also not because he's won plenty of competitions and established himself as arguably one of the best sportsmen on the planet. It's based on the psychology of hero worship which comes back to what I said earlier about wanting to be that "famous, talented, sexy", person, place or thing. If you can't be it, then you can act like it or at least try to look like it. If Alex Nord was in a Gillette commercial, some viewers (those who play Ultimate Frisbee at a high level) might notice that there's a Gillette advert on the TV but for most Billy McCouchpotatos, it would get tuned out. Put Roger Federrer in the advert and now people who don't even like Tennis notice the advert. Let's throw in that VaVaVoom guy and why not bring Wayne Gretzky in as well to make sure we've covered any Canaduhs who might be tuning in. Now your really watching this advert! More than likely your next razor is also a Gillette razor.
In the end it comes down to the fact that sponsorship is an investment. Like all investments, a return on that investment is expected. If Gillette injects 10 million badoogans to sponsor players and advertisements for its new 7 blade kryptonite face axe then it expects that investment to conjure up considerably more than that amount in sales. And by sales, I mean sweet delicious profit.
Lets look at some examples...Company X sponsors Johnny Awesome for 10million to sell their new elbow moisturiser and spends another 10 million in advertisements using Johnny. If the profit on a bottle of moisturiser is £1.00, then we need to make sure we sell 20 million bottles to cover our investment right? Of course not! We want a return not a break-even! So, we need to sell 40 million bottles to cover our investment right? Of course not! That's only a 20 million profit margin. If Company X had done no sponsorship at all, resulting in half of the sales, they'd still have made 20 million in profit. Let's try again. That means that a sponsorship needs to yield a profit that not only pays for itself but also boosts sales so significantly (more than double in this case ), that it brings in a profit well beyond what the projected levels would have been if no sponsorship had been done at all. Somebody get me a towel!
Complicated? It gets worse. If your advert reaches 50 million people, not every person is going to run out and buy your product. If your previous advertisement statistics say that your campaign will bring in a new sale for every 10 views, that means in the above example, the advertising would need to have reached at the very least, 10 times the number of people as bottles of products you need to sell. Assuming we need to sell 60 million bottles of elbow glow, we'll need to reach at least 600 million people with our advertising campaign. Woah! That's going to cost more than 10 million! We need to start over with our math then!
That leads us nicely to the final factor and absolute key to sponsorship value that we're talking about, and that is, exposure. It's that combination of hero worship, brand association, and exposing that association to as many people as possible that brings in the Benjamins! Without exposure, the value of a sponsorship of even the most talented, sexy, and unique person/team/event drops to zero. You need to convey your message many times to many people. Even then, it's not that simple because it's not just any people. This is where market segmentation comes into play. Your message only holds value if it's being delivered to the right people, aka, the 'demographic' for your brand. Advertising value approaches zero the farther you get from your market segment. The exciting new Gillette face axe advert, playing repeatedly during Sex in the City would be an example of wasted sponsorship investment just as much as adverts for Rimmel's new eye liner would be if played during the Superbowl. Swap those around however and you've cracked it! The end result is, you need to find not just any 600 million people, but the right 600 million people. Problem solved. Now you have to hope that your 600 million people are easy to find. Let's hope you aren't marketing yourself to Ultimate Frisbee players then!
This is why televised sports are rolling in the money thanks to the millions of home viewers, while more underground sports like Ultimate Frisbee are struggling to figure out why everything costs so much, why they aren't being paid yet and why it's not yet being considered for the Olympics.
The next time your thinking of asking for sponsorship, if you really want it and think you deserve it for your achievements, then it's time to apply the formula. Does your person, event, or team stand out from the crowd in some positive way? Is your mojo strong? Do you feel that your uniqueness is almost capable of being a brand in itself, and is something that others respect, admire and potentially seek to emulate? Do you believe that your choices and associations may influence people? Lastly, do you have ideas about how your sponsor and yourselves can convey all this to enough relevant people that you feel your association with your sponsor will garner a significant return for the sponsor, meaning the relationship is beneficial for all involved! If you said yes to all of above and yet haven't already been approached by a potential sponsor, you might want to ask yourself those questions again.
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