During the most challenging parts of the pandemic, a number of brands approached us looking for support around portfolio optimization, property evaluation and sponsorship governance. In each case, they had realized that the way they were managing their sponsorship investments had not pressure-tested very well during the pandemic.
Their sponsorship agreements were inadequate around force majeure. They did not have an approach to address lost value. They were getting pressure to justify and divert spend. They lacked contingency playbooks and, as a result, pivoting was not easy.
Between 11% and 18% of the average brand marketing budget goes toward sponsorship rights fees and activation spend. For many brands, it is the second largest marcom spend after media. And yet, in many brand organizations it is an unmanaged spend category and it is unmeasured.
There are at least two reasons for this: sponsorship is emotional and sponsorship is messy.
Sponsorship is messy.
There are few initiatives across an organization that involves as many stakeholders. Marketing/brand, legal, trade marketing, HR, procurement (maybe), sales, corporate affairs, IMC agency partners.
A portfolio can be made up of properties from different geographies, with different contract terms, serving different brands in different verticals (sports, arts, music, community, culture), addressing different objectives.
Sponsor measurement is simple, but not easy. There is no out-of-the box, one-size-fits-all solution.
Sponsorship is emotional.
People inside your organization—the stakeholder groups involved in sponsorship and members of your C-suite—can have an emotional connection to the properties you sponsor.
Whether its football, music, the arts—fans of the properties your organization sponsors, or considers sponsoring, sit within your organization. Sometimes, though it happens less than it used to, those internal fans can override—or supplant, a business case approach to sponsorship evaluation and measurement.
Optimize your sponsorship investments starting right now.
With the economic headwinds of early 2023, with continued pressure for marketing effectiveness and efficiency, now is the time to make your sponsorship spend more effective and more efficient.
1/ Portfolio Audit
Optimizing your sponsorship investment starts with understanding your current state.
Over time, a portfolio can wind up becoming a basket of properties that might have supported old brand or commercial strategies, be legacy deals that just keep getting renewed or may have been the pet passion buys of former executives.
Review your portfolio with fresh eyes—start with making a business case for the properties that sit in the top 60%, or the top 80% of your spend. Assess fit with your brand and commercial strategies, validate target efficiency and value proposition, and assess how the sponsorship has performed for your brand over the last two years.
Use a two-level review where you first put all of the properties you are assessing through a quick scorecard exercise to validate around alignment with business and commercial strategy and target audience efficiency. This first level review means that you are not investing time and resources in a deep assessment of the properties that can be assigned a quick divest decision.
From the properties that remain after the first level triage review, do the deeper valuation and evaluation, creating a divest or optimization plan for each property. This may mean rightsizing investment level or updating the asset package. If you are midterm on a property, you likely will not be able to right size the rights fee investment, but horse-trading assets with the property to increase your activation opportunity should be possible. We’ve had very good success cracking deals open mid-term for asset exchanges.
As you look at optimizing your portfolio of properties, it is important to look at the portfolio as a whole, and not just the sum of the properties within it. Geographic coverage, marketing calendar coverage, a balanced support for brand and commercial objectives can often look different when you look at the portfolio through a wider lens.
2/ Smarter Evaluation
Table stakes to evaluate the properties you are renewing and the properties you are considering is a valuation of the rights and entitlements you are renewing or acquiring. This determines the value of the rights for your industry category. It enables you to understand the value of specific assets, which is helpful in the negotiation process and in ensuring you have the proper weight of value in each asset class (i.e., digital, measured media, consumer engagements, direct revenue drivers, etc.).
A thorough evaluation is built on top of the category rights valuation. It is a deeper analysis that looks at brand fit, reputational risk, asset scoping and optimization, the momentum behind the property and the passion point, deal and fee structure, rights fee spend targets and variable compensation framework.
A stronger approach to property evaluation enables your organization to make more effective, more efficient investments in individual properties.
3/ Sponsorship Governance
Sponsorship governance is the ‘how’ of sponsorship. It is the processes and systems you use to maintain an optimized sponsorship portfolio. It ensures you are always on your front foot around renewals and acquisitions. It makes internal alignment easier and more predictable. It builds continuous improvement and best practice sharing around how your organization manages and leverages sponsorship investments.
A sound sponsorship governance model delivers five key outcomes:
- It gives your team and your executive visibility into where you’re spending and how you’re leveraging your sponsorship investments.
- It involves managing the routine of renewals, activating planning, execution and measurement.
- It creates accountability across your stakeholder group – especially around their commitment to activation.
- It creates an opportunity for alignment, to ensure you have stakeholder and leadership’s support for where you’re focusing your sponsorship activity.
- It creates an opportunity for investment efficiency, ensuring you’re not over or under investing in rights fees and activation spend, and that you’re measuring the outcomes for your business.
With economic uncertainty, with residual impacts of the pandemic on your business, it is finally time to take a more methodical approach to your sponsorship investments.
Don’t tackle all of these aforementioned solutions at once. Start with a portfolio audit, with a fast follow on your approach to evaluation to get some quick wins, and de-risk the change for you and your team.
Our Sponsorship Portfolio Health Check™ provides you with an actionable plan and support to optimize your sponsorship portfolio. We typically deliver between 10% and 15% incremental value once a portfolio is optimized.
We’ve evaluated thousands of traditional sponsorship, community investment, cross-promotional partnership and athlete/performer deals across 21 country markets. Our evaluation approach is grounded in our battle tested, industry recognized valuation model True Value™.
Our customized to-your-organization sponsorship governance model Sponsorship Accelerate™ delivers meaningful life-changing results and makes sponsorship far less messy.
For information on these, or any of our services, reach out to us: [email protected]
By: Ian Malcolm