Sponsorship is a capital asset.
It can work across channels, make other marketing investments work harder and address multiple brand and business objectives at the same time. That potential is also what makes sponsorship complex.
When brand owners don’t have sufficient sponsorship expertise in-house, predictable mistakes can occur. Here are six we see most often.
1. Evaluating Sponsorship Like Media
Media weight matters in sponsorship. Reach, impressions and the quality of that exposure can represent significant value.
But sponsorship isn’t simply media.
Evaluating an opportunity primarily on impressions or media value captures only one dimension of the investment. Evaluation should start with measurable brand and business objectives, then assess the opportunity against them, including
audience fit, strategic relevance, available rights, activation potential, competitive context and risk.
A property with significant reach can still be the wrong investment. Another with less media weight may create considerably more value because of what the rights enable the brand to do.
2. Paying More Than the Rights Are Worth
Without an independent view of fair market value, the rights holder’s asking price can become the anchor for negotiation.
Brand owners need their own view of value before entering that negotiation. That means valuing the rights based on the assets being acquired, their quality and utility, relevant market comparables and other factors that influence value.
Without that benchmark, a brand can negotiate well and still overpay.
3. Buying the Package the Rights Holder Wants to Sell
Rights holders build packages around the inventory they have available. Brand owners should start somewhere else: with what they need the sponsorship to accomplish.
Measurable objectives should determine the rights and assets required to deliver against them.
A standard package may contain assets with limited value to the brand while excluding rights that are critical to its activation strategy. The negotiation should therefore shape the package around the brand’s needs, rather than accept the scope of what’s been offered.
The objective isn’t to buy more assets. It’s to buy the right ones.
4. Underestimating Deal Structure
Rights and price get most of the attention in sponsorship negotiation. Deal structure can be just as important.
How much compensation should sit in the base rights fee? What compensation should be variable and tied to specific rights, opportunities or delivery? What is the appropriate contract term? How should annual escalators, renewal terms and exit rights be structured?
These aren’t details to resolve after the commercial deal has effectively been made. They influence cost, flexibility and the brand’s ability to adapt the partnership as its needs change.
A well negotiated rights fee inside a poorly structured agreement can still be a bad deal.
5. Moving Too Quickly to Sign
Sponsorship opportunities often come with urgency. Competitive interest, rights holder timelines and internal enthusiasm can all create pressure to move quickly.
But sponsorship requires diligence.
Before committing, brand owners should understand strategic fit, audience alignment, the property’s ability to deliver against objectives, the rights required, fair market value, activation requirements and material risks.
Unlike most media buys, sponsorship is often a multi-year commercial relationship. The implications of a rushed decision will last well beyond the initial negotiation.
Move efficiently. Don’t skip the work.
6. Underfunding Activation
Rights fees secure the opportunity. Activation puts the rights to work.
Sponsorship can extend across media, content, social, CRM, retail, customer and employee engagement, experiences, promotions and other parts of the marketing and business ecosystem. Realizing that potential requires investment beyond the rights fee.
There is no single ratio for how much a brand should spend on activation. The appropriate level depends on factors including the property, category, objectives, rights package, market and activation strategy.
But that requirement needs to be understood before the sponsorship is acquired.
If a brand can afford the rights but can’t afford to activate them effectively, it may not be able to afford the sponsorship.
Performance Starts Before the Contract Is Signed
Much of a sponsorship’s potential for performance is established before the deal is done.
Selecting the right opportunity. Evaluating it against measurable objectives. Understanding what the rights are worth. Buying the assets the brand needs. Structuring the agreement intelligently. And budgeting adequately to activate it.
Getting those decisions right doesn’t guarantee performance. But it creates the conditions for it.
Getting them wrong can leave a brand overpaying for the wrong rights, constrained by a poorly structured deal, or without the activation budget needed to make the investment perform.
