The thorny question of how to get perceived value out of sponsorship still seems to be very much up in the air, over a decade after we first blew the whistle on the financial black hole of sponsorship.
As part of a communications effectiveness audit into the marketing and public relations activities of a major banking group, we examined the financial and practical issues surrounding the bank’s sponsorship of British athletics in 1989. It was revealed to be a major unexpected cost centre.
It became crystal clear that in order to reap any benefit whatsoever from the substantial direct sponsorship fees paid to the sponsorship organiser, an equal additional amount had to be found to ensure that any meaningful client publicity and public relations benefits were actually gained from the involvement. The practical options requiring very little creative input – and to a large extent, a justification to shareholders – are to simply use the sponsorship as a basis for extended corporate hospitality and basic branding.
In a short period, the client viewed the sponsorship fee as dead money as the realisation dawned that no return would be supplied by the sponsorship organiser – headed by a then-leading athletics personality turned businessman. The investigation also revealed that the sponsorship contracts signed had automatic built-in inflation clauses, no recourse for non-performance or the application of penalty payments. As a justification for the sponsorship fee, a media cost analysis was supplied.
Our view at that time concluded “this is fanciful beyond belief”. The analysis simply applied a BRAD advertising rate to a series of athletics listings results on the sports pages and TV commercials advertising rates, every time a perimeter board or vest number was briefly in view.
In light of all this, we suggest that any organisation approached by someone offering sponsorship opportunities has to do some serious thinking. Do not automatically call in the lawyers to examine the deal, but first of all carry out a very hard nosed and independent client-side investigation as to the specific purpose of the involvement. Then, if the answers are still acceptable, automatically double the quoted financial element.
Clients should also bear in mind that the employee, director or officer who originally was the enthusiastic driving force behind progressing the sponsorship opportunity could well have moved on or been promoted elsewhere by the time the actual contract kicks in. Perhaps this is the key question we could usefully put to CGU?