How much should you pay?

How Much Should You Pay For a Sponsorship?

Too often in the world of sponsorship marketing, value and asking price seem to have little in common.

As an enlightened marketer, you must take control of this relationship and determine first whether the sponsorship is worth pursuing, and second, at what price.

Here’s my rule in determining how much to pay for a sponsorship:  You should never pay more than the value that the sponsorship delivers to your Marketing By Objectives plan.

This puts the onus back on you, because the party marketing the sponsorship generally will have little insight into your specific goals and objectives.

(That insight, by the way, may develop over the course of a long-term relationship and is one of the power tools of sponsorship marketing, when done right.)

Starting with your weighted goals and objectives, identify the value elements that the sponsorship in question could bring to the table. Then apply value based on:

• -       Reach to your desired demographics or target customers (quantity).
• -       Level of engagement with these target groups (quality).
• -       Cost and difficulty of reaching these target groups at the same level of engagement in other ways (alternatives).

Bear in mind that the fees you pay are only the beginning, and must be supported by activation, as discussed in previous blogs.

This approach puts you in the driver’s seat at the negotiating table, allowing you to craft a sponsorship package that meets your needs and your budget.

You may find that the sponsorship cost is quite reasonable, given its unique ability to deliver value to your MBO plan.

Conversely, you may find that the sponsorship is not worth pursuing at any price. In that case, both sides can move on to greener pastures.

Individual Sponsorships Require Balancing Risks, Rewards

Individual Sponsorships Require Balancing Risks, Rewards

My last blog talked about whether sponsorship of a team, such as Team USA in the World Cup, constitutes ambush marketing. The answer was – it depends.

Certainly some sponsors use it that way, while others simply find it makes better sense to target a specific market by going the team route.

There are similar considerations when it comes to individual sponsorships. An athlete or entertainer may actually resonate more strongly with your target consumers than a team or league does.

In some cases, a very popular athlete may allow you to address multiple markets much more efficiently than either sponsoring a selection of national teams or becoming a global sponsor.

A good example of this is Argentine star Lionel Messi, whose face has been ubiquitous in television and Internet advertising during the World Cup.

And he’s done pretty well on the field of play, too.

By contracting for personal endorsements or sponsorships with Messi, a host of global companies are capitalizing on the World Cup in multiple markets without having to deal with FIFA or any of the teams directly, or perhaps after having been shut out of those sponsorships by competitors.

Some of these Messi-centric campaigns have the distinct feel of ambush marketing.

The Return on Investment of such a personal sponsorship can be very attractive, because it may allow you to reach the same or even better potential customers at a lower price. You negotiate only the benefits you intend to use, and pay accordingly.

However there is a risk-reward aspect to this strategy.

While it’s highly unlikely that a World Cup primary sponsorship would disappoint, given the event’s long history, established popularity and the spread risk of multiple teams’ involvement, an individual sponsorship can go bad in a hurry.

Your company becomes linked with the athlete or entertainer’s behavior, both on and off the performance venue. If he gets drunk and drives his sport utility vehicle into a tree, you are faced with damage control.

With a team sponsorship, the worst that can happen is early elimination. In the case of Team USA, sponsors were elated to see the team exceed expectations this year.

With a league sponsorship, the worst case would be an unattractive matchup in the finals.

Either way, your corporate president isn’t fielding media calls asking for comment on some salacious scandal.

Peace of mind comes at a price – and that should be factored into your plans.

Team Sponsorship - Ambush or Not?

Is Team Sponsorship Ambush Marketing?

Global FIFA World Cup sponsorship is a heady proposition, committing you not only to hefty rights fees and almost certainly advertising support of the tournament broadcasts, but more than likely the cost of new marketing campaigns that must be created from the ground up to leverage your sponsorship.

Then you must face the prospect of your top competitors swooping in and sponsoring the individual teams that will play in “your” tournament.

The competitors have the further advantage of being able to pick and choose those teams that geographically represent their best markets.

Does this constitute ambush marketing of your massive World Cup investment?

That depends on your perspective.

The team sponsors will feel that they are doing everything properly and above-board. They obtain official status, then support their sponsorship investment in the usual way.

But when that marketing campaign transcends the themes of team support and links the brand with the sport as a whole – and by implication its biggest tournament – then the World Cup sponsors can be forgiven for throwing around the “ambush” word.

Let’s look at Pepsi’s “Futbol and Pepsi” campaign, running on US broadcasts of the World Cup coverage – and not just during games featuring Team USA, which Pepsi sponsors.

The message is likely to leave consumers at the very least wondering if Pepsi or Coca-Cola, the official World Cup sponsor, is the best soft drink for their favorite sport.

They feature everyone’s favorite soccer superstar, Lionel Messi, who likewise has no connection to Team USA.

Ambush marketing? If you’re Coca-Cola, the answer is probably yes.

Other potential head-to-head clashes are World Cup sponsor adidas vs. Team USA sponsor Nike; the 

World Cup’s Hyundai-Kia vs. Team USA’s Chevrolet; and World Cup’s Sony vs. Team USA’s Panasonic.

Is it worth the investment to double-up, and sponsor both the World Cup and the team in your most important markets? Visa, McDonald’s, Castrol, Continental Tire and Yingli Solar apparently think so.

That’s one way to make sure you get past the elimination rounds.

World Cup Continued - Relevance Increases Sponsorship Value

Relevance Increases Sponsorship Value

We have examined the impressive marketing campaigns that consumer products giants Coca-Cola and Budweiser are using to leverage their FIFA World Cup sponsorship.

But are soft drinks or bottles of beer intrinsically any more relevant to a soccer fan than to the average consumer? Arguably not.

Soccer gear such as footwear and apparel, on the other hand, is very obviously relevant.

World Cup sponsor adidas (www.adidas.com/World_Cup‎) has the advantage of being able to produce products that both commemorate the events and directly enhance the consumer’s ability to enjoy the sport on a personal level.

There’s nothing like a great-looking pair of soccer shoes to reinvigorate your game.

And having the current World Cup logo attached gives the consumer incentive to buy yet another soccer ball, which is much better from adidas’ perspective than waiting for a ball to wear out before replacing it.

Of course adidas supports their investment with the usual inspirational marketing videos, etc. (does Lionel Messi dream?). This helps to generate lasting affinity between fans of the sport and the company’s products.

In that sense, they are pursuing the same goal as Budweiser and Coca-Cola, but with the advantage of being able to integrate their products quite seamlessly into the action.

adidas has the additional advantage of being able to compute its merchandising ROI very easily.

For Budweiser and Coca-Cola, the merchandising sales/profit lift is much more nuanced.

This supports our first rule of sponsorship marketing: Understand your ROI.

The easier it is to connect sales to the sponsorship – in essence the more relevant your sponsorship is to your company’s products or services – the more value you generate from every consumer reached.

Therefore, in considering adding sponsorship to your marketing mix, look for relevance between your offering and the sponsored activity.

That can make the difference between a sponsorship program that you have to take on faith, and one that you can take to the bank.

Something’s afoot in soccer’s ad wars.

Several big brands this week are scoring sneaky yet sizable World Cup points, dodging global soccer-licensing cops and avoiding massive fees while still tackling fans on the sly.

As quiet as a Nike swoosh, that Oregon-based shoemaker, along with Pepsi, Samsung and a cluster of companies are applying an age-old advertising trick called “ambush marketing” to hawk their wares by playing outside traditional sponsorship lines, according to marketing experts.

The game is simple: Those brands cannot show World Cup logos or imagery in their TV commercials because they are not one of the six official "partners" of the Fédération Internationale de Football Association (FIFA), the sports's governing body.

Does the American team have a chance?

THE CYCLE

 
 
 

Adidas and Coca-Cola each paid FIFA an estimated $100 million to legally embed World Cup emblems but Nike andPepsi did not — yet those two non-sponsors are airing soccer-drenched spots featuring Portugal’s Cristiano Ronaldo, Columbia’s Radamel Falcao, and other international star players.

Can a casual fan discern which of those four companies is formally affiliated with FIFA, and which is not?

And more importantly: Do they care?

FIFA officials have not yet responded to a request for comment made by NBC News.

"It is nearly always smarter to conduct an ambush or guerrilla campaign via media and other activation vehicles on site at these big events with the fraction of the budget it would cost for the rights themselves," said Ray Bednar, president at Hyperion Marketing Returns in New York City.

"I cannot fathom the rationale for a brand the size of Coke or Visa to spend these sums of money in what is essentially a brand awareness play," Bednar said. "Yes, they are connecting the passion of the fan with their brand, but that can be done directly with a fraction of the money without paying the rights fees."

Nike has become known on Madison Avenue as a master of guerrilla slickness. During the 2012 London Olympics, numerous track athletes donned the company’s neon-yellow Volt kicks. The footwear earned nearly as much chatter as the gold-medal winners.

"Nike connects where it matters — clubs, federations as well as elite and everyday athletes, and we are part of football (soccer) 365 days a year," said Nike spokesman Brian Strong. "We are a sponsor of the CBF (the Brazilian Football Confederation) and and of 10 teams total at the World Cup, more than any other brand. Over half the players in the tournament are wearing Nike boots.

"The World Cup provides a huge energy moment for us as a football brand but our #RiskEverything campaign is not specific to the tournament, and we don't seek to associate ourselves as an event sponsor," Strong added.

What Nike does not say: Their blueprint to fly below the official sponsorship wire also gives the company a dash of pirate panache, experts say.

Now other brands are following their lead.

Check out the new soccer ads for Sony, a FIFA partner, and Samsung, which is not. The tech competitors slug it out in their commercials, each clearly aimed at World Cup lovers. Sony shows cheering, dancing fans using its gadgets in a bouncy ad. Samsung shows sliding, kicking stars using its gadgets in a booming ad.

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"There are two reasons why a company might embrace a guerrilla campaign," said Tim Calkins, professor of marketing at Northwestern University. "First, it could help their brand and drive growth. Second, it might limit the impact of a competitor's sponsorship.

"Event organizers have to fight to protect sponsors. Companies will only pay big dollars to sponsor events if they are confident the investment will pay off. Guerrilla campaigns dilute the value of being an official sponsor," Calkins added.

Even a company like Beats, which drew a marketing red card from FIFA, is making bucks from that wrist slap, said Brian Quarles, an executive vice president at rEvolution, a Chicago-based sports marketing firm.

FIFA even banned the Beats By Dre headphones at World Cup stadiums this year — during matches and media events – because FIFA has a partnership with Sony. But all that some fans hear is this: World Cup players like the Beats headphones.

"It certainly seems that the brands using ambush or guerrilla tactics have been the ones receiving more attention around this World Cup," Quarles said.

"Sometimes it is more of a story not to be directly involved with the game, such as the case with Beats By Dre," he said. "That, in itself, grabs headlines and attention."