Font Size: Increase | Decrease

Implementation Planning

• Identifying Appropriate Athlete Endorsers
• Expecting Proper Levels of Sponsorship Service
• Implementing Effective Hospitality Strategies
• Integrating Community Relations into Sponsorship
• Planning And Scheduling Around A Sponsorship
• Rethinking The Effectiveness Of Promotional Giveaways
• Using Intangible Assets
• Using Sponsorship to Market Luxury Brands
• Activating Sponsorship through the Web
• Falling For Price Escalators
• Generating Direct Revenue From Sponsorships
• Activating Golf Sponsorship Successfully

Home > Sponsorship Resources > Implementation Planning

Generating Direct Revenue From Sponsorships

Sponsorship is a customer and brand driven discipline, and it should be treated as such. The challenge to that thinking however, is that it is quite difficult to measure ROI from modifications of customer attitude and behavior, or from adjustments in brand perception. As most marketers know, it's easier to gain support from senior management for a renewal, new sponsorship investment or substantial activation budget if you can show that sponsorship is actually generating revenue, or at least contributing to increased sales.

Are there really ways to make revenue generation a priority in sponsorship, without relegating the customer and the brand to the back seat? The answer is definitely affirmative, but with qualifications. Sometimes sponsors sign deals because of revenue guarantees from properties and completely ignore brand fit. In those cases, negative associations can inflict serious damage on the sponsor's brand. Instead, sponsors should approach revenue generation as an enhancement to the sponsorship, with the brand and customer as the priority.

The most prevalent direct revenue arrangement is a clause in a sponsorship contract that requires the property to purchase a minimum amount of product or services from the sponsor over a set period of time. The property receives favorable pricing and the sponsor feels as if it's getting a discounted sponsorship package. But is it really getting a great deal? Some properties attempt to add on throwaway inventory that is difficult to sell off piecemeal - and increase the overall fee - in order to recoup money it will commit to the sponsor's products over the life of the contract. Still other properties slightly increase the price of the package or add annual escalators to make up for the money they'll throw your way for product.

The best way to generate direct revenue is to actually have your products sold at the event. While such an arrangement is more conducive to food and beverage products, many non-traditional sports and entertainment events provide on-site vending opportunities. This approach allows you to control your message and visual branding around the sales environment. You can treat it as a strictly revenue-led area and dedicate your sponsorship to other physical areas of the venue, or you might want to tie them more closely together.

Another direct revenue approach, although not guaranteed, is to set up a vendor program with the property and its sponsors, partners, and suppliers. This type of arrangement has only been sporadically utilized in the sponsorship world, perhaps because many properties feel encumbered by such a deal, especially if they don't think they will gain any benefits from it. How shortsighted they are! A well-organized vendor program could work as follows: If you have an extranet site dedicated to preferred customers, provide all outside businesses associated with the property access to the site and a purchase code that allows your company to track orders. What's the incentive for the property's partners to opt into such a program? They receive preferred pricing and support a business that believes in and supports the same property that they do. And how do you entice the property's management? You provide them with an agreed upon percentage of sales, and once the arrangement is up and running, they need not dedicate resources to the program. You may need to dedicate an account person to service the property's business partners, but that is likely the extent of your additional internal resources.