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Making the Decision to Renew
Sponsorship renewal is always a tricky subject, primarily because many sponsors neglect to set specific, tangible objectives before they invest in sponsorship. At the end of a sponsorship contract, your marketing staff is left scratching their heads, wondering whether the deal is worthy of renewal. Without a point of reference on sponsorship success, how can you properly decide if your continued investment in the property makes sense? The solution is to always set objectives and budget properly for measurement along the way and post-sponsorship. Even with objectives in mind, a number of other areas should be considered in the renewal decision:
Political Considerations: Many companies' portfolios include sponsorships for the purpose of strengthening corporate presence in their headquarters city. Sometimes, events would not occur or properties would not exist if the local corporate player didn't swoop in and save the day. Think local arts or film festivals, small marathons, minor league naming rights. This type of sponsorship often carries with it placement under the local microscope. Companies are lauded for saving the day when they sign a deal, and are perceived by politicians and the community at large as supporting the property. As a result, some sponsors are terrified of the backlash if they decide against renewal. If you've met your objectives of altering perception, then you've achieved what you wanted. So bring out your PR team to tell the story of how satisfied you are for playing a part in making the event or property a success and enriching the arts or entertainment community. Then walk away unscathed.
Business Environment: Over the course of even a one-year sponsorship contract, your business may undergo radical changes. Let's say you didn't set objectives for a sponsorship, but it was selected to support a specific product or business, and even appeared to be a winner. But why would you renew the deal, knowing that you've got new product launches, corporate acquisitions, or a business repositioning to support? Other sponsorships would likely address those business challenges more successfully than your current one.
The Alternatives: Many sponsors feel that renewal for safety's sake is a legitimate reason for staying with the same property. Wrong! "But the sponsorship seems to be doing well," you cry out. It's meeting your ROI objectives; the needle moved considerably on brand perception, credibility and awareness levels; and senior management loves the ego-building opportunities that sponsorship brings them. You may have forgotten though that during the life of the sponsorship, a number of new properties or properties that were not available when you made your sponsorship investment, are now available. Review these alternative opportunities, run the numbers, and perform comparative analyses. You many find that renewal is not in your best interests.
The Name Game: What's in a name? Over time, you may answer that question with, "Not much." If you've bought entitlement for an event or naming rights to a venue, name recognition and associative value will increase over a period of time. However, at some point the value of entitlement may slowly decrease as fans and attendees become so accustomed to the name - from hearing, seeing and reading it - that they will tune out the fact that your company is the primary sponsor and supporter, and will treat your company's name as simply part of the name of the event or building. When that attitudinal change occurs, the level of goodwill may also suffer. That means it may be time to opt against renewal and move on.
