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The Case For Variable Sponsorship Pricing
The buzz continues to grow louder regarding the growing prevalence of variable ticket pricing, particularly in Major League Baseball. The principle behind variable ticket pricing is that teams can fill more seats - and thus, increase revenue - by raising ticket prices for more desirable games (better opponents, more attractive days or dates) and lowering prices for less desirable games. We'll leave the debate over price elasticity of demand for sports and entertainments tickets to economists and ticket pricing strategists. But the idea of variable ticket pricing raises and interesting question: Why isn't the option of variable sponsorship pricing available to corporate marketers?
The idea behind variable sponsorship pricing is what we would describe as "demographic selectivity." In other words, companies would buy sponsorships based on the fact that fans at certain games would fall into their target audiences more than fans at other games. Of course, this supposition is based on the assumption that sports fans, performing arts supporters, and other event attendees are price conscious consumers. If our assumption is correct, then variable ticket pricing provides a significant benefit to sponsors. It creates a more narrowly defined demographic profile of audiences.
Just as fans and supporters of some properties have the opportunity to purchase partial-season ticket packages based on days of the week, team opponents, musical genre of performing artists, etc., sponsors should be able to purchase their own mini-plans based on the desirability of the audience delivered. Of course, the success of such a scenario is dependent on a great deal of trust, since properties would have to do some legwork to determine whether a consistent demographic snapshot of attendees at lower-priced events or games exists.
Other scenarios may also provide opportunities for variable sponsorship pricing. If an event changes locations annually, why shouldn't sponsorship fees be adjusted based on the desirability of the market to sponsors? Of course you're thinking that many desirability factors are highly subjective. In fact, you're correct. But variables like area population, size of television market, and median household income are not subjective. Other less black-and-white factors include the amount of entertainment/sports competition for fans' attention and the level of security taken to protect ambush activity.
Although variable ticket pricing has only been made available to sports fans in the last year, it may take little time to impact the sponsorship activity and associated marketing investments of sophisticated, aggressive sponsors. Our idea of variable sponsorship pricing also helps to refine the practice of setting sponsorship fees, which many properties still tend to do arbitrarily. Variable pricing would ultimately contribute to fee justification and move pricing from an arbitrary practice to a more exact science.
