chapter 13 Promotional Licensing and Sponsorship

Objectives To illustrate the relationship between the sport organization and the corporate sponsor To provide an understanding of the scope of sponsorship and promotional licensing To develop a comprehension of the motivations and rationale for the use of sponsorship by corporations and sport entities

Sponsorship or Partnership A cash or in-kind fee paid by a client to a property in return for access to the exploitable commercial potential associated with the property. A win–win situation where the client and the property both benefit. It is a partnership where both should see economic benefits.

Sponsorship It is the acquisition of rights to affiliate or directly associate with a product or event for the purpose of deriving benefits related to that affiliation or association. The sponsor then uses this relationship to achieve its promotional objectives or to facilitate and support its broader marketing objectives. The rights derived from this relationship may include retail opportunities, purchase of media time, entitlement (the inclusion of the sponsor name in the event or facility name, such as the McDonald's LPGA Championship or the RCA Dome), or hospitality.

Sponsorship Provisions The right to use a logo, a name, a trademark, and graphic representations signifying the purchaser's connection with the product or event The right to an exclusive association in a product or service category The right of entitlement to an event or facility The right to use various designations or phrases in connection with the product, event, or facility (“official sponsor,” “official supplier,” “official product,” or “presented by”) The right of service or the right to use purchaser's product or service in conjunction with event or facility The right to conduct promotional activities, such as contests, advertising campaigns, or sales-driven activities, in conjunction with sponsorship agreement

Reasons for Growth in Sport Partnership Decreased effectiveness of advertising in print and on TV Increased interest in sport and leisure time Opportunity for two-way communication Changing social priorities: Statement of priorities by sponsor and consumer High consumer acceptance “life-styled marketing”

Why Sponsorship? Lifestyle marketing Exclusivity Heightened communication Publicity

Sponsors’ Objectives To increase public awareness of the company, the product, or both To alter or reinforce public perception of the company To identify the company with the particular market segments To involve the company in the community To build goodwill among decision makers To generate media benefits To achieve sales objectives To showcase unique product features, technologies, or advantages To create an advantage over competitors through association or exclusivity To gain unique opportunities in terms of hospitality and entertainment To secure entitlement or naming rights

E-Marketing Opportunities for Sponsorships Not dependent on existing traditional inventory Does not have to take place during a game Does not to happen at the venue Does not take inventory away from radio and television Only limited by the creativity of the content

A Co-Op Sponsorship Agreement It is the joining together of two or more entities to capitalize on a sponsorship or licensing opportunity. Co-op sponsorships are viable in today's marketplace: –Allow companies to share the total cost of the sponsorship. –Allow promotion of several product lines within the same corporate structure. –Enable corporations to use existing business relationships that make sense. –Enable a weaker corporation with something to offer to leverage the strength and position of another corporation to gain the sponsorship and a position of advantage over its competitors. –Allow testing of a relationship when future opportunities are under consideration. –Create a pass-through opportunity, typically involving grocery chains that agree to a sponsorship and pass some or all of the costs (and benefits) to product vendors in their stores.

Affinity Marketing “An individual's levels of cohesiveness, social bonding, identification, and conformity to the norms and standards of a particular reference group” (see endnote 50 in book) Credit cards Rewards programs Donation to affiliated entities

Ambush Marketing “A planned effort (campaign) by an organization to associate themselves indirectly with an event in order to gain at least some of the recognition and benefits that are associated with being an official sponsor” (see endnote 54 in book)

Evaluating Effectiveness for Client Return on investment (ROI): Revenue- generated or sponsorship fee. Examples: –$50/$1 = 50 to 1 ratio –$1,000,000/$10,000 = 100 to 1 ratio –For every dollar spent $100 was made Return on objective: –Increased exposure or awareness –Enhanced image

Selling the Sponsorship Evaluate inventory. Establish list price for items in inventory. Establish packaging discount policies. Determine or recognize real costs of items. Determine exclusive items and exclusive product areas. Initiate sales process. Work from larger sponsorship proposals (major corps) to smaller proposals and corps. Pit competitors to create bidding environment.

The Partnership Sale Know when budget decisions are made. Identify and cultivate the decision maker. –Face to face –Complementary items Make presentation: Offer solutions to their problems. Negotiate: Sell from the top down. Secure the sale: Document terms of the deal. Service the sale: Underpromise, overdeliver.

Six-Step Process of Selling Sponsorship Identify and arrange meeting with decision maker. Hold preliminary meeting: Listen more than talk. Arrange follow-up meeting. Create proposal. Hold follow-up meeting for purpose of making presentation. Negotiate final deal.

Ethical Issues Undue influence Social responsibility –Unfair labor practices –Alcohol sponsorship