By sponsorship we mean “the acquisition of rights to affiliate or directly associate with a product, person, organisation, venue, cause, team, league or event” (Marsden, 2014). Think Virgin Australia and Melbourne Fashion Festival, Lexus and the Melbourne Cup or Kia and the Australian Open. These examples are all big brands though, what about the SME’s?
To the question above, the short answer is… it depends. On quite a bit as it turns out;
We just need to look to the Fyre Festival to see how badly this could go. The problem however, is that most successful events and festivals now have too high an entry point for small business, so small business needs to take a risk with an up and coming event that may or may not succeed. Sure, they can promise 5000 visitors but what if only 1000 turn up.
It may seem obvious but it all comes down to the sponsorship deal itself, even if the event is awesome. Here’s a real life example ; Careflight Rescue were looking for event sponsors for their Gala Ball. Awesome cause, awesome event; around 500 affluent attendees from business and industry. However, what they offered their potential sponsors was; a logo on a ticket and a logo on a big screen throughout the night. That’s it! That’s rubbish. No-one was ever going to take notice of those logo placements and even if they did, they’re meaningless.
Many small businesses don’t have the luxury of in-house sponsorship and partnership executives, who can go in hard and negotiate the best damn partner package ever.
The rule of thumb needs to be; for every dollar that the sponsorship costs, a business must allocate a minimum of the same again in activation. Otherwise it’s a missed opportunity. For example, if the sponsorship fee was $5000, then another $5000 needs to be allocated towards promoting or leveraging the sponsorship to raise awareness. It’s not a $5000 sponsorship but $10000, and that’s gone from manageable, to a fair dint in the budget. This is a crucial step that is almost always ignored.
“Sponsorship works by association rather than persuasion. The general idea is that a sponsored event elicits a strong positive emotional response will have a ‘halo effect’ that rubs off on the associated sponsor” (Marsden, 2014.)
But I’ve seen events run so poorly they leave attendees and sponsors alike reeling - plenty of emotions here, none of them good. Massive queues, not enough toilets, confusion and chaos. Without a killer contract it’s too bad for the sponsor, their brand may be tainted by association and they paid money for it!
Often small businesses don’t have legal teams on retainer to nut out a contract that protects them from false promises and shortchanging.
Back to our original question about whether event sponsorship is a winning strategy. It’s a lot more involved than it appears. There's big risk involved and it’s nowhere near as affordable as it may initially seem.