Using sponsorships to increase brand recognition has never been more prevalent or more complicated. While sponsorship can be a valuable marketing tool, it is also fraught with risks if appropriate precautions are not taken. Many issues must be addressed to ensure a well-intentioned process does not go awry.
Whether your company is the Title Sponsor or has some other status, you should know whether you are the only sponsor in a particular category or industry. For instance, if you are a candy company, would another candy company be prohibited from being a sponsor? What if other candy companies were sponsors in other categories? Would a potato chip company be prohibited from also being a sponsor of the event?
While sponsors want to limit as many competitive products as possible, you may also want to limit incompatible products. For instance, if the American Heart Association sponsors an event, they might require that no fast food companies also sponsor. These details will be based on the fees you are paying for the sponsorship, past relationships with the promoter, the value of your product to the event, and the anticipated audience of the event.
Standing out in the sponsorship crowd
Sponsorships allow your product to rise above the “noise” and be singularly associated with an event. In this regard, it may be appropriate to negotiate limits on the number of sponsors within categories and the total number of sponsors for the event.
The more consumers are inundated with advertising noise (i.e., multiple sponsorship categories and multiple sponsors within each category) the less likely your product will stand out. This diminishes the value of your sponsorship. The extent to which this provision can be negotiated will depend upon the market itself, the status and value of your particular brand, and the promoter’s desire to have you as a sponsor.
Promoting your sponsorship
The promotion of the sponsorship must also be negotiated. How will the sponsor’s name be used in event press releases or advertisements? How often is your name mentioned in association with the event and in advertising for the event? Will the sponsor’s name be used on t-shirts, hats, and billboards? If so, the sponsor may even have to pay additional fees for these particular items.
The event itself is not the only source of brand awareness that will be generated from the sponsorship. Often, pre-event activities and post-event promotions can generate additional value. The sponsor must clarify how it can use the name of the event and its sponsorship status in its own marketing and advertising. These additional issues must be negotiated. For instance, to what extent does the sponsor have the right to use materials from the event in its marketing after the event?
Assuming that the sponsorship arrangement is mutually beneficial, the sponsor will want to continue its relationship with the event, and the event with the sponsor. To provide the sponsor with these rights, it should negotiate, up front, automatic renewal rights or rights of first refusal. These rights may only be exercised within certain timeframes and may also result in an increase of fees over the prior year of sponsorship.