An Example of an Inventory of Assets - Calculating the Value of a Sponsorship - Process for Getting Corporate Sponsors

Like any field, sponsorship has its own terminology. Whether you are planning to sponsor something, or are seeking a sponsor, it is important to know some of the terms used.

According to Wikipedia - To sponsor something is to support an event, activity, person, or organization financially or through the provision of products or services. A sponsor is the individual or group that provides the support, similar to a benefactor.

The most common usage though, refers to a sponsor as someone who pays for the rights to display a logo or corporate name on something. When used in this way, sponsorship refers to a form of advertising. There may be other benefits the sponsor receives, such as, event tickets, media advertising, or the opportunity to sell products at an event.

Sponsorship is a very common form of advertising in sports and arts venues. Companies may sponsor an event, an athlete, a program, or a wide variety of related things. Sponsorship is used primarily as a way for companies to increase brand recognition. The value of a company's brand may be increased not only from the exposure sponsorship brings, but also the positive associations consumers may make between the company and the organization or event it sponsors.

Some other important terms to know about sponsorship are:

• Activation - The additional costs to a sponsor, over the cost of the sponsorship rights, for promoting the sponsorship to its fullest potential. Activation may include additional advertising, inclusion of the sponsorship in existing advertising, or a public relations campaign.
• Assets - The places owned by an organization that have the potential to display a corporate brand name or logo. These places may be a part of a building or venue, may be on literature or may be placements in media. These assets have a value that can be determined, priced and sold to sponsors.
• Bundling - This is the grouping of various assets into packages that are sold to the sponsor as a group. As an example, a bundle might include the opportunity for a sponsor to display a banner at the finish line, their logo on participants t-shirts, four passes to a VIP tent, and a picture with the winning athlete. This might be described in a proposal as a certain level of sponsorship opportunity.
• Evaluation - The process of attaching a value on each asset in a property's inventory. This value is usually based on the number of impressions (the number of times people see the logo) the property can deliver. Unique sales opportunities at an event, media coverage of an event, and the ability of an event or property to appeal to a specific demographic, will affect the evaluation of the inventory.
• Event - A gathering, festival, athletic event, play, concert, or similar function that provides a sponsor opportunities to display a corporate brand or logo. The event may be professional, such as a sporting event or concert, or it may be charitable, such as a fundraising run or gala. Both types of events have the potential to attract sponsors.
• Fulfillment - When the promises made to a sponsor by an organization or property in its proposal are kept and the sponsor realizes their return on investment.
• Inventory - All of the assets of an organization, property or event are known as its inventory.
• Property - Another term for the assets owned by an organization that have the potential to be exploited by a commercial sponsor. The property may refer to a building, such as an arena or stadium, but it may also refer to an event or to media.
• Proposal - The document that the owners of a property prepare to solicit a sponsorship from a corporation. The proposal will typically list the inventory of assets, offer a bundle of those assets, declare the price for the bundle and describe the evaluation that was used to determine the price. It will also describe past events, the potential for activation and other benefits to the sponsor.
• Prospect - The potential buyer of a sponsorship, who is usually a company who is selling products that are likely to be of interest to the people that are being attracted to a certain property or event. Usually prospects for sponsorships are consumer goods companies. The company may have people dedicated to buying sponsorships or this may be done by the marketing department.
• Return on Investment (ROI) - The method a sponsor uses to determine the business result from the money that was invested in a sponsorship. There are various ways of calculating ROI, depending on the sponsors objectives. ROI may be very specific, such as actual product sales at an event, or it may be more general, such as increase in brand awareness over a period of time.

Evaluation of sponsorship assets and properties is based on the number of impressions (also called turns or hits) a brand name or logo receives. In other words, the number of people see the logo. A monetary value is placed on each impression, based on the quality of the impression.

In other words, a exterior sign seen by everyone passing on the street will receive a high number of impressions, but the value per impression might be lower than a more targeted placement, such as an exclusive backstage pass. The pass will get fewer impressions, but the holders may be a valuable target market that increases the value per impression.

If you want to start with a rough estimate of the sponsorship value of your property or event, a good rule of thumb is to use $.01 per impression. So add up all your impressions and then multiple that number by $.01 and you will have a total ballpark figure of the value of your sponsorships. As an example, daily traffic by your property is 100,000 cars. Multiple that number by 365 and you get 3,650,000 impressions. Multiple 3,650,000 by $.01 and you get a value of $36,500 per year for naming that property. This figure may be discounted if your brand is new, so the sponsor may offer you 75% of that number, as an example. But keep in mind that street traffic is only one source of impressions. Also, there may be precedents in your city for naming events and venues. If there are, you may need to know these figures and use them as a benchmark for your sponsorship opportunities.

Other sources of impressions in your inventory might be:

On-site Signs

Static signs like banners, playing surface logos, perimeter boards, back of seats, etc. are often valued at less than $.01, so a safer multiple might be .003 to .006 but electronic signs, coreboards and jumbo-trons might be valued slightly higher. Use the same figure for mentions by MC or announcer during the event.

Marketing Materials

Program advertising, website listing with link, pre-event brochure, and similar promotional and marketing material usually are valued at .005 per impression. Logo on tickets is usually a part of the exclusive naming rights and may fetch a higher price per impression, i.e. $.007.

Goody Bags and Samples

Items placed in goody bags that advertise sponsors usually are valued at less than $.005, unless there is an opportunity for the sponsor to make contacts with a target market. Then the item placement would be charged at a rate closer to $.01 per impression. Product sampling opportunities that may result in an on-site sale, i.e. credit card application, may reach as high as $.2 per impression.

Media Advertising

If the sponsor shares advertising space with other sponsors or the event name, then the value is a fraction, i.e. of the advertising cost. If the sponsor has exclusivity or is a naming sponsor than the value may be equal to the advertising cost.

In summary, each type of logo placement will generate a different number of impressions and have a different value. Complete your inventory of assets (logo placements), then multiply the number of impressions for each asset by the cost. The assets are then bundled at different price points for the sponsors.

There are professional firms that specialize in sponsorship evaluation. If your event or venue has a potentially high value, you may wish to engage one of these firms.

Once you negotiate a sponsorship, you will need a written agreement between your organization and the sponsoring corporation to ensure that you both understand the obligations and responsibilities that have been agreed. The following is not meant to be a legal document. It is a draft agreement that will give you some idea of the types of things that should be considered when you sell a sponsorship.

The agreement is between Company X and the Singles Sports Complex.

Benefits to Company X

The Singles Sports Complex Agrees to Provide Company X with the following:

An event now known as the Singles Sports Complex Singles Fun Run, scheduled for November 12, 2011 at the Singles Sports Complex (SSC) will be known as the Company X Singles Fun Run. This name change will be recognized in the manner outlined in this document:

Event Signs

The following signs will be changed to reflect the name change and will use the new Company X Singles Fun Run logo:

Main event entrance banner, 24’ x 3’, visible from Highway 11 and Exit 23;

A banner, 15’ x 5’, on the south side of SSC facing High Street;

A sign attached to the west side of SSC facing Castle Elementary School;

A 8’ x 2.5’ sign over the main entrance to SSC;

A 24’ x 4’ banner over pedestrian overpass on Highway 14;

32 directional signs on city streets leading to the event.

(Note - All outdoor signs require City approval and must conform to the standards determined by City bylaws. It will be the responsibility of SSC to obtain the necessary City approvals for all event signs.)

Other Signs

SSC will have the right to sell the naming of other event assets, such as, the start line banner, the finish line banner, runner vests, gift bags, and refreshment tent to other sponsors.

SSC will have the first right of refusal for these sign sponsors to ensure that they are protected against the encroachment by competitors;

All signs erected during the event will display the name “Company X Singles Fun Run”.

Other Name Changes

The Singles Sports Complex also agrees to change the event name to the “Company X Singles Fun Run” and display the new logo with that name on the following locations and collateral:

On the facility and the event website;

On all letterhead, brochures, event programs, media releases, fax cover sheets, internal memoranda, newsletters and similar communication materials produced by SSC in preparation for the event, during the conduct of the event and after the event;

In the SSC promotional brochure, sent out to 75,000 homes, three weeks before the event;

In any purchased media advertising and public service announcements in print or electronic form.

Additional Promotional Opportunities

Company X and SSC will arrange a media conference to announce the new event name and brand;

Company X will receive a prominent role in the opening ceremonies of the event, using a spokesperson to be determined by Company X;

During the event, Company X may use two multipurpose rooms in SSC at its discretion;

Company X employees participating in the event will receive three custom training sessions designed and led by SSC employees, at times to be determined prior to the event.

Obligations of Company X:

In consideration for the naming of SSC Singles Fun Run and associated benefits, Company X agrees to provide SSC with the following:

$150,000 payable upon signing the agreement;

In addition to this fee for the rights to name the event, Company X will pay for the design of a new event logo, the cost of sign and banner design and replacement associated with the name change, and the costs of design and printing of all other material and collateral associated with the name change;

Company X will pay for any publicity it seeks related to the name change that is in addition to the promotion of the event planned by SSC (see schedule A);

Company X will promote SSC and the event through a link on its company website;

Company X will promote SSC and the event through use of its other corporate media such as employee newsletters, supplier reports or other similar communications.

Other Considerations

Naming of the SSC Singles Fun Run does not include or imply any participation by Company X in the governance or the management of SSC;

The rights and obligations of Company X do not extend beyond those specified in this document;

Similarly, SSC will not to interfere in any way with the business of Company X and indemnifies Company X from any liability that may arise from the association with Company X. Similarly, Company X indemnifies SSC from any liabilities that might arise from its association with SSC;

The agreement will remain in effect from date of signing until December 31, 2012, after which time, Company X will have the first right of refusal for the name of the 2013 event.

The process of getting corporate sponsors for an event is described in another related hub. I have also done a hub that illustrates how to write a sponsorship proposal.