Questions & Answers
Q. Are Sponsorships the same as donations?
A. Sponsorships are often confused with donations. A donation is just that - a gift of product or cash with little or no expected return. Sponsorships provide tangible benefits for the sponsor. Sponsorships are a business tool used by various companies to achieve defined marketing and communication objectives.
Q. Why do companies use sponsorship?
A. Companies undertake sponsorship to further many and varied objectives. The following are major reasons for sponsorship:
- Purchase of a significant marketing advantage
- To generate goodwill towards the sponsor
- As a cost effective alternative to mainstream advertising
Sponsorship Industry Terms
Agents or Brokers have the right to sell a sponsorship property and take a commission or receive payment.
Ambush Marketing occurs when a company associates with an image or an association it has no rights to:
The Trojan Horse ambush is named after the famed horse of ancient Troy and is committed by sponsors who ambush co-sponsors and the title sponsor and take rights they are not entitled to OR appear to be a far more major sponsor player than the rights they have purchased.
The Guerilla ambush is committed by non sponsors who steal a perception of being a sponsor, when they have not bought any rights to the property.
Contra is where a company's products or services are provided in lieu of, or as well as, cash for the payment of a sponsorship. Contra occasionally suits both parties, however there are taxation and valuation implications to consider.
Corporate sponsorship is the provision of financial or material support (cash, services, or product) by a company for an independent activity not directly linked to the company's normal business.
Cross promotions are where two or more sponsors group together and create a promotion which mutually benefits all parties involved. These are a good way to extend the benefits of your sponsorship.
Donations are a a gift of product or cash with little or no expected return. Sponsorship is not a donation. Sponsorship is a business tool used by various departments of companies to achieve defined objectives.
Grants are often once off payments. They are given, generally to assist in the development of a project, or purchase of an artwork and are generally of a non commercial nature, being given by either government or a trust.
Marketing Sponsorships are the provision of cash or contra (free goods) in return for access to the exploitable potential associated with that entrant, event or organisation. Marketing Sponsorships are used primarily to promote products and services to targeted market segments, reinforce a product brand or promote sales activities.
Naming rights sponsor is an alternative to a principal sponsor and receives identical rights and benefits with the addition of having the right to have the sponsors name added as a prefix to the organisation or event name.
Niche marketing is communicating to a tightly defined market which is usually a portion of the overall market of the product. Through niche marketing it is possible to gain a position of strength and appear as the dominant and only brand to that segment.
Official supplier - this status provides the sponsor with the right to claim themselves as being an official supplier to the organisation in return for providing free or discounted services and goods, or simply the right to be the sole purveyor of goods in a particular category.
Packaging is the method in which you structure the benefits for a sponsor and the relationship they have to the seeker and other sponsors. There are five methods of packaging sponsorships: the Level Playing Field, the Hierarchal Package, the Sole Sponsorship, the Pyramid, and Ad Hoc. Each provides different benefits to the sponsors and varying returns to the seeker.
Partner is usually sought where an event or organisation requires substantial funds to underwrite a project and the partner will enter into an agreement with the seeker of the funds and will have rights to the project or venue for its useful life or for an agreed lengthy period. Usually funding is once off at the commencement of the project.
Partnership is a joint activity in which business objectives of both organisations are met.
Philanthropy is the intersection of societal and corporate needs.
Philanthropic sponsorships make the company feel good and often provide taxation concessions. Philanthropic sponsorships sometimes generates goodwill towards the company, however, few, if any, benefits are returned, or expected.
Policy document is an internal document and contains items such as the approval processes required, levels of expenditure and the rules as to what is allowed to be sponsored and what isn't.
Principal sponsor is the main sponsor who has rights to have their identity on everything and featured at least twice the size of any other sponsor. They pay a premium and get the most and the best benefits. Only one sponsorship can be sold at this level.
Property is the opportunity (proposal) to be offered to a potential sponsor, whether it be an event, organisation or entrant.
Real price is the real cost to the seeker of having a sponsor.
Sales promotions are short term incentives provided to encourage the consumer to buy the product and are also used to make a product stand out from the clutter. The strategic use of sales promotions are a common extension in major sponsorship programs.
Selling on some sponsors who are manufacturers sell on or give sponsorship benefits they have purchased to their retailers so providing them with incentives to increase their customer base. Common benefits sold on include event ticketing, in store appearances and signage. This activity should not be confused with sponsors running consumer promotions. In this case the benefits are handed to the retailer who then acts as a defacto sponsor.
Sponsee the recipient of sponsorship from a sponsor. Could be an event, an organisation or an individual entrant.
Sponsor is the purchaser of sponsorship rights. For the purposes of this manual, either a business or a business's representative.
Sponsorship is generally recognised as the purchase of the, usually intangible, exploitable potential (rights and benefits), associated with an entrant, event or organisation which results in tangible benefits for the sponsoring company. See also Corporate Sponsorships, Marketing Sponsorships, and Philanthropic sponsorships.
Signage is any logo or message on a surface.
Sponsorship guidelines are designed to give sponsees detailed information on what is and is not sponsored by the company, and how to apply for sponsorship. These guidelines commonly list what information is required to assess the proposal.
Sponsorship plan should state how you are going to achieve each objective, detailing activities that will be implemented and it should include a timeline and quantifiable outcomes.
Sponsorship policy is a document that details the company's ground rules for entering into sponsorship arrangements.
Sponsorship strategy is the basic approach to sponsorships within a company. It sets the overall course for achieving stated objectives and provides the foundation of all sponsorship business plans.
Television sponsorship is basically an advertising package with extra rights ie, pull throughs, opening and closing billboards, exclusivity.
Title rights sponsor is an alternative to a principal sponsor, receiving identical rights and benefits with the addition of having the right to have the sponsors name added as a prefix to the organisation or event name. Title rights is a term used more commonly in the USA, but gaining acceptance in the Australian sponsorship market.
Traffic growth attractions are attractions used to attract store traffic and can include placing personalities in store, displaying a racing vehicle.
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