Five key pointers in structuring sponsorship investments

Amrut Joshi

 

 

ACTIVATE, ACTIVATE, ACTIVATE!

Once a sponsorship agreement has been executed, both parties need to constantly monitor and maximise their respective rights, by deploying a range of creative and meaningful activation platforms. There are several media available to sponsors to deliver their message: print, radio, television, internet, in-stadia advertisements, product/service displays, designing of collaterals such as t-shirts, caps, flags, mugs, and creation of fan zones at consumer touch points. The choice of media would clearly depend on the extent of coverage of the event, the buzz associated with the event, and the costs associated with delivery through various media.

The nature of activation platforms and the timing of sponsorship activation programs vary according to the nature of the property. To illustrate, while an Olympic Sponsor has at least 2-3 years to land the sponsorship rights deal and design appropriate sponsorship programs, the same luxury of time may not be afforded to a sponsor of a one-off event (say the title sponsor to a test match series between India and Australia). Therefore, while an Olympic Sponsor would need to have a long-drawn activation plan (involving multiple activation platforms), which builds up to the Olympic Games gradually, a test match sponsor would need to have multiple activation platforms in a short time period, which can still deliver a significant ROI on its sponsorship.

However, in both examples, the key lies in trying to create a unique brand message around the property, which can connect with customers and employees. By designing multiple activation platforms, a sponsor is likely to create a higher impact on consumers and thereby command a higher brand recall. It is essential for a sponsor to ensure that their activation programs add value to the event experience for the attendees and ensure that their experience with the event is long-lasting and positive.

To achieve target market satisfaction, it is also essential for a sponsor and a property rights holder to safeguard against designing any activation platform which distracts or diminishes from the experience sought by the attendee/fan. For example, a television sponsor of a cricket match and a property rights holder of a cricket match should, at the least, ensure continuous ball-by-ball coverage of the game, and not distract the viewers’ by airing commercials in the middle of the game!

From a legal perspective, a sponsorship agreement should facilitate the creation of multiple activation programs, and provide for appropriate revenue sharing mechanisms between the sponsor and the property rights holders.

UTILISATION OF MEASUREMENT TOOLS TO DETERMINE ROI

As more events and properties have become amenable to sponsorship opportunities, the costs associated with obtaining a sponsorship rights deal has increased. Not surprisingly, ensuring accountability is a major issue for sponsor organizations. It is therefore critical to measure various aspects of a sponsorship investment, before determining the success or failure of such investment. There are various components in the measurement of a sponsorship investment, including:

tangible measurement components such as media exposure (which can be attained by studying the location, duration and size of the brand exposure across various media such as television, radio, print and internet);

cognitive measurement components such as market research studies on the brand recall value, top of mind association of the sponsor with a property by the consumer, consumer reactions and intent to purchase etc.; and

behavioral measurement tools such as determining whether there has been any significant increase in sales figures around the time of the event, channels of engagement with customers and whether there has been an increase in the competitive advantage vis-à-vis the sponsor’s direct competitors on account of the sponsorship investment.

Ultimately, the above tools enable both a sponsor and a property rights holder to (a) determine the ROI on its sponsorship investment; (b) place an appropriate value on the property; (c) validate prior sponsorship propositions and set expectations for future propositions; and (d) determine whether a relationship can be renewed or whether an entirely new sponsorship package ought to be designed or whether the relationship needs to be terminated.

(Amrut Joshi is an Advocate at MMB Legal, a law firm based in Bangalore . Amrut can be contacted at amrut@mmblegal.in ).