To Sponsor or Not To Sponsor: That is the Question

As an entrepreneur you are doubtless asked on a continuous basis to buy sponsorships for various events. In the marketing and communications industry, we are always tasked to measure the value of advertising dollars, and more specifically to measure the ROI of every dollar spent. In the world of Web 2.0, the landscape of marketing has become so much more measurable than in days of yore (when our only tools were direct mail, print ads, telemarketing and good old fashioned networking), the question arises as to whether or not these brick and mortar styles of advertising still hold any value.

The next time you’re approached by an event to become a sponsor, how will you analyze whether or not it’s worth your time and money?  There are a few things to consider:

Do you and the event share the same target audience?

If you’re a B2C company and it’s a B2B conference, how will sponsoring the event help you reach your clients or customers? If you’re ultimate goal is to sell a product to an end user that is an individual and the attendees of the event are other professionals in the same vertical, you need to analyze the value of the reach you’ll gain to that market sector.

What do you get for the money?

Steve Feldstein is a marketing and advertising veteran in the home entertainment and consumer electronics industry, with a resume that includes a who’s who of gold-standard consumer brands including Fox, Disney and Sony. His take: what do you get for the money?

“It depends on what’s included in the sponsorship package,” he says. If, for example, it’s a few hundred bucks to slap a logo on a flier for a local community event and you can afford it, go for it. “Something like that can really look to your customers like you support your community, and there’s value in that.” Make sure, he goes on, to find out who the co-sponsors are and to make sure that you want to be seen in their company.

If you’re asked to pay a few thousand bucks for a conference sponsorship, analyze the cost to value ratio, Feldstein advises. “It may be worth it if you get to speak on, or even moderate, a few panels. That kind of exposure can really boost the brand.” But again, he warns, make sure that the audience at the conference is going to reach to your target. “There’s value in it if your message is related to the right audience.”

I asked these same questions of Dorrit Ragosine, of Nomad PR. Dorrit has been a colleague of mine for years, and has done marketing and PR campaigns for just about every imaginable entertainment business in the world (Dreamworks, Disney, Fox, MGM, to name a few).  “Even with the measurable impact of digital connection, nothing can replace in-person, one-on-one connection.  Humans are tactile and visual creatures that absorb information more readily when it is delivered in the physical realm than in the cloud.  Sponsorships at events, conferences and seminars add that messaging layer and are particularly powerful when you have personnel on the ground to evangelize your product whether via panels or conference social events.”

So, what if you don’t have the personnel on the ground? In my opinion, sponsorships are great if you’ve got the staff and the time to leverage them properly.  I agree with Steve that if you’re asked to throw a logo up on a flier for a couple hundred dollars and that will buy some goodwill with your customers (e.g. a charity event) go for it. Keep in mind, though, that the way to gain actual BUSINESS from an event like that is to attend the event and to aggressively make yourself known as a co-sponsor.

Have you ever been to an event?

If it’s a conference, make sure to attend before you agree to write a check. If it’s a smaller event or a more local one, make sure that you attend at least one event that the host has coordinated before you agree to become a part of it. You need to make sure that an event is well-organized and well-attended before you commit.  Always, always do this!

Are you conspicuous by your absence?

As your business grows and your name brand becomes more directly linked to your industry, how will it impact you if you start saying “no” especially if it’s a conference in your vertical market? What will it do to your business if you’re not there, but your competitors are? This is something that should be weighed carefully, and only considered as a “must” if your brand is already hovering above the radar.

I’ll give you a solid example: in my past life, I was the director of communications for a press release distribution service. We had two major competitors and our “industry” as such had two major conferences per year. We were constantly in a three-way race (such is life in a niche business) and we absolutely had no choice but to splash our logo and our presence as much as possible at those two annual events. Even if we were well represented at the event with our staff, we had no choice but to spend the money creatively and wisely at these events to stay neck and neck with our competitors for business the following year.

In other words, you’ll know when the time comes when you simply don’t have the choice BUT to allocate the funds.

Ask yourself this question: “How can I measure the ROI from the expenditure?”

Ladies and gentlemen, I’m always, always, 100% of the time, coming back to this core question:  What is your marketing strategy? If you don’t have one, if it hasn’t been linked to goals and outlined with a budget, then don’t spend any money on anything until you’ve taken care of step one. Once you’ve done that (admittedly, in the first couple of years of business, this is easily one of the most challenging processes that you’ll undergo), then you’ll be in a position to determine what ancillary advertising revenue you can divert to event sponsorships.

Once you’ve done that, below is a simple check list that you can use to determine whether or not the money is going to be well-spent:

1.  Do I have the discretionary budget to cover the costs?

If the answer is “no” and you have to divert funds from your tactical marketing plan, then I’d advise that you pass and let it come back around again. If it’s an annual event (or one that’s even more frequent) there’s nothing wrong with saying “Thank you, but now’s not a good time for me, but please consider me as a sponsor in the future.” 

If you answered yes, go to step 2.

2.  Will I have to hire additional staff to leverage all the benefits from the event?

This is important!  If you lay out some money to put a logo on a flier and you can’t attend the event, really, what’s the point? Unless it’s for a cause that you want to align yourself with AND you can afford it AND you can be there in person, I’d say let it pass.

IF, however, the answer is “yes” go to step 3.

3.  Do the event, but keep really accurate records of the contacts you make as a result.

I remember a boss of mine, years ago, said “It’s always so tough to measure the ROI of these things” (referring to a day-long conference that I thought strongly we should sponsor at the time). You could have crushed me with a feather. 

Really? It’s tough to keep a list of contacts that you got from the conference (or tag them appropriately in your CRM database) and determine how much, if any, business resulted from those contacts?

Determining the ROI from an event sponsorship requires two things: basic organizational skills and a calculator. Don’t assume that just because it was a big event and that you handed out a lot of business cards that the money will just flow. Keep good records, follow the results so that you can…

4.  Determine if it’s worth the expense the next time you’re asked to sponsor the same event?

I think that question should always answer itself in one of two ways: yes it was, or no, it wasn’t. Period.

In closing…

Some other thoughts on the subject: events and sponsorships are an overall tactic within the umbrella of your marketing strategy. They should coexist with your existing social media and online media plans. They are complimentary, not competitive. They can be effective and helpful, but only when the right kind of analysis is employed to measure their worth.  As always, if you have any questions, it’s probably a good idea to consult a professional.