Sponsorships: Objectives, Selection, Expenditure, Evaluation and Termination (2024)

Read this article to get information about the objectives of Business Sponsorships: it’s selection, expenditure, evaluation and termination!

Sponsorship is a business relationship between a provider of funds, resources or services and an individual, event or organization which offers in return some rights and associations that may be used for commercial advantage.

Sponsorship allows a business to demonstrate its affiliation to the individual, event or the organization that it has chosen to associate with. The patrons or enthusiasts of the sport, event, organization, or the individual that the business is sponsoring should be current for prospective customers of the business, and they should feel grateful to the business for helping out their favorite individual, event, sport or organization. The idea of sponsorship is to develop strong relationships between the business and its customers due to their common ties with the sponsored individual, event, sport or the organization.

1. Objectives of Sponsorship:

Sponsorship of an individual, an event or an organization can be treated as a strategic decision by the company. Many companies make the mistake of sponsoring an event merely because of its popularity. Sponsorship should not merely be based on popularity polls. Any such sponsorship decision must create stronger, positive bonds between the company and its customers due to the common interest (the event or the organization or the individual being sponsored by the company) that they share.

i. Gaining publicity:

Sponsorship provides the sponsoring company an opportunity to create publicity in the news media worldwide events such as Olympics and soccer world cup provide the platform for global media coverage. Millions of people watch these events, and sponsorship of such events can provide brand exposure to millions of people.

Some events such as golf have a more upmarket profile, and a game like football is followed widely. The publicity opportunities of sponsorship can produce major awareness shifts, and a brand can become a household name almost overnight when it sponsors a mega event.

Sponsorship of music, the performing arts, and sports creates entertainment opportunities for the customers of the sponsoring company. Attendance at sponsored events can be used to reward successful employees, customers and trade partners.

ii. Fostering favourable brand and company associations:

Sponsoring a mega event like Olympics or soccer world cup ensures almost instant international recognition. There is huge amount of prestige associated with sponsoring such big events and the sponsoring companies’ credibility soars up. They are considered as big as the events they are sponsoring, as it is known that big money is involved in sponsorship deals of such events. A company advances to the big league as soon as it associates with a mega event.

But a company can also foster favourable brand associations by sponsoring special events like some arts or some charities. The patrons of the events will start seeing the sponsoring company favourably.

iii. Improving community relations:

Sponsoring an event or an organization which will help the community where the event is being organized or where the organization functions is always a good idea. Sponsorship of old age homes, for instance, can foster a socially responsible, caring reputation for a company. Developing community relations is the most important sponsorship objective for both business and consumer companies. There are usually many such opportunities to help a community. Two or more companies can join hands to sponsor a programme beneficial to the community where they are based.

iv. Creating additional promotional opportunities:

Bags, pens, etc., carrying the company logo and the name of the event can be sold to a captive audience. Flags and banners bearing the name of the company and the event can be displayed at the site of the event and outside to boast of the association.

This is especially important when there are many companies sponsoring the event. It is important that the company takes leverage of the association between itself and the event by promoting the association aggressively. Where the brand can be consumed during the event, it provides an opportunity for customers to sample brands.

2. Selection:

Sponsorship can be a one-off deal or it can be a continuing association. While the promotional leverage from sponsorship is important, it is more crucial to assess the impact that the association will have on the perceptions of the customers and other stakeholders towards the company.

Selection of an event or a programme to sponsor should be undertaken by answering a series of questions:

i. What the company wants to achieve from the sponsorship deal:

Is the company looking for increased brand awareness? Or does the company want to improve its image, or its community relations? Or is it looking for entertainment opportunities for its customers and employees? The choice of the individual, the event or the organization that the company will sponsor should be governed by what it wants to achieve from the sponsorship deal.

If the company wants increased brand awareness, it should get associated with mega events like soccer world cup. If it wants to improve its relations with the community it is a part of, it should a sponsor a literacy programme for the locality. And if the company wants to improve its image, it should sponsor a dying art or an event which would not take place if the company does not pitch in.

ii. Personality of the event should match the desired brand image:

It is easy to get enticed by the promotional opportunities of mega events but if that is all that the company is looking for in a sponsorship deal, it will be better off putting the money in advertising. It will at least have more leverage in deciding how to spend the money in advertising than it has when it puts the same money in a sponsorship deal.

Sponsorship should be used to shape the personality of the sponsoring company. If the company sponsors a prestigious golf tournament, the motive should be to bestow an image of exclusivity on the company. The company should be very clear about the type of image that it wants to portray and then associate with an individual, an event or an organization that has a similar image.

iii. Target market:

The profile of the company’s customer base should match the likely audience of the sponsored event or programme. One of the most important objectives of a company entering any sponsorship deal is to influence its customers. This can only happen when the enthusiasts of the sponsored event are also the customers of the company. The enthusiasts of the event should feel grateful to the company for having sponsored their favourite event or sport.

iv. Risk:

What are the chances that the event or programme might attract adverse publicity? The sponsoring company should dig deep to find the individual’s the events, or the organization’s character and other associations. And as soon as the skeletons in the cupboard of the sponsored event, individual or the organization are out, the sponsoring company should publicly declare discontinuance of the relationship between the two. Any dithering on the issue would damage the interests of the sponsoring company. The company should try to ensure that its stakeholders are not hurt because of its association with the individual, the event or the organization.

3. The fit among the sponsor, event and customers:

Align the values of the event and the customers of the sponsoring company.

Traditionally customers have preferred one brand over another on the basis of functional attributes and price. But many categories have become commodities in these two respects. Customers increasingly base their purchases on factors such as emotional need and value alignment. How cool does one look in Ray-Ban sunglasses?

The right sponsorship demonstrates an emotional alignment with the target market. To a much greater extent than other marketing media, sponsorships communicate what the brand values are, and how aligned these are with the values of its target markets. The more are the values of the event and the customers aligned, more is the value derived from the sponsorship. If a person loves animals, he will be more inclined to buy from a company that donates to the Human Society, because his purchase from that company will say something about him.

4. Expenditure on sponsorship:

Expenditure on sponsorship is increasing due to:

i. Restrictive government policies in some products, such as prohibition on tobacco and alcohol advertising.

ii. High costs of media advertising.

iii. Large number of leisure activities and sporting events.

iv. Greater media coverage of events.

v. The reduced efficiencies of traditional media advertising due to heavy clutter.

vi. Although companies spend most of their sponsorship money on event sponsorship such as sports events, broadcast sponsorship, where a television or radio programmer is sponsored, is also attracting sponsorship money.

vii. An event may be sponsored by one company but coverage of the event may be sponsored by some other company.

5. Evaluation:

Understanding sponsorship objective, i.e. why an event or programme is being sponsored, is the first step in evaluating its success. Formal measurement of media coverage and name mentions and sightings, and the change in perception of the company’s stakeholders have to be undertaken.

It is important that there is a formal system to find out the gains from a sponsorship deal. It is often convenient to believe that gains would have accrued from the association with the event. It is also important to qualify the gains for the company in terms of whether it primarily gained awareness or whether it was able to improve its relationship with the community, or some other gain. The results of the evaluation process will be useful when the company is considering a sponsorship deal in future or when it has to decide the continuation or termination of a sponsorship deal.

6. When to terminate a sponsorship:

Terminate a sponsorship deal, even if it is a long standing one, if the reputation of the event has suffered. Companies sponsor events primarily to enhance their reputations. They want to leverage someone else’s credibility and image for their own benefit.

It does not make sense to continue associations with an event whose reputation has been tarnished, no matter how rewarding the relationship has been in the past. IBM walked away from a 40 year relationship as a top Olympic sponsor in the wake of findings about corruption in its site-selection process. In 1968 Pepsi-Cola ended its support of the Miss America contest because the event no longer represented the changing values of America.

There is always a danger of running into a sponsorship deal with an event engaged in sordid deeds not known to the public yet. It is imperative that marketers display due diligence when selecting a partner for a sponsorship deal. A sponsorship deal with a partner with sullied reputation can alienate important customers.