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Why Sponsorship Valuation is Like a Snowflake

by Emily Taylor
  
19 10 2010

I love unique individual expression.  I personally think it’s attractive and intriguing.  A small example: the fact that no two snowflakes are alike blows my mind; and when you consider that I live in Nebraska you know that I see a LOT of snowflakes!   In sponsorship, individual expression is also attractive to a consumer, meaning no two sponsors or brands or experiences with each one are exactly alike either.  And when customized activation of partnerships between properties and brands is required to meet the needs of each individual sponsor, this translates into a direct correlation into valuation: the value of your offering/partnership is not the same for any two sponsors. 
When we were in market research, before we had developed anything with SponsorPark, we started researching, interviewing and navigating through resources to try and uncover some of the major gaps in the industry.  One such “issue” that came up over and over again was the topic of sponsorship valuation.  More specifically, how do you place a value on assets and relay that to sponsors when the value of these same assets and benefits are going to increase or decrease based on the interests and needs/priorities of each individual sponsor?  Joe Smith from “up and coming” new company may be very interested in your ability to get his brand out so that it is more recognizable to his target market.  Coca-Cola isn’t probably as concerned with creating brand recognition (I think we all know who they are by now… worldwide) as they are relating to their target audience in an attractive way.  Your value will be established based on the customized partnership you offer each brand, and you can’t really place a value or price in front of that package until you better understand their marketing priorities.  The catch 22 is that you really have to start somewhere in order to communicate what it is you need from them.   These same sponsors need to know if you’re going to ask an approximate $500 or $5,000 from them in order to partner.  And I’m not sure that there’s a perfect formula or solution that we’ve yet seen so far that perfectly encompasses a solution in a neat and tidy way.
We do have a few insights and advice to offer when it comes to taking the plunge and assigning value the best that you can.

  1. First – sit down and inventory your assets/benefits.  Some of them are obvious, some may be creatively unraveled as you get you get going.  You have to first know what you have to offer before you can start assigning a value to it.
  2. Measure something.  For example – if you have a media partner that will be providing broadcast exposure for your sponsors, you can communicate exactly what that air time will consist of and what this partner values that offering at.  Some of the measurement is very clear, other measurement is somewhat subjective especially as it relates to items like popularity of your event/property, or exclusivity of a sponsored category.  But you can highlight measured growth of your audience participation – perhaps your fees are up 20% this year because your popularity continues to climb by 20-25% each year.    If you just throw a price out there a sponsor is blindly evaluating why you’ve priced it in such a way.
  3. If someone hands you a “perfect formula”- run.  There are companies out there that will hand you formulas for how to measure the value of your sponsorship.  If you use something like this you have to keep in mind that it’s a starting point and it’s very likely that you’ll customize this once you connect with a potential sponsor.  Now, I’m not saying it’s bad to use a service like this if you are looking for a starting point for your value, but just know that it might not translate perfectly to each sponsor you talk to.  If a company asks for a large chunk of your pocket change to assess your worth, and then claims it can carry over and apply to all sponsors – this just isn’t the case – don’t be played the fool.
  4. Communicate give/take after customization – when you’re creating a proposal for a sponsor, make it clear that while you’ve spent some time considering why the packages you’re offering are valued the way that they are, you’re very open to customizing the partnership to the needs of your sponsor.  This shows that you’re truly interested in meeting their needs, and who knows – this might increase the value of your partnership! 
  5. Consider sponsors who are going to most benefit from what you offer – if your clear pricing need is at xyz price, and the value will be worth even more to a particular partner for a specific reason – point it out, if you are charging a price that’s lower than the perceivable worth they’ll feel like they’re getting a deal. 

We know this is a tricky subject – if there are suggestions out there or tips for how to better approach valuation, please feel free to comment here!  And please realize that we are definite advocates of doing your best to value your offering the best that you can upfront; in fact, we require it in the way we layout our sponsorship listings, but it’s just that: a starting point.  We realize that this value can change because just as beauty is in the eye of the beholder, sponsorship value is in the eye of the partnering brand! 

 

Categories:   sponsorship sales | Sponsorship Valuation
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10/20/2010 6:47:14 PM #

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10/21/2010 10:54:28 AM #

Excellent post Emily, and so true.  I've never worked with a sponsor who just "bought" our standard sponsorship proposition - they always asked for or suggested customization to fit their brand's needs.
And that's just fine - because isn't the ability to customize so each partner benefits from the relationship one of our strongest assets when selling our properties.   And who does't like catching snowflakes.

Richard Paradise

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