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What Is Sponsorship

What is sponsorship?

As a consultant, I often get asked what is sponsorship. Unfortunately, there’s a lot of misinformation on the subject, and in this article, I clarify what sponsorship is and why it should be included in every business’s marketing strategy.

Like most endeavors, sponsorship has matured over time as competition for marketing budgets has increased. Back in the day, you could put a logo on something and call it sponsorship. However, those days are long gone.

Today, sponsorship is a sophisticated and nuanced marketing strategy that generates significant commercial benefits for those who understand its power.

Before we get started, let’s look at what sponsorship is not.

  • Sponsorship is not putting a logo on something. When you think about sponsorship, imagine you can’t use logos and focus on creating marketing opportunities for a sponsor
  • If you receive cash with no expectation of a return on investment, this is a donation, not sponsorship. Modern sponsorship assumes the sponsor’s objective is to generate some form of commercial benefit

Sponsorship terms

Now we know what sponsorship is not, let’s define some standard sponsorship terms.

Sponsorship – a form of marketing in which a commercial entity (sponsor) pays a rights holder (sponsee) to be associated with their property.

Sponsee – the recipient of the sponsor’s investment. Also commonly referred to as the rights holder or sponsorship seeker.

Sponsor – the commercial entity that buys the rights from a sponsee to market to their property’s audience.

Property – sponsee asset or collection of assets that a sponsor can leverage to derive a commercial benefit.

Audience – the people who participate in and engage with a sponsee property. E.g.:

  • Fans (audience) at a sporting match (property)
  • Members (audience) who attend an event (property)
  • Subscribers (audience) to a Youtube channel (property)

Audience Segment – the specific section of the audience the sponsor is interested in marketing to.

Leverage – to take advantage of the relationship between the sponsee and their audience to derive a commercial benefit for the sponsor.

Activation – the sponsorship-related marketing activities designed to enhance the audience experience around a sponsored property.

What is sponsorship?

Fundamentally, sponsorship is the commercial relationship between a sponsor, sponsee, and their audience.

  1. The sponsor pays the sponsee a fee for the right to market to their audience via the sponsee’s property
  2. The sponsor leverages this right to market to the audience, using an activation strategy to enhance the audience experience to deliver a commercial benefit
  3. The sponsee acts as a conduit between the sponsor and the audience to create a mutually beneficial relationship – a win-win-win scenario between the sponsor, sponsee, and audience
What is sponsorship?

Let’s look at two practical sponsorship examples:

Example #1

SponsorDigital camera company
SponseeState cycling association
Property5-day cycling tour
AudienceAvid and experienced cyclists who are heavily invested in the sport.
ActivationDuring the course of the tour, a professional sports photographer is employed to take professional actions shots of the cyclists using the sponsor’s equipment.

Each evening the photos are uploaded to social media, where they can be shared and tagged by cyclists.

At the end of the tour, the best photos are made into a photo book for cyclists to purchase.
Commercial BenefitProduct showcase and drive retail sales.

Example #2

SponsorElectric car company
SponseeFestival promoter
PropertyAnnual alternative music and arts festival.
AudienceMusic lovers, aged 35 to 45 who are early adopters of green technology and care about the environment.
Activation“Party today and protect the future; go electric” – run a competition where fans can win the chance to meet their favorite artists while on a test drive in the sponsor’s car.
Commercial BenefitStrengthen the emotional connection between the brand and the audience. Increase social media chatter.

Creating a win-win-win scenario

For a sponsorship to be successful, there must be three winners.

Winner #1 – The Audience. Any sponsorship must enhance and add value to the audience experience.

Winner #2 – The Sponsor. Tap into the emotion and passion of the audience and connect them with the sponsor in a meaningful and positive way that delivers a commercial benefit.

Winner #3 – The Sponsee. Fairly compensated for their expertise, effort, and access to their audience. The sponsorship must strengthen the relationship between the sponsee and the audience and no detract from it.

Why sponsorship is good for business

Sponsorship provides laser-targeted activation opportunities that other channels can’t match. This focus elevates sponsorship above other channels, like more traditional interruption-based marketing, including advertising or telemarketing.

Sponsorship is all about enhancing the audience experience, weaving the sponsor’s brand into a natural and memorable exchange with fans.

Here are six reasons why sponsorship is good for business:

  1. The halo effect – the positive influence that extends from the sponsee to an associated sponsor
  2. An engaged and passionate audience of ready-to-go fans
  3. Irresistible experiences – create irresistible and memorable experiences for the audience and align with the sponsor’s objectives
  4. Social proof and influence – the phenomenon where others influence our behavior
  5. Interactive content that is fed into the marketing mix to promote the sponsor and strengthen relationships with current and potential customers
  6. Word-of-mouth referrals – combining an engaged audience with the halo effect and social proof creates an environment rich with word-of-mouth referral opportunities for sponsors

For more detail on each benefit, see 6 reasons why you should be sponsored.

Different audience segments

Every sponsorship opportunity will have several potential audience segments based on the nature of the property and the commercial objectives of the sponsor.

For example, suppose the sponsor is looking to increase direct sales through new customer acquisition. In that case, they will be looking for people in the audience who have not purchased from them previously and fit their target market.

However, another sponsor may be looking at the opportunity from a completely different perspective. Their commercial objective is to strengthen their relationship with retailers to purchase more products for their stores. In this case, the audience segment is current retail partners who have an affinity for the property. Hospitality and money-cant-buy experiences are excellent activation strategies for this audience segment.

Here are some audience segments a sponsor may want to influence:

  • News customers
  • Existing customers
  • Suppliers
  • Staff/employees
  • Business partners
  • Decision-makers and bureaucrats

Types of sponsors

Sponsors fall into two broad categories, endemic and non-endemic.

  • Endemic sponsors are directly related to the industry and have a natural affinity with the sponsee’s audience. This type of sponsor may be easier to attract and convert than non-endemic sponsors
  • Non-endemic sponsors are not directly related to the sponsee’s industry but have a more general connection with the audience

Take a motor racing team as an example. Endemic sponsors would include motor oil companies, car part retailers, and car insurers. In this example, a beverage, home entertainment, or construction company is considered a non-endemic sponsor.

Another example is eSports. Game publishers, console manufacturers, and gaming equipment retailers are endemic to the industry. For eSports, fashion retailers, car companies, and financial services are non-endemic.

Sponsorship types

Broadly speaking, there are two types of sponsorship:

  • Financial sponsorship – the sponsor pays you directly in cash. This type of sponsorship has the most flexibility, as you can spend the investment where needed
  • In-kind (or contra) sponsorship – the sponsor provides products and services instead of cash. While this type of sponsorship has less flexibility, it is very valuable if used effectively. Imagine you’re running an event; if an event hire company provides you with the marques you need as part of a sponsorship program, you can spend the cash you save elsewhere

A sponsor can include both financial and in-kind investment as part of a sponsorship program. For example, a car company sponsors a music festival. They provide cash (financial sponsorship) and courtesy cars (in-kind sponsorship) as part of the deal.

Note: It’s not sponsorship if a business offers you a percentage of any sales you make rather than direct financial or in-kind investment. A percentage of each sale you make is called affiliate marketing. It is a valid monetization strategy, but it’s not sponsorship.

Types of sponsees/properties

Sponsorship properties can range from international sporting teams to charitable events and personal youtube channels. It doesn’t matter who you are or what you do; sponsorship is for you if you can meet the following three criteria:

  1. You have an engaged and passionate audience who participate in and thoroughly enjoy what you do
  2. There are opportunities to enhance the audience experience and build relationships through sponsorship activation
  3. There’s potential for a sponsor to derive a commercial benefit from engaging with your audience through sponsorship activation

That’s it. If you can tick these three boxes, you’re ready to get sponsored. If you’re not convinced, here are several examples of property types that attract sponsorship all the time.

  • Individual athletes
  • Social media influencers
  • Charities, not-for-profit, and cause-related organizations
  • Performing artists
  • Digital channels, e.g., Youtube, blogs, and podcasts
  • Sporting teams
  • Events, galas, and tournaments
  • Festivals and conferences
  • Race meetings
  • Concerts, exhibitions, and artistic productions

Sponsorship benefits

Sponsorship benefits can take many forms and are divided into tangible and intangible categories based on the commercial objectives of the sponsor.

Tangible sponsorship benefits are quantitative and are easier to measure. For example, the sponsor may want to:

  • Increase the sales of a new product
  • Generate leads for a service
  • Increase visitor numbers to their website

Intangible sponsorship benefits are not so easy to measure. They derive from the powerful emotional connection between the sponsor, sponsee, and the audience. For example:

  • The halo effect
  • Prestige and exclusivity
  • Audience loyalty
  • Networking opportunities

Sponsorship activation

Sponsorship activation (sponsorship-related marketing activities) is all about enhancing the audience experience to trigger an emotional response that generates tangible and intangible sponsorship benefits.

The key to success is to understand what the audience expects from their experience and determine how the sponsor can enhance it in some way. Here are some examples of audience expectations:

  • Entertainment – I want to be entertained, and I want to have fun
  • Exclusivity – I want an experience that few others have; I want to feel special
  • Community – I want to spend time with like-minded people
  • Improvement – I want to improve my situation, be it mental, physical, or financial
  • Excitement – I want my heart to race; I want to feel the adrenalin
  • Contribution – I want to play my part
  • Gratification – I want to feel pleasure in myself and my surroundings

The role of the sponsor is to tap into these emotions and expectations through a thoughtfully crafted sponsorship activation strategy.

Next Steps

Ready to take the next step on your sponsorship journey? Here are some popular articles to get you started:

Happy sponsorship seeking, Kym.

Do you need help?

Schedule your FREE 30-minute sponsorship consultation today and take the first step to sponsorship success.

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