One is a valuable tool in the sponsorship armoury; the other may be the harsh reality of offer and demand.
In fact, sponsorship evaluations provide a valuable sounding board to determine pricing, assess the market value and manage the sponsorship portfolio.
Why do I need to evaluate sponsorship proposals?
As each new proposal you build is customized to the sponsor’s specific objectives, you need the sounding board of evaluation every time. First, you do not want to put yourself in a bad place pitching a ridiculous amount to a brand: they will evaluate the true value of your sponsorship (read further)! Moreover, each package being different, you don’t want sponsors with similar levels to have a disproportionate amount of assets for the same rights fee. It’s a tool that will keep fairness, and maintain harmony between sponsors. As a general rule of thumb, you want the value of the proposal to be at least at par with the asking price. Sponsors are looking at a 2 to 1 or even 3 to 1 ratio, due to the uncertain nature of sponsorship. Evaluating your proposals will ensure that you get the right value for your proposal.
Sponsorship valuation is an essential part of acquiring a new property. In this day and age, all marketing expenses can be under scrutiny. This is especially true for sponsorship because of its very nature: the presence of hospitality and the entertainment aspect attached to it might raise suspicions that the decision to sponsor was motivated by top managers’ appreciation of a particular sport more than by sound market insight. John Kerry, secretary of state, raised the issue in his now infamous quote about sponsorship being wasteful. He tried, to no avail, banning companies that received bailout money to pursue such a marketing strategy.