According to IEG, between 15-20% of sponsors spend more than three times their rights fees on activation. The rest (of those that spend on activation) spend less than or equal to rights fees. IEG asks, “Why the discrepancy?” How can this variance be so high?
There are probably several reasons as IEG notes—and I concur. In my view, there are two that are most likely.
First, brands have limited budgets and therefore decide to sponsor higher-valued properties for prestige and have nothing to activate with.
Second, these brands have no idea what activation can do for them (they are also the ones who fail to measure ROI) and therefore do not invest in it.
When sponsors merely buy rights and some basic assets, they fail to leverage the investment. The target audience may be aware of the relationship between the brand and the property through signage and such, but failure to activate makes this a media buy versus a sponsorship. It is the engagement of the audience (either online, through point of sale, at the event, through QR codes or otherwise) with the brand in association with the property that the brand is paying for. If the brand fails to leverage this opportunity through investment in activation, the investment is a poor one.
But it is important to remember that all sponsorships do not require activation. As Don Mayo from IMI notes in his presentations, activation is not determined by a ration factor such as 3:1. It is determined from investment to investment. In some cases, the rights fees may have “built in” activation programs and no additional dollars need to be spent. The objectives may simply require association and brand building, and no real additional activation. Not all sponsorships require a massive activation investment.
Every day, I watch brands and properties negotiate deals. Too often, they fail to take into consideration the measurement of objectives and how to leverage a sponsorship investment across the multiple silos within the brand’s organization—from HR to sales, marketing to operations, finance to public or internal affairs, and government relations to logistics. When the “big picture” is not considered, a rights fee investment may not be the best financial decision. Unless you plan to conduct the post-sponsorship research; unless you have the metrics to measure success (or failure); unless you have both a rights fee budget and an activation budget, you may be playing in the wrong field.
I had lunch with an old client late last year. It was interesting to hear him speak of “the complexities of sponsorship.” He and his organization are quite successful, but as he noted, “I still need help navigating through sponsorship… that is why I need you again. We have an opportunity.” Sponsorship is not simple. To be successful, you must be strategic.
Activation is critical. As a brand, you must understand this. As a property, you must embrace it. Sponsorship is not about buying GRPs though an agency or being sold impressions on an outdoor buy from a local sales rep. Sponsorship is about a partnership. It is about mutual win-win scenarios that grow great and greater success together. That means rights fees, activation and trust all work hand-in-hand between a property and the brand.
These are just one person’s thoughts. Do you think Sponsorship is simple?