7 Sponsorship Valuation Questions, Concerns and Common Mistakes Part One
Before you dive in, if you are looking to determine the value of your sponsors , check out these titles in our “sponsorship valuation” series:
Sponsorship ROI Metrics: Approaches to Measurement and Evaluation
Tangible vs. Intangible Sponsorship Benefits Defined
Seven Sponsorship Valuation Questions: Part Two
Sponsorship Valuation Best Practices
Essential Guide to Sponsorship Valuation
If you’ve only skimmed through the information in this guide (which, you really should take the time to read everything), then spend some time with this section at least. It’s a recap of all the steps needed to complete your sponsorship valuation.
I recently ran a session all about sponsorship valuations. In that session we had people from all over the world and sponsorship seekers of every size and property (from galas to sports to naming right…and everything else). Out of this session came some questions about valuing sponsorship packages that I think will be helpful to a broader audience.
Before you continue reading, make sure you check out my post on sponsorship valuation best practices where I describe in detail the process of valuation.
Here are some highlights with my responses below:
Q1: What is the most valuable asset to a company when deciding on sponsorship?
I get this question a lot…as in several times a day. Whenever I’m asked, I simply turn to my magic sponsorship crystal ball and pull out that one asset that every sponsor wants! Alright, your sarcasm detector should be red-lining now but I had to do it.
The absolute, best source for assets that your sponsors will love is…your sponsors! Ask them and they will tell you.
This question is rooted in the belief that sponsorship is all about creating a sponsorship package at the office, which you send to sponsors that you’ve never met in hopes that you guessed right as to what they’re looking for. Best practice calls for several meetings with your prospects before you send them a sponsorship package.
Need some help with this? Check out these articles:
Q2: How do you compete with other organizations that aren’t following proper valuation techniques and are undervaluing their assets?
I am tempted to answer this question with a question. At present, you are likely one of those sponsorship properties who has not done a proper valuation, has undervalued your assets and is undercutting your competitors. My question is this: how successful have you been in comparison to those sponsorship seekers who have created a proper inventory, done a market valuation and are meeting with their prospects to tailor every single sponsorship package they create?
Your secret weapon is understanding the sponsorship sales process, engaging your prospects in that process from the beginning and knowing the real value of what you have to offer and the power of your audience.
Q3: How detailed do we need to get when valuing assets? Do you need specific values for each item or can you assign a broader value to “recognition on printed marketing materials”?
When you are involved in sponsorship marketing, you are selling a product. Your customers want to know exactly what they are getting so they can determine the value of the assets you’re offering and so that they can measure whether or not you delivered. The other advantage for you is that if you promise 50 branded flyers and instead deliver 125, you get to tell your sponsor you over-delivered in your fulfillment report.
Showing your sponsor a $10,000 price tag for “branding in printed materials” is almost completely meaningless. Showing your sponsors that you are giving them $20,000 worth of value for $10,000 in an itemized list means you will wow them every time.
Q4: How do you add more value without additional expenses?
My initial reaction to this is twofold: you can’t…and why are you worried about cost? Sure, there are things you can do that don’t cost money, like making key introductions at your event, including your sponsor on mailings that you already planned to do, giving out product from your sponsor etc., but generally speaking, if you are offering good sponsorship activation opportunities, they are going to cost money.
When you add an asset to your inventory that has hard costs, you bill your sponsor for those costs anyway. Add to that all of the branding opportunities, speaking opportunities, goodwill, access to your audience etc. and that $1,000 you’ve spent becomes $10,000 very quickly.
If your goal is to have no expenses, but no revenue, then be concerned about adding costs. If your goal is to bring in as much money as possible, then you should expect your expenses to increase as well. If the ratio of expense to revenue is going up (and your ROI) is going down then I would argue that your valuation is flawed.
Want to find the answers to other burning questions about sponsorship valuation? Stay tuned for part two coming shortly!
ABOUT THE AUTHOR
Chris Baylis is the President and CEO of The Sponsorship Collective and a self-confessed sponsorship geek.
After several years as a sponsor (that’s right, the one investing the money!) Chris decided to cross over to the sponsorship sales side where he has personally closed tens of millions of dollars in sponsorship deals. Chris has been on the front lines of multi-million dollar sponsorship agreements and has built and coached teams to do the same.
Chris now spends his time working with clients to value their assets and build strategies that drive sales. An accomplished speaker and international consultant, Chris has helped his clients raise millions in sponsorship dollars.