In Kind Sponsorship: How to Upgrade to Cash Sponsorship

I have been getting a lot of questions about in-kind sponsorship lately. Not so much focused on getting in-kind, but how to get your in-kind sponsor to “upgrade” to cash. In my post “The Seven Deadly Sins of Sponsorship,”

I speak out against in-kind sponsorship as one of the deadly sins. In a world where cash is king, I am not a big fan of in-kind sponsorship.

There, I said it!

I am also not a fan of the philosophy that you should use sponsorship to cover off your expenses and let ticket sales drive your revenue. The hard costs of your event or program have nothing to do with the market value of your assets.

Getting “free” wine, AV, lunch, dinner, photo booths etc. is actually costing you thousands of dollars. Why? Because the value of the wine as a marketing opportunity is unrelated to its hard costs. Every logo placement, call out from the stage, and opportunity to connect your sponsors to their audience has value.

Apply your valuation calculator to your wine (and all in-kind sponsorships) and sell it to companies who care about your demographic. Bonus tip: I never sell wine sponsorship to wine producers. Instead, I look for professional services firms who want to connect with my audience.

Is In-Kind Sponsorship Ever OK?

In a word: yes! While it’s true that in-kind sponsorship is probably costing you money, the decision to get “free stuff” instead of seeking a cash sponsor is highly personal and based on your goals, time, resources and ability to activate your sponsorship.

The other scenario that I think warrants in-kind sponsorship is when you are getting services or products that offset genuine hard costs to your or your organization. For example, your law firm offers you free services that you budgeted $10K for in exchange for $10K in sponsorship. You are unlikely to find a “legal services” sponsor like you would a wine sponsor and if you are avoiding budgeted hard costs, a trade is in order. A penny saved is a penny earned, after all. If you are giving away sponsorship for a “nice to have,” then you have to budget for the opportunity costs of not being able to sell those tickets, exhibit space or title sponsorship.

The take home message is to be careful and to use your valuation calculator for every single asset you have. This way you know exactly what you are giving away as an in-kind benefit.

Moving Sponsors from “In-Kind” to Cash

So, you’ve been getting free wine, lunch, product samples, AV, posters etc. from “sponsors” and you’ve been giving them the corresponding sponsorship along with a slew of benefits for free. How do you move them from in-kind to cash?

Let me answer with a story:

You go to the same restaurant every Friday. Every Friday your server brings you free dessert, free coffee and free cocktails as a thank you for ordering the steak and lobster and for being such a great customer. After six months of this, your server gives you your bill and has charged you for all of the things he has been giving you for free. How would you feel? Will you be back? Will you agree to all the extras next time?

Once you tell your prospects that the value of the things you are giving them is $0, aside from the hard costs of the product, you are going to struggle to prove that your brand and audience is worth more than $0.

If we go back to the narrative, one could argue that there is a market value for all of the free stuff you got…but it doesn’t mean you are going to pay it. The same is true with sponsorship. In other words, if you have been giving stuff away for free…you have created a market value of $0 to that “sponsor.”

In-Kind Sponsorship Sales Strategies

Here’s what I suggest. First, run all of your in-kind assets and related benefits through your valuation calculator to get a sense of the real value. Next, present the valuation to your in-kind sponsor and tell them how much you appreciate their support. Let them know that your plan is to move to charging the full market value to all sponsors over the next three years and that you want to talk to them about their marketing goals.

Find out what they really want out of their sponsorship investment. Maybe giving you product is only part of the equation. Once you know what their goals are, maybe you can sell them another type of sponsorship tailored to their needs. They may walk away, and you should be ready for that. If they do walk away, make sure you have done all of the other steps in my article “The Five Stages of Sponsorship” and you will be in a good place to reach out to new prospects who value your audience and will pay for access to that audience.

In-Kind Sponsorship Best Practices

Something I hear a lot of is this: a property gets food given to them for an event for free. They accept the food and then the property goes out and gets a cash sponsor as well. The cash sponsor trumps the in-kind sponsor in terms of recognition and you end up with a very unhappy in-kind sponsor.

The catch in upgrading your in-kind sponsors, if there is one, is that you can’t double dip! If you want a cash sponsor, you need to buy the food, wine, signs etc. yourself. But it isn’t really a catch because when you use this approach you add the hard costs of product to your valuation, which is passed on to the sponsor anyway!

So how do you get your wine sponsor to move up from giving you free wine to paying you for the right to give you wine? The same way you sell all sponsorship: define your audience, define your assets, value those assets and meet with your prospects to find out what they want to accomplish.