Sponsorship Valuation Basics

Valuation is a critical part of your sponsorship program, but it’s also one of the trickiest areas to master. 

I often have first-time sponsorship seekers ask me how much to charge for assets and whether they’re charging too much or even too little.

I’m here to help you understand valuation wholly so you can move forward with confidence in your sponsorship program. There’s lots of great information coming up, so make sure you check it out!

What Is Valuation?

To explain valuation, I have to talk about the phases of your sponsorship program, at least to a point. 

When you seek sponsorship, you’re searching for a company to offer you funding, promotions, in-kind gifts, you get the gist. They’re giving you something.

Like in many things in life, you don’t get something for nothing in sponsorship. You–as the sponsorship-seeking individual, company, or organization–must have something to give to the sponsor. 

That something is your assets.

An asset can be tangible or intangible, virtual or physical. For example, if you can offer the sponsor naming rights for an event, that’s an intangible asset. Signage and logos are physical, tangible assets that can also be virtual depending on the nature of your event.

In this post on sponsorship valuation, I have several more asset examples. Those include:

• Employee benefits
• Traditional or paid media
• Venue usage (different from naming rights)
• Pass-through benefits
• Mailings and newsletters
• Webpages
• Speaking opportunities
• Booth space or exhibiting opportunities
• Product samples and giveaways

At the beginning of the assets-gathering process, you should rattle off asset ideas irrespective of value or quantifications. Next, you want to create properties, which are groups of assets. 

Only then can you move on to the valuation process. To value your assets means to go one by one and determine the financial worth of each one. 

How Do You Do a Valuation? 

That brings us back to your main question: how do you value assets in a way that’s fair to the sponsor but still ensures you’re receiving the funding you require? 

Here’s how it’s done.

Where Your Valuation Numbers Should Come From 

As you sit down to value your assets, I recommend asking yourself a question. How much money would your sponsor pay for the same exposure, opportunity, or outcome elsewhere?  

For instance, let’s say one of your key assets is a series of social media posts. What would a brand pay for a similar campaign if they went to an ad agency or a team of marketing specialists?

What would it cost to create samples of a product to give away? To make signage? To acquire naming rights?

At the end of the day, sponsorship lives in the marketing department. By keeping that in mind when doing your research, you’re much more likely to come up with asset pricing that’s reasonable. 

Where Your Valuation Numbers Should NOT Come From 

You might have already done something like this as part of your sponsorship program. Perhaps you’ve spent hours combing the Internet, looking for the sponsorship packages of competing companies in your niche or broader industry. When you find the sponsorship package, you download it and even emulate it.

That includes mimicking your competitor’s pricing, sometimes down to the letter (or number, in this case).

You can’t rely on your competitors to inform the price of your assets. If you price yourself exactly like your competitors and offer the same assets too, then what’s the advantage of working with you? What do you offer that they don’t? That’s right, nothing. 

It gets worse. Where do you think your competitors got their asset pricing information from? Do you think they a.) made it up as they went along, or b.) valued their assets correctly? If you guessed A, you’re more than likely right.

Using your competitors’ asset pricing is like copying a test off someone in school who also doesn’t know the answers. You’re both going to fail.

Sponsors sometimes ask you where you got your asset valuation numbers from. Not all will, but enough do that you must have an answer prepared. 

What are you going to tell them, that you copied the values from someone else? So maybe you make up an elaborate lie about using some nonexistent market value as your baseline. 

If the sponsor believes you–which they might or they might not–and they decide they want to work with you again, they’ll expect you to someday produce more assets. They’ll also expect you to use whatever convoluted method you claimed got you your assets the first time around. 

Now you’ve dug yourself a hole that’s very difficult to get out of. 

That’s why you must use your own research to determine your asset value. Your competition can inspire your pricing, but you can’t lift asset prices directly from them. Market value is the more accurate pricing measure. 

Determining Your Asset Pricing

A valuation tells you what the worth of your asset should be, but that doesn’t necessarily mean your asset pricing needs to match those numbers.

What do I mean by that? Let’s say one of your asset collections involves social media. You tell the sponsor that for $10,000, you’ll send an e-blast to your audience and post about the sponsor 10 times on Twitter. 

Think about that from the sponsor’s perspective for a moment, would you? Through targeted social media advertising, they can scope out audience segments that just might belong to your company and then advertise to them without paying you a dollar. 

Sure, social media advertising isn’t free, but what the sponsor is doing would be a lot cheaper than paying you $10,000.

You have to give the sponsor a reason to pay you that much money. Your assets should revolve around areas that your company or organization excels in so you can deliver the highest quality assets that will drive the most outcomes for the sponsor.

For those assets that you’re not as confident in, I would suggest pricing them lower. 

Let’s use another example to explain why. This time, you know for a fact that your sponsor is inept at social media. If a marketing firm charges $10k for a Twitter campaign and you come in and offer the same services but for half the price, who do you think the sponsor will choose?

That’s right, you. 

You don’t want to lowball too much, of course. If all your assets are woefully underpriced, you’ll lack the funding you need for your event. Instead, you need a mix of high-value, mid-value, and lower-value assets to present to the sponsor.

Low value is not the same as no value, let me be clear. These lower-cost assets can be appealing to the sponsor if they’re trying to save money, but you shouldn’t be giving them cheap assets just because.

Organizing Your Assets

After you’ve valued all your assets, you need to put them together into a sponsorship menu, which is part of your sponsorship proposal. The menu organizes your assets and gives the sponsor a chance to browse your offerings at their leisure.

I wrote a very informative sponsorship proposal template that includes a handy section on how to organize your sponsorship menu. I recommend you give it a read! 

If there’s one thing to shy away from when putting together your sponsorship package, it’s tiered sponsorship menus. I know, I know, you’ve seen all your competitors do it this way, which should be reason number one why you don’t do it.

The other reason is that sponsors hate it. They really, truly do. A sponsor can see right through your tiered assets. They know you want them to buy the gold assets so you can get the most money, even though the sponsor only wants one or two of the assets in that tier, not all six.

Forget tiers, whether it’s gold, silver, bronze or blue, green, and yellow. Instead, always prioritize customizing your sponsorship menu. 

Ask the sponsor which assets are most appealing to them versus the least appealing. Then reassess the value of these assets. If you have several low-value assets the sponsor doesn’t care for, discard them without a second thought.

If you believe some of the assets are of higher value and the sponsor isn’t interested, you might broach the topic again. Still, just because an asset has a high market value doesn’t mean its value is high in the eyes of a sponsor. The asset might not solve any of the sponsor’s problems, so it’s extraneous.

When putting together your sponsorship menu, you often must let some assets go. If this is at the sponsor’s insistence, then do what must be done.  

Conclusion 

Sponsorship valuation is the process of assigning value to tangible and intangible assets you’ll sell to a sponsor. If you put together your sponsorship menu based only on what your competitors are doing, you’re short-changing yourself.

You can never be sure that your competitors aren’t guessing at their own assets, which you now just copied.

Instead, take the time and research the market value of your assets one by one. Then work with your sponsor to customize the contents of the sponsorship menu.

If you’re struggling to put this all together or if other areas of your sponsorship program could use a boost, please check out my free training called How to Grow Your Sponsorship Program!