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The Do’s and Don’ts of Negotiating Festival Sponsorship Deals

by | August 1, 2023

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Before you dive in, if you are interested in festival sponsorship, check out these titles in our “sponsorship for festivals” series:

Sponsorship spending is up, and festivals are one of the biggest areas of profitability outside of sports. Now is no time to be haughty if you have a sponsor on the line for your upcoming festival. You must know how to negotiate fairly and efficiently. How do you do it?

Here are some do’s and don’ts for negotiating festival sponsorship deals:

  • DO have targeted audience data ready
  • DON’T negotiate until you’ve had a discovery session
  • DO know your value
  • DON’T forget to customize assets and activations
  • DO be realistic
  • DON’T highball your offer
  • DO be flexible
  • DON’T get taken for a ride
  • DO have a lawyer review the contract
  • DON’T promise what you can’t deliver

Creating a mutually beneficial and lucrative festival sponsorship deal is simple if you follow these strategies. Keep reading for more information so you can pitch a successful deal to your next sponsor.

DO Have Targeted Audience Data Ready

When a sponsor aligns themselves with your festival, they’re not doing it primarily for your event. They want access to your audience.

That’s never an easy thing for sponsorship seekers to face, especially those that are very event-focused. I’m not recommending you understate your festival but position your audience as your primary asset, and you’ll have more interested sponsors to negotiate with.

Your sponsor wants to know as much about your festival audience as possible. No detail is too small, as it all helps the sponsor decide where your festival goers fit into their target market.

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You’ll have months to years of data depending on the age of your festival, but you really only want the current stuff. 

Longer-term data helps you more accurately predict attendance, but audience data from five years ago doesn’t let you understand today’s audience.

Begin by dividing your festival goers in the usual way, such as by demographics, psychographics, and geographics. 

However, I propose you go far more in-depth than you likely do, mining as much rich data from your audience groups as possible.

I recommend having at least 20 datapoints on each group, ideally around 25. As you do this, you’ll begin to notice that your audience groups shrink.

That’s okay because while they’re becoming smaller, the groups are also a lot more specific. This is the targeted audience data sponsors salivate over, especially if they see major overlaps between their target audience and your festival attendees.

Make sure you present the information in a digestible, appealing format, using graphs, tables, and charts to your advantage.

DON’T Negotiate Until You’ve Had a Discovery Session

When is the right time to begin sponsorship negotiations? You can’t pitch to a prospect in the hopes of signing a contract without understanding their struggles, and you can’t understand their struggles without having a discovery session.

Discovery is arguably the most important part of the sponsorship process, as it sets you up on the path to success (or failure). 

Treating the meeting like a sales session will result in you gleaning no valuable information about your sponsors. You’ll likely also get ghosted to boot.

Walk into this meeting with the mindset of an investigative journalist or detective. You’re trying to get to the bottom of why the sponsor can’t achieve the outcomes they seek. 

That means asking pointed questions about their current goals, their ongoing strategies, and new tactics they might employ.

Don’t be afraid to peel the onion further and ask follow-up questions if a response is unclear or vague. Even saying something like “tell me more” can get the prospect talking.

You don’t want to interrogate or intimidate the prospect, so let the conversation naturally flow between your questions. Maybe ask 10 questions during the entire meeting.

The information you generate during the discovery session serves as the basis of your entire sponsorship offer. You’ll review what the sponsor has tried and pivot in another direction, tailoring your activations and assets toward driving the conclusion they seek.

DO Know Your Value

Imagine walking into a job interview negotiating for a role and not knowing what you should be paid. You always research the salary information before applying, let alone sitting down to an interview.

However, sponsorship seekers often fail to calculate the value of their opportunity before they meet with a prospect or value incorrectly.

Taking a shot in the dark doesn’t work. A sponsor wants to understand why you’re worth what you claim before they agree to pay you. When you skip valuation or do it incorrectly, you risk missing out on thousands, possibly tens of thousands of dollars.

Valuation requires you to assess the market value of every activation and asset on your list. Next, you compare the value of what you offer versus what the going rate is.

Do you bring a specialty or expertise to that service? You should increase what you charge for that asset or activation. 

Is your service about average with what’s on the market? Leave the value at the market average or slightly lower your pricing.

Make sure to document your valuation processes, including how you conducted your research and calculated your numbers. This isn’t a math test, but sponsors still like you to show your work, so be ready.

DON’T Forget to Customize Assets and Activations

Do you have a stock sponsorship package sitting in a file on your computer somewhere? Ditch that as you approach a sponsor. Everything you offer should be customized according to the sponsor’s needs.

As a festival organizer, you’re in a unique position where all your assets and activations are far more exciting than average. It doesn’t matter whether you run a music or art festival, you have more to work with than a business conference.

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Why wouldn’t you want to customize your assets and activations? Don’t only consider how this will benefit the sponsor. Think of how your audience will also profit (non-monetarily speaking) from a five-star festival full of engaging activities before, during, and even after the festivities.

Custom sponsorship packages are worth far more than stock packages, giving you ample room to negotiate for a higher rate. You don’t have a leg to stand on when you use stock sponsorship.

You might try to push your sponsor toward a gold package with all the good assets so you can make the most money, but you usually end up pushing them straight out the door. In other words, they don’t want to work together.

DO Be Realistic 

Researching your audience and customizing your assets and activations are not advantages in your sponsorship program. These are standards you should offer to every sponsor regardless.

One of the costliest mistakes you can make in your festival sponsorship program is taking the high and mighty approach. By the time you reach the sponsorship negotiation stage, you should have already valued your opportunity.

It should come as no surprise to you to learn what your opportunity is worth. That gives you a realistic sum of money to plan for in your sponsorship program.

For example, let’s say your festival needs a large sum of money, say, $60,000. However, you valued your sponsorship opportunity, and it’s only worth $25,000.

What do you do in a scenario like this? The correct answer is not to try to double what you charge a sponsor unless you’re going to double the value of your sponsorship opportunity.

Instead, you’ll have to seek out two sponsors to make the $60,000 you need for your festival.

Could a sponsor be willing to pay you more than what your opportunity is worth? Yes, especially if you have a desirable target audience. 

However, it’s best to approach negotiations with a dash of realism to ensure your head doesn’t get too big and you wind up empty-handed.

DON’T Highball Your Offer

Highballing a sponsor is off the table. 

It’s an especially brazen negotiation tactic to offer your sponsorship opportunity for far more than you know it’s worth hoping the sponsor will match your value or reduce the number but still pay you more than what the opportunity is valued at.

Sponsorship seekers don’t always do this intentionally but sometimes ask for more than their opportunity is worth out of sheer ignorance, incorrect valuations, or lack of valuations.

Sponsors will not pay you fundamentally more than what your opportunity is worth, as I’ve made clear. Playing hardball with the sponsor often results in playing the game by yourself.

DO Be Flexible

Here’s what I suggest you do when you walk into the negotiation meeting with the sponsor. Use a range rather than have a set dollar amount in mind. 

This will help you better temper your expectations and maintain the flexibility needed to negotiate.

Dollar amounts will change during the negotiation phase. However, they should not change beyond that, and especially not once you put it in writing in a legally binding contract.

DON’T Get Taken for a Ride

Make sure you’re protecting yourself throughout the negotiation phase. You’re looking out for sponsors’ interests and vice-versa, but don’t forget about your own.

The best way to keep your best interests at heart is to know your value. If your opportunity is worth $25,000, as we said in the example before, you shouldn’t accept too far below that. After all, there’s being flexible, and there’s being taken for a ride.

If a sponsor continually tries to lowball you, you need to back out of the deal before it progresses any further.

DO Have a Lawyer Review the Contract

When you and the sponsor agree on a price, you can move on to the next stage of your festival sponsorship agreement, and that’s creating a legally binding contract.

I always recommend consulting with a lawyer to help you produce a mutually fair contract. The lawyer can also track the contractual changes that will inevitably result on both sides and ensure you’re getting a fair deal before you touch pen to paper.

I must stress that once you sign, you can’t take it back. You must be fully confident and comfortable with the contents of the contract, and working with a lawyer will help you.

However, please don’t take this to constitute legal advice. I’m merely recommending that you work with an attorney, but it’s ultimately your choice.

DON’T Promise What You Can’t Deliver

Let me make it clear one more time that whatever the contents of the festival sponsorship agreement become legally binding when you and the sponsor sign it. The contract will include an overview of your deliverables, so they must be achievable.

I’ve discussed this recently on the blog, but sponsorship seekers can fall into the trap of overpromising and underdelivering. The motivations are usually benign and stem from an urge to impress the sponsor and fetch the full value of their sponsorship deal.

However, when it’s time to put up or shut up, these sponsorship seekers fall short. They jeopardize a future working relationship with their dishonesty. 

Sure, they get the full dollar amount they initially sought, but nothing more, as there’s no long-term relationship potential.

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Keeping your expectations realistic is as important as framing your negotiation terms in realism. A sponsor wants accurate attendance numbers, attainable activations, and assets you can achieve. 

Smaller assets will do, as anything you can deliver brings the sponsor closer to their goals than no deliverables.

Launch Your Festival Sponsorship Program Today   

Negotiating festival sponsorship deals cannot happen without audience data. Your audience is your most valuable asset, so you must have strong, detailed data about your festival goers. 

You must also know the value of your sponsorship property before you sit down and begin pitching figures.

It’s tempting to promise huge deliverables to a sponsor to inspire them to fund your event in full. However, it’s best to have several smaller sponsors and deliver for each than one large sponsor you can’t deliver for.

Are you struggling with valuations? Clueless about how to generate audience data? Sign up for a free call today to discuss your festival sponsorship opportunity.