Jul 01, 2009 at 05:10 PM
written by Michael Munson

Think bold. Think different. Above all, think.

"There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order, this “lukewarm-ness” arising partly from fear of their adversaries and partly from the incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it."

-Niccolo Machiavelli (1469 – 1527)

In the summer of 2008 I began discussing building an online fan engagement application for a Fortune 500 company. The objective was to help activate a sponsorship of a major NCAA member institution with modern technology. The sponsor wanted to evolve a piece of software my company, Fantell, had built to let fans create team depth charts, into an engaging and quantifiable activation of its sponsorship with the university. The modified application would:

  • Let fans vote for and comment on their favorite players of the school
  • Capture permission-based marketing data; the property’s audience, interests and its demand for sponsor services
  • Provide incentives for fans to become or continue as customers with the sponsor
  • Leverage sponsor assets (game tickets, hospitality, web presence, email lists, radio spots) as incentives and to drive participation
  • Allow fans to promote the sponsor’s activation to other fans through social media (earned promotion)
  • Throughout the next 10 months, we talked back and forth about execution ideas, approval process, and budget. Ultimately we arrived at a proposal that would truly activate the sponsorship in a meaningful, quantifiable way for the sponsor and offer value for the property audience. The program leveraged all available assets and used incentives to get the audience to act in a measurable way. The company had buy-in from key internal stakeholders, and after some convincing, the key decision-maker got on board with spending money on the proposed online activation.

    The final hurdle was the Athletic Department. The sponsor wanted to incorporate an affinity program it had with the university’s Alumni Association in the activation, and the Athletic Department had to approve. Remarkably, the Athletic Department said the sponsor would have to pay more - above what it had paid for its rights already - if the Alumni Association would in any way benefit from an activation of an Athletic Department sponsorship. This raised the price higher than the sponsor was willing to pay and the deal was killed.

    We hear all the time about how sponsors won’t do anything to activate their sponsorships. Yet here we have a situation where a well-conceived activation was developed, the sponsor wanted to do it in an effort to see more tangible results from its sponsorship spend, and the property found reasons to prevent it from happening. It was as if the property was more fearful of potentially having its value questioned and losing what it had, than it was eager to prove its value and potentially gain more. Aren’t interactive experiences that engage property audiences online and facilitate quantifiable measures of audience participation with sponsor, what is most valuable in the times in which we live? Why should a sponsor have to buy assets of unknown value and then pay more for the right to implement modern, state of the art activation platforms? Why would a property want to do anything but encourage a sponsor to pursue developing any activation that has the potential to demonstrate property value? It may seem properties maximize revenue by charging incrementally for or packaging each individual entitlement or asset. But what if just one of the assets is needed to meet sponsor objectives? If the logo is all that is needed to deliver sponsor value (for use in product packaging for example), there is no reason the property couldn’t sell only its logo, and not include banners, PA announcements, etc. with its sponsorship deal with that sponsor. And no reason it couldn’t sell that logo for the same price as its traditional asset packages, which may include logo use as an afterthought. If the sponsor wants to create an additional asset, instead of the property charging more as a “cost of entry,” like in my University example, why not ask to get paid more if the new activation platform generates business as planned?

    A solid argument could be made that properties actually could earn themselves more money by charging less in the near-term. Let the sponsors pay less upfront, so they can spend more on activations that work for them. Then get paid on the back end, after the association with the property has actually delivered on objectives and demonstrated its value to the sponsor. In other words, set goals or milestones that will pay the property for delivering on or exceeding sponsor objectives.

    Sponsors may not be as inclined to embrace activation when they are asked to pay so much for rights fees based on the value IEG, Joyce Julius, SponsorAid, etc. has placed on them, especially when they are sold in pre-defined packages like “Gold,” “Silver” and “Bronze.” When a sponsor buys an asset package, it’s almost led to believe it’s getting some value, even if it does nothing to activate effectively. Who really has time these days to do anything more than minimally necessary?

    But if the property delivers value by way of its assets being instrumental in meeting sponsor objectives, who cares what the individual assets are that facilitate creating that value? Why should a sponsor be charged based on assets, and not the value it extracts from the property? Why not pass on the cost of producing an asset to the sponsor - without mark-ups - to encourage them to spend more on activation, and get paid based on business generated as a result of a sponsorship?

    Few companies (in my experience) really know their objectives when they buy a sponsorship. Even though properties can budget their own cost and insure a profitable "walk-away" price, can the value to the sponsor really be accurately determined by the property alone? Just as properties might be leery to forego up-front money for the opportunity to earn more after they deliver results, sponsors might be leery of the value they are buying when they are being charged so much up-front without the promise of results. If the property is not willing to revenue share or agree to performance-based payment bonuses when it’s assets are validated as worthy, the property’s value has to be questioned, doesn’t it? Shouldn’t it?

    Perhaps if sponsorship was viewed more as business development that pays when revenue is generated, and sincere thought and effort was put into activation that creates sales, both the property and the sponsor would have significant vested interest in collaborating to make activations work to their utmost. Nobody makes money on business development deals when they don’t generate sales. Adopting this concept to sponsorship would be a pretty big incentive to make sure sponsor and property work together and are a good fit. If it worked this way, you might find more companies being a lot more proactive about searching out opportunities. Best of all, nobody would question the value of sponsorship. The valuation everyone is obsessed about will be a lot easier to grasp when both parties are working together to increase it, and neither earns anything unless they do.

    It seems logical to think properties would rather get paid more in the long run. And it seems logical sponsors would be willing to pay for business a sponsorship property creates for it. But are properties willing to re-invent how they charge and what they sell in order to reap greater rewards? Are companies and brands open to working harder to activate their sponsorship investments, and willing to be proactive instead of reactive when it comes to selecting properties to sponsor? Machiavelli would probably say no. He’d be mostly right, too. But there are always people willing to be first to adopt new ways. Will you be one of them?

    Mike can be reached by email at [email protected] and on Twitter at @mjmunson.