April 30, 2020

What's next | Sponsorship relationships

Sponsorship is ‘affinity marketing’ – where brands look to bolster their reach and value by being associated with events, places, teams and/or people. Equally, the sponsored party wants to ensure that their portfolio of sponsors is consistent with the brand they are or aim to be. In essence, each party wants to make sure that there is a true exchange of value and that the sponsor relationship is one that adds to their own brand.

While the nuts and bolts of any sponsorship arrangement should sit within the terms of the relevant sponsorship agreement, there will be a set of assumptions that each party has made about the overarching deal.These assumptions can differ depending on the type of sponsorship deal and as we move through these trying times, it’s important to review these assumptions and challenge how they impact your sponsorship arrangements going forward.

When managing these relationships, there is no clear path to follow and there are no ‘right’answers. You might need to push pause on arrangements that no longer serve you,but in other cases you may be able to come up with creative solutions that lean in to the turmoil and deliver more impact than you’d originally expected.  

To help frame your thinking on your sponsorship arrangements, this article:

  • tracks through some assumptions that generally apply across all sponsorship deals; and
  • touches on the ‘value exchange’ assumption across specific sponsorship types (i.e. sponsorship of events, sponsorship of entities/ venues and sponsorship of individuals).

So, what next?

As we’ve said, there is no ‘right’ or ‘wrong’ answer to how you approach these issues – and the discussion goes beyond the black and white language on the contract page. That being said, it is likely that one party will have clear rights in the relevant agreement, whether that’s the right to cancel an event without refunding the sponsor – or the right to terminate sponsorship. But the ability to do something doesn’t always mean it’s the‘right’ thing to do – or the ‘only’ thing do to.

At its heart, sponsorship is about building the reputation of, and creating value for, both parties. An inability to perform as contracted doesn’t need to be the end of the relationship - there may be other ways in which real value can be obtained. The parties need to be careful how they broach the subject of change and performance, but blindly going ahead regardless of the world around you may not provide the best outcomes for a relationship that is centred on brand and public perception.

Understanding your assumptions and tracking through how these assumptions have changed may help you to strategically maintain and support a network of positive business relationships and establish win-win situations that enable both parties to weather the storm and thrive in the new normal.

This article has been co-authored with Simon Martin as part of his "What's Next" series.

Check out video where Simon and I discuss some of these points in relation to Sponsorship relationships.

Social media image credit: Toa Heftiba

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