Sponsorship Defined - Sponsorship in Marketing Cornwell

T Bettina Cornwell

30 Jun 202007:15

Summary

TLDRThe video discusses sponsorship in marketing, focusing on the relationship between brands and properties like sports or entertainment. Sponsorship is defined as an investment in cash or kind in exchange for brand association and commercial potential. The speaker distinguishes between deals, leveraging, and activation, explaining how brands invest beyond the initial deal to enhance engagement. Terms like leverage ratio and ambushing are explained, and the concept of sponsorship-linked marketing is introduced as an integrated strategy. The speaker also differentiates sponsorship from other partnerships for clarity in marketing contexts.

Takeaways

🤝 Sponsorship is a relationship between a brand and a property rights holder, involving either cash or in-kind investments.
💵 The investment could be financial or a product/service offered in exchange for brand association and access to the property's events or activities.
📝 Sponsorship deals are formal agreements that define the length of partnership, investment, and mutual benefits.
🌍 An example of sponsorship is Amazon’s deal with Climate Pledge Arena, which aligns brand association with climate action goals.
🎯 Leveraging refers to additional spending beyond the initial sponsorship deal to maximize the return on investment.
🛠 Activation, a form of leveraging, involves interactive two-way communication, engaging consumers directly with the brand.
📢 Non-activation leveraging refers to thematically tied ads that don’t involve direct consumer interaction but promote brand association.
📊 The leverage ratio is the comparison of deal spending to additional leveraging, with ratios like 2:1 or even 10:1.
⚠️ High leverage ratios, like 10:1, may be seen as ambushing, where a small deal is over-leveraged to gain disproportionate attention.
🏷️ Sponsorship is distinguished from other types of partnerships, such as co-branding or licensing, due to its long-term contract and specific brand-property collaboration.

Q & A

What is the basic definition of sponsorship as described in the transcript?
-Sponsorship is defined as a relationship where a brand invests in cash or in-kind with a property (e.g., sports, arts, entertainment, or cause) in exchange for access to the commercial potential of that property, such as using their logo or participating in their events.
What forms can the investment in sponsorship take?
-The investment in sponsorship can be in cash or in-kind. In-kind investments can include products or services offered by the sponsor to the property.
What does the term 'deal' refer to in the context of sponsorship?
-A 'deal' refers to the contract that specifies the terms of the sponsorship, including how long the partnership will last and how much will be invested by the sponsor.
Can you give an example of a sponsorship deal mentioned in the transcript?
-An example is the Climate Pledge Arena in Seattle, where Amazon has a deal to name the arena in support of climate action. This deal involves financial support and the opportunity for Amazon to put its name on the arena.
What is 'leveraging' in the context of sponsorship?
-Leveraging refers to additional spending by the sponsor beyond the original deal. This can include activities like advertising or creating promotional content tied to the sponsored event or property.
How does 'activation' differ from 'leveraging'?
-Activation is a form of leveraging that involves two-way communication, where the sponsor engages directly with individuals through activities like booths or interactive events. Leveraging, in general, may include one-way communication, like advertisements, without direct interaction.
What is the concept of the 'leverage ratio'?
-The leverage ratio is the ratio of additional spending (leveraging) to the original sponsorship deal. For example, if a sponsor spends $1 million on the deal and an additional $2 million on leveraging, the leverage ratio would be 2:1.
Why does the speaker prefer to use the term 'sponsorship' rather than 'partnership'?
-The speaker prefers the term 'sponsorship' for clarity, as there are many types of partnerships in marketing (e.g., co-branding, licensing agreements). Sponsorship refers specifically to a contract-based relationship over time, which distinguishes it from other forms of partnerships.
What is 'sponsorship-linked marketing' according to the speaker?
-Sponsorship-linked marketing is the orchestration of the deal, leveraging, activation, and the integration of these elements into the brand's overall portfolio or strategy. It involves managing how the sponsorship supports the brand and the property.
What might be considered a high leverage ratio, and what does it signify?
-A high leverage ratio, such as 10:1, signifies that a relatively small sponsorship deal is accompanied by a large amount of leveraging. This can sometimes be seen as a form of ambushing, where the leveraging outpaces the deal itself.

Outlines

00:00

🤝 Introduction to Sponsorship and Definition

Bettina Cornwell introduces the concept of sponsorship in marketing, emphasizing the relationship between a brand and a property rights holder, such as sports, entertainment, or arts. She explains that sponsorship involves an investment, either in cash or in-kind (e.g., services or products), in exchange for the ability to use logos and participate in activities. Cornwell critiques a formal definition that focuses on 'exploitable commercial potential,' preferring a broader view of sponsorship as a mutually beneficial association. She uses the example of Amazon's Climate Pledge Arena sponsorship to illustrate a sponsorship deal and the financial and goodwill value it brings. She also touches on the concept of leveraging, which refers to additional spending on activation and engagement beyond the initial sponsorship deal.

05:01

📊 Leveraging and Activation in Sponsorship Deals

Cornwell dives deeper into the concept of leveraging, where additional spending beyond the core sponsorship deal is used to maximize the partnership’s value. Leveraging may involve activation, which fosters two-way communication between the brand and its audience through interactive methods such as event booths or quizzes. She differentiates between activation-based leveraging, which engages consumers directly, and non-activation leveraging, which could be a thematic ad campaign tied to the sponsorship. The effectiveness of these strategies is measured over time, and brands aim to invest more in what works. She also introduces the concept of leverage ratios, explaining that spending beyond the deal is compared to the base amount. She provides an example of a 2:1 leveraging ratio, while noting that high ratios (like 10:1) may even be viewed as a form of ambushing.

🔍 Why Sponsorship is a Unique Marketing Partnership

Cornwell discusses why she prefers to use the term 'sponsorship' over simply calling it a 'partnership.' While sponsorship is indeed a type of partnership, it is distinct from other forms, such as co-branding alliances or licensing agreements. Sponsorships are based on a specific contract that evolves over time, creating long-term relationships between brands and properties. To avoid confusion with other types of marketing partnerships, Cornwell advocates for the use of 'sponsorship' to maintain clarity in the marketing context. When successful, these sponsorships can develop into meaningful partnerships over time.

Mindmap

Keywords

💡Sponsorship

Sponsorship refers to the relationship between a brand and a property rights holder, such as a sport, entertainment, or cause, where the brand invests either cash or in-kind support in exchange for marketing benefits. In the video, sponsorship is defined as a partnership, with the brand seeking to utilize this relationship for commercial gain, such as placing their logo or participating in events.

💡In-Kind Investment

In-kind investment is a type of sponsorship where the brand offers products or services rather than cash. The video explains this concept as a non-monetary contribution by the sponsor, which still provides value to the property in exchange for access to marketing rights. This can include providing equipment, services, or other tangible goods instead of direct financial support.

💡Property Rights Holder

A property rights holder is the entity that owns or controls the asset, such as a sports team, arena, or event, that a brand partners with in a sponsorship deal. The property allows the sponsor to exploit its commercial potential. In the video, examples include entities like sports teams or venues, which enter into sponsorship deals with companies like Amazon for rights to use the property’s name or events.

💡Deal

A deal in the context of sponsorship refers to the contract that outlines the terms of the partnership between the sponsor and the property rights holder. This includes the duration, the financial or in-kind contributions, and the benefits exchanged. For instance, the Climate Pledge Arena deal with Amazon is highlighted as an example, where Amazon’s investment is tied to promoting climate action.

💡Leveraging

Leveraging involves additional spending beyond the initial sponsorship deal to maximize the impact of the sponsorship. The video explains how leveraging can include spending on marketing, activation, or other activities that support the sponsorship. For example, a $1 million deal might be leveraged with an additional $2 million in marketing expenses to boost its effectiveness.

💡Activation

Activation is a form of leveraging where the sponsor engages the audience through two-way communication, such as interactive booths, events, or online activities. The video distinguishes activation from other forms of leveraging by emphasizing that it involves direct interaction with the audience, allowing them to engage more deeply with the sponsor’s brand.

💡Leverage Ratio

Leverage ratio refers to the ratio of additional spending (leveraging) to the original sponsorship deal. For example, a 2:1 leverage ratio means that for every $1 spent on the sponsorship deal, an additional $2 is spent on leveraging activities. The video discusses various leverage ratios, including how high ratios like 10:1 can be seen as ambushing, indicating excessive leveraging relative to the size of the deal.

💡Ambushing

Ambushing in the context of sponsorship refers to a situation where a brand spends disproportionately on leveraging activities compared to the initial sponsorship deal, potentially overshadowing the original partnership. The video hints at this when describing situations where the leverage ratio is extremely high, such as 10:1, which could be viewed as an attempt to dominate the marketing space without a large initial investment.

💡Sponsorship-Linked Marketing

Sponsorship-linked marketing is the broader orchestration of the sponsorship deal and leveraging activities, aligning the sponsor’s brand with the property to maximize marketing potential. The video introduces this concept as the overall strategy that includes the deal, activation, and leveraging, all integrated into the brand’s portfolio.

💡Partnership

While sponsorship is a form of partnership, the video clarifies that it is a specific type that involves a formal contract with clear marketing objectives. The term 'partnership' is used broadly in marketing, but the video emphasizes that sponsorship is distinct because it involves a long-term, strategic relationship between the brand and the property, which may evolve into a more holistic partnership over time.

Highlights

Sponsorship is a relationship between a brand and a property rights holder, involving an investment in cash or in-kind services.

The purpose of sponsorship is to give the sponsor access to the exploitable commercial potential of the property, although the speaker prefers the term 'potential of association.'

A sponsorship deal is a contract specifying the duration and financial investment for the collaboration between the sponsor and the property.

Example of a sponsorship deal: Amazon’s Climate Pledge Arena sponsorship, naming the arena to support climate action.

Leveraging refers to additional spending beyond the initial sponsorship deal to enhance the relationship or sponsorship impact.

Leveraging includes both activational leveraging (two-way communication, engagement with consumers) and non-activational leveraging (advertisements or promotions tied to the event without direct interaction).

Activation involves two-way communication where consumers are engaged, such as a booth or online interaction, to deepen the relationship with the brand.

Non-activational leveraging refers to thematic advertisements or promotions that are linked to the sponsorship but do not involve direct consumer interaction.

A leveraging ratio represents the proportion of additional spending to the deal. For example, a ratio of 2:1 means twice as much is spent on leveraging as on the deal itself.

A leveraging ratio as high as 10:1, where a small deal is supported by significant leveraging, can sometimes be seen as ambush marketing.

The speaker refers to 'Sponsorship Linked Marketing' as the orchestration of the deal, leveraging, and activation, integrating it with the sponsor's broader marketing portfolio.

Sponsorship is distinguished from other types of partnerships, such as co-branding or licensing, due to its unique structure of a relationship over time with mutual benefits.

Although sponsorship is a form of partnership, the term 'sponsorship' is used for clarity to differentiate it from other marketing partnerships.

Sponsorship, when successful, evolves into a long-term partnership, characterized by ongoing collaboration and mutual benefits.

The speaker emphasizes that sponsorship is a specialized form of partnership, important in marketing, that deserves its distinct terminology for clarity and precision.