New white paper on sponsorship in a scary economy

Depending on how a sponsor manages this process, they could end up with a leaner, better performing portfolio, or they could end up making a huge mess of things that could take years to undo.

Says Skildum-Reid, "It is entirely possible to get a better result from a sponsorship portfolio while minimising costs, but the approach must be best practice and considered. It's never a good idea to make knee-jerk decisions about a sponsorship portfolio."

Most powerful

Whether or not to even make cutbacks in sponsorship is something to be considered. Skildum-Reid maintains that corporate sponsorship is the single most powerful of all marketing media. According to Skildum-Reid, "if you rush into making cuts, you could lose sight of the fact that you are cutting the most emotionally and personally relevant of all the marketing tools you have and start cutting valuable, brand-building properties. You could well have other media that is more expendible."

Budget cuts are going to be one of the most contentious areas in coming months. With most of the big sponsorship rights money tied up in multi-year deals, making significant cutbacks on investments may not even be feasible. There is a light at the end of the tunnel: cut your leverage budget. After years of hearing about how much we should be spending to support our sponsorships, this might seem counterproductive. Not so, says Skildum-Reid.

"Most sponsors spend too much on leverage. They chase rights fees with some arbitrary percentage - 100%, 200% - spent on incremental leverage activities," says Skildum-Reid. "If they could elevate their approach to best practice, so that their leverage planning is creative and highly integrated, they would be using the power of sponsorship across a broad range of activities they're already spending money on. A best practice sponsor spends only 10 - 20% incrementally on their leverage program."

“We all hope this isn't going to be a deep and protracted recession, but we need to manage for that possibility.” And according to Skildum-Reid, we need to act now.

Scary economy dos and don'ts

In the meantime, here are some scary economy dos and don'ts for corporate sponsors:

Dos

• Do audit your portfolio - more than ever, you need to know what is performing, what could perform, and what isn't. That will allow you to plan for better leverage of under-performers and exit non-performers
  
• Do leverage smart - by integrating your sponsorships across media you've already got budgeted, rather than spending a lot of incremental money, you can save a lot of money. This requires a creative, best practice approach, but if you do it, you could drop your incremental leverage investment to as low as 10 - 15% of what you pay for sponsorship fees.
  
• Do consider whether sponsorship is the best place to make cuts - it is the most personally relevant and integratable of all media. It has incredible power to connect your brand to your target markets.
  
• Do make sponsorship an exception to across-the-board cuts - you may be able to cut the budget substantially more than required, or because of multi-year contracts, you may not, but it is unrealistic to apply an arbitrary percentage figure to sponsorship

  Don'ts

• Don't panic - this is not the time to make rash decisions. You have a lot of options, but your decisions must be considered
  
• Don't focus solely on cuts - while this is a great time to exit sponsorships that are wrong for your brand, don't get rid of sponsorships that have real resonance. For those, the focus should be on getting the greatest possible impact.
  
• Don't think you can break multi-year contracts - partners are under no obligation to break contracts to suit you and, especially in this economy, shouldn't be expected to. If you saw enough value to sign a multi-year contract, chances are there is unrealised potential in it. Concentrate on getting a better result.

Skildum-Reid's new white paper is available as a free, no-obligation download from www.powersponsorship.com.