This week, Cheryl Dyer-Ballard looks at sponsorship, what exactly it involves, who it benefits and how, and some of its advantages. She looks at how you can sponsor a team or a cause, and the processes involved in making a difference to the community through sponsorship.
She also looks at some of history’s biggest sponsorship deals, and some of the ones that didn’t go so well. So, you want to get your brand noticed and do some good in the wider community? Read on…
What is Sponsorship?
Small businesses rely on revenue, and whilst many businesses rely on product sales and service charges as their main income source, other ways to raise funds are available – by sponsorship. The definition of sponsorship is to support an event, activity, person or organisation within a community. Sponsorship could be financial input or to provide products or services to your chosen benefactor, raising both brand awareness and creating positive public relations.
Business sponsorship is not only a way of supporting a good cause or raise awareness, but an opportune moment to create positive publicity in and around your community. It provides a target market to those who wouldn’t necessarily be within your catchment area for business, and could make you more favourable in front of other not-so-generous competitors. Sponsorship in the right places with the right organisation could be a source to strategic marketing.
You do not need to have a huge budget for sponsorships – just the smallest kind gesture could make a difference to your business. Being a sponsor is not an act of charity – as a sponsor, your responsibility is to ensure that there is a positive return on the investment you have made. Sponsorship is a business arrangement, where a clear idea of what your investment is worth should be seen. A sponsor can enjoy benefits such as:
• Raising brand awareness and of the organisation as a whole
• Creating positive public relations
• Promoting and supporting sales campaigns
• Using clothing/publicity material with the display of your own brand logos, images and trademarks
Who will be your target market?
Before deciding who you will be approaching to sponsor, you need to find out where your target audience is going to lie. What kind of target market do you want to attract and where will this be? Once you have decided what your audience and the platform you will be using to promote the company, you then have a rough idea about what kind of sponsorship deal can target your audience. Companies will often agree sponsorship deals to audiences that are out of reach – they understand the costs involved with advertising campaigns and see sponsorship as a less expensive option.
The characteristics of your customer base will become a large factor when deciding how, what or whom you are going to sponsor. A good example being that if parents are your principal target market, then having a browse through practical parenting magazines and researching the website for parenting sites is a great place to start. You can see the kind of companies that advertise on them, then, you can then use this information when choosing someone or something to sponsor.
What Can You Offer A Sponsor?
On the other side of the coin, you’ve found a company that could sponsor you or your team, and you want to approach them, but don’t know what you can offer. Actions sometimes speak louder than words when it comes to sponsorship so you need to ensure that you are proposing the right package to your sponsor. This could include:
• Company sponsorship for your blog
• Product giveaways to your audience
• Reviews of your sponsors products
• Advertising within your own advertisements
• Large scale advertising banners/advertisements for events
To ensure company sponsorship and engagement, it is always best to build strong long-term relationships with your sponsor. Ensure that any proposals put forward are clear about what your club or project can offer them and why they should sponsor you. Companies will want to know what they are going to get out of investing in you. You need to explain clearly exactly what your aims are, how it will affect the community or the impact it will have on lives, how the sponsoring company will benefit, who your target market is and how you will help your chosen sponsor to reach out to these communities, customers and potential clients.
Remember also, that many companies are used to dealing with deals of tens of thousands of pounds and not pocket change. Don’t get greedy though – you don’t want all your hard work to backfire. It is important that they understand your connection with the sector of the population that they are interested in, and that what you require is justifiable to both parties. Ensure that you follow up any correspondence that has been sent. Life seems to get in the way and business owners seem to be busy all the time.
If they haven’t responded to your correspondence it could be that they just haven’t got round to doing it yet due to heaving workloads and strict deadlines. It is not uncommon for people to lose out on sponsorship deals because the applicants have not followed their request up.
Don’t be afraid to chase them: the simple rule is, if you don’t hear from the organisation you have submitted your proposal to, give them a ring, send them an email, touch base with them – sometimes this is all that is needed and most businesses want to see initiative rather than ignorance.
Larger Companies and Sponsorship Deals
Canon (UK) Ltd is involved with many charitable organisations, and known to be one of the major companies within the UK that are willing and have the ability to support worthy causes and events throughout communities in and around the UK.
Canon provide their own “CARE” scheme that was established in 1990 following members of the board identifying that Corporate Social Responsibility (CSR) continues to be growing in the UK, and most companies now have this high upon their business agendas and will continue to do so into the future.
Due to Canon being one of the many UK’s largest companies, they receive approximately 50 requests each week asking for cash donations, products to aid fundraising events or printing requests from charitable and community associations. Although the company continues to drive forward with initiatives, they cannot meet all requests and have set clear guidelines within their working CARE Committee.
The CARE Scheme Committee continue to support local charity and projects within the community including initiatives and ideas in the five areas:
• Business & Community: designed to build working relationships with local companies and associations with a view of inspiring new employees, jobs and interacting with the community.
• Education: Direct involvement with schools, colleges and extra-curricular activities.
• Arts & Culture: encouraging community interest in participation with the introduction to creating initiatives and programmes to the community to get involved.
• Humanitarian: Intended to provide support and assistance to a selection of health related good causes.
• Environment: improving the environment in which we live by supporting local community and environmental organisations and their work.
Whether you are applying to a multi-national company, or to a small one man band down the road, all companies will still look at the reasons behind the sponsorship application, and what each applicant can offer the benefactor.
The Tax Man
If your sponsorship deal meets the conditions set by HMRC you may be able to use it as a legitimate expense, and claim for items that are used in the sponsorship deal (in both your VAT and end of year tax returns) include:
• Entry/membership fees – providing it is the company that is benefitting from paying the fee.
• Branded clothing and accessories – items that display company branding.
• Branded Assets – for example a car, a bicycle or other form of vehicle if that is the brand you are sponsoring.
• Facility expenses which are related directly to the sponsored party (outside of normal business activity).
Expenses involved with sponsorship deals must be seen by HMRC, and must be deemed to be true. If the HMRC believe that there is a suggestion that it is for a non-business benefit, the cost will not be allowed. Should it be a sporting activity or event, and that it is a director, partner or company proprietor’s regular hobby then HMRC may make the decision that you are “funding” a personal hobby, again the cost will not be allowed. If the sponsored amount is for or related to a director, partner or proprietor, again HMRC may take the decision that the amounts are disguised as earnings that you would have paid for anyway.
When sponsorship goes wrong
Don’t be alarmed to hear that sponsorships don’t always go well. Terminated sponsorship deals happen all the time across many sectors. Here are some recent examples…
Following the consumption of performance-enhancing drugs, 8 of Armstrong’s sponsors dropped him. According to a number of reports, he lost $75 million dollars in one day.
Armstrong was involved in an advertising campaign with Nike in 2001, where he was seen to mock users of performance-enhancing drugs. His message throughout the campaign was, “Everybody wants to know what I am on. What am I on? I’m on my bike, busting my ass six hours a day. What are you on?” Nike had reportedly been misled by Armstrong for more than 10 years.
Armstrong also cheated sportswear company Skins, who argued that he had caused damage to their brand by association, and the US Government sought to recover nearly $40 million that the US Postal Service had paid to sponsor the team he was involved in.
SeaWorld and Southwest Airlines
Southwest Airlines pulled out of their 26 year-long sponsorship deal with SeaWorld following the “Blackfish Documentary”. Approximately 32,000 people signed the petition to stop the cruelty to the killer whales within the theme park SeaWorld, causing bad publicity by association. Following pressure from the charity People for the Ethical Treatment of Animals (PETA), Southwest Airlines took the decision to withdraw their sponsorship.
The London 2012 Olympic Games and McDonald’s
McDonalds and the Olympic Games have been involved in sponsorship with each other since 1976, but it wasn’t until the London Olympics in 2012, that McDonalds was at the centre of an enquiry into the sponsorship deal. It was brought to light by a group of campaigners that the official Olympic brand was approving unhealthy eating and obesity with selected deals using children in the advertisements as mascots, in order to sell its fast food and sweets.
Campaigners also accused McDonalds of having the exclusive rights to sell portions of chips within the Olympic park, causing other fast food vendors to keep to a strict “chip” ban unless selling the UK’s favourite, fish and chips.
McDonalds used the bad publicity to their advantage, and successfully proceeded to use the opportunity to raise awareness of the healthier options available to customers within their stores. McDonalds continue to sponsor the Olympic Games and have a sponsorship deal currently up to and including the 2020 Olympics.
It is your responsibility to ensure that you have a written copy of your sponsorship agreement in place. In this, you will be required to list everything to be detailed in the execution and value of the sponsorship deal, and for how long the agreement is for. A termination clause should be in place enabling sponsorship to cease if you feel you are not getting the expected returns. These returns may not be financial; this can include the agreement in relation to brand awareness, traffic on website or sales leads.
To summarise, if you are a club or community project, corporate sponsorship can be your way to move forward and work alongside large corporations that are looking to expand their portfolio and business practices within a local community. Sponsorship opportunities are available in and around the UK within many different sectors. For businesses looking to sponsor a cause or sports team, it is an excellent way of raising brand awareness and perception of the company as a whole. And sometimes you don’t have to spend a lot being a sponsor to achieve both great results and more customers.