20 Apr 2017

9 Different Types of Sponsorship Structural Options

9 Different Types of Sponsorship Structural Options

For sponsorships to work, they need to be fully tailored to the requirements and objectives of all the parties involved. Therefore, let us explore the type of sponsorship structures to help identify which ones work for your organization.

1. Less frequent, but bigger sponsorships

With the importance of leveraging a sponsorship in a creative and meaningful way, sometimes going mainstream comes at a price. Many sponsors and event organizers often underestimate how much time and effort should be put into it. Many sponsors have found themselves exhausted and overwhelmed after looking at their exhausted and often fragmented portfolio realizing they can never be able to do them all with the kind of resources they have in place.

Therefore, this is when the  “fewer, bigger” approach usually works. This approach makes sponsorship a lot easier and manageable. With its rationalization and streamlining features, sponsors will have fewer investments but often larger (impactful) sponsorships.

2. Umbrella sponsorship

The umbrella approach is best when there is a collection of related and highly relevant sponsorships. It is easier and more effective to bond them together under one themed “umbrella”.

Doing so will the pave the way in creating a “leverageable” brand because you can be leveraging dozens or even hundreds of individual investments into one large investment where the impact can be easily communicated and highlighted. Jack Daniels and Ergon Energy are just two of the samples who are employing the umbrella approach in their sponsorship portfolio.

A great advantage of this approach aside from the economies of scale is that none of the individual sponsorships needs to be perfect, for as long as they fit into the larger scale of things. Umbrella also gives a lot of flexibility for both strategic and tactical investments driven by the marketing staff, local management and any number of divisions. One of the great benefits of this approach is the consistency it creates across a longer period of time with many opportunities for leverage focal points.

3. Vertically integrated

This type of portfolio structure is one type of the umbrella sponsorship. As opposed to a simple collection of related sponsorships, the vertically integrated portfolio features a single category sponsorship but in multi-level approach. For example, one sport from grassroots to all the way to the professional level where they are seen as vertically or topically relevant. The advantage of this approach is that it offers a multi-level channels to the target markets which enables leveraging individual components of the portfolio under the same theme.

4. Decentralized

Using decentralized approach to sponsorship allows regional or local areas as well as different business units to take control over the management and selection of their sponsorships without necessarily relying on a single portfolio to succeed. This approach works well if the brand operates across several geographic areas where interests and needs of the target market may often vary and would require different approaches.

The key to making this approach work is to get a central strategy with firm direction and guidelines while at the same time allowing flexibility and empowerment to the local or regional level decision makers. This will also help provide quality training, tools, and template which will ensure consistent mindset and method across all sponsorship portfolios.

5. Hybrid approach

With some exceptions, most of the sponsorship portfolios often present a combination of other approaches mentioned above. Often times, tt could be Umbrella with 200+ communities and cause investment, or Vertical Integration with professional hockey league (most of its teams, state associations, and few tournaments) or the Big approach like Formula 1 race and Pink Ribbon campaign and Decentralized like allocating $15,000 per region for a summer event.

At the end of the day, a combination approach allows companies to better customize the sponsorship portfolio to best fit different demographic and sponsorship opportunities available in different regions. In fact, it’s okay to take any of the approaches outlined above.

6. Fragmented

This type of approach is the most common and most typical among the sponsorship types since the basic idea in event sponsorship is to choose different investments that will work for different situations. However, this type of structure is like having an unsolved jigsaw puzzle which often lacks cohesion, unclear and does not necessarily have a consistent story about the brand which may not entice many potential sponsors.

While having fragmented approach is better than not having any approach at all, it is still bound to be underutilized the sponsorships for the following reasons.

Having unrelated investments means having separate leverages which may also result in a lot of manual work.

Having unrelated investments will several conflicting messages about the brand.

Having investment that is catered only to a concise situation, may or may not direct relevance to other business units, other geographies, and other objectives. It will unlikely be accessible thus making it a chronic underperformer among other portfolios.

7. Ad-hoc

It is the type of sponsorship that needs major overhaul among others. While the fragmented type is like having an unsolved jigsaw puzzle, the ad-hoc is like having a pile of random puzzle pieces coming from dozens of different puzzles which may not necessarily tie in with each other making it challenging to put the pieces together. The best way to address this is to start a zero-based audit that will bring focus to the possibilities.

8. Based on percentages

It is a common question in sponsorships to ask what is the appropriate percentage of expenditures should the budget be spent on various categories. However, instead of putting arbitrary figures or percentages which is often counterproductive, sponsors should focus on rigorous selection process since sponsorship budget is not grant money. Therefore, it should be invested in the most effective sponsorships possible in order to achieve the optimum result when trying to reach the target market and accompanying business objectives.

9. Defensive

The least known among the sponsorship portfolio types. This kind of structure is primarily built on blocking competitors, and not on creating gains for the brand. Instead of focusing the company’s business objectives, it will be focused on finding the upper hand and making sure the competitors will never have access to such. Say for example, you have $100,000 to spend and you have created a good leverage program around it. It’s a guarantee that you can get the benefit far more than blocking any competition you might have. The only exception to this sponsorship sponsorship is sales buying. This happens when you are given the exclusive rights to a certain product at the event and that the profit from it outweighs the cost. That is not blocking competition per se, but buying sales.

These are just the 9 most common types of sponsorships structures available to companies. While there is not one-size-fits all sponsorship structure for all companies, in order to utilize the best type of sponsorship, it is important for businesses to identify their key objective and pick the best structure or set of structures that will align in achieving those goals.