Sponsorship and Commerciality - Event Perspectives Series

Sponsorship and

Commerciality

Chris Austin

12 November 2014

twitter.com/chrisaustin87 | linkedin.com/in/chrisaustin87 | slideshare.net/christopheraustin

Commerciality and events

• Event business planning

• Viability and sustainability

• Budget and revenue planning

• Sponsorship

• Incremental income

• Other income sources

• In-kind support


Viability

• “Events need to achieve financial goals and the viability component assesses the business case for a proposed event. [Events] generally need to fit within organisationalfinancial constraints or budgets. Other types of events may be required to generate an expected return or profit”.

Ferdinand and Kitchin (2012:76)


Viability

Stakeholder expectations

Feasibility

DesirabilityViability

Ferdinand and Kitchin (2012:76)


Sustainability

• Financial sustainability if the event is

not a one-off proposition.

• Long-term resources to cover the costs

of future events.


Budget and revenue planning

Establish what is the economic

environment

Establish budget guidelines to fit

objectives, including sub-budgets

Identify and estimate cost areas and

revenue sources

Prepare a draft budget for

committee and approval

Evaluate draft budget and prepare

final budgets and control ratios

Bowdin et al (2012:303)


Budget and revenue planning

• Revenue plan…

EventScotland (2006:68)


Sponsorship

• “Any commercial agreement by which a sponsor, for the mutual benefit of the sponsor and sponsored party, contractually provides financial or other support in order to establish an association between sponsor’s image, brands or products in return for rights to promote the association and/or for the granting of certain benefits”.

Collett and Fenton (2013:2)


Sponsorship

• “Emphasis is now on ‘connecting with’

rather than ‘talking at’ the market,

event sponsorship can be the ideal

way for marketers to create brand

interaction with consumers and

stakeholders… pretty much every

event is sponsored in some way”.McDonnell and Moir (2014:6)


Sponsorship process

Strategy

•Historical review

•Asset inventory

•Asset valuation

•Resources review

•Marketing strategy

Planning

•Timetable

•Website

•PR plan

•Sales materials

•Prospect research

•Employee communications

Execution

•Implement PR

•Direct mail

•Face to face

•Contract negotiation

•Budget control

Review

•Objectives sharing

•Staff training

•Partnership review and evaluation

•Exit planning

Sales effort and

Sponsorship activation

Collett and Fenton (2013:22)


Benefits to the sponsor

• Brand awareness

• Brand image

• Target market (existing segments or new audiences)

• Media coverage

• Corporate hospitality

• Database expansion / lead generation

• Sales promotion

• Product exposureMcDonnell and Moir (2014)


Sponsorship fit

• Sponsorship fit (aka congruence) has two

dimensions…

• Relevancy – The degree to which the

information contained in the stimulus favours

the identification of the message being

communicated.

• Expectancy – The degree to which an item or

information falls into a predetermined

schema or structure evoked by the theme.Heckler and Childers (1992)


Sponsorship fit

• Dimensions of fit…

• Target market

• Image

• Geography

• Typicality

• Complimentarity

• ClashMcDonnell and Moir (2014:54)


Sponsorship risks


Sponsorship proposal

• Cover and contents

• The event

• The organisers / partners

• Benefits

• Sponsorship opportunities / packages

• Practical information (payment etc)

• Contact


Sponsorship sales funnel

Dibb et al (2012)


Incremental income

• Definition 1…

• Incremental budgeting – “take the

previous year’s budget as a base and

and add (or subtract) a percentage to

give this year’s budget”Collier (2012:311)


Incremental income

• Definition 2…

• Incremental costs – “Incurred only when

the individual event or project is

undertaken. The incremental costs

include both additional fixed and variable

costs arising from the event or festival,

besides the costs already being incurred

by the business”Rak et al (2009:171)


Other income sources

• Ticket sales

• Participant entry fees

• Public funds

• Charitable donations

• Concessions and franchises

• Merchandising

• Showcase, demonstration and information stands


Other income sources (cont’d)

• Advertising

• Licensing and broadcasting rights

• Private benefactors

• Fundraising events

EventScotland (2006:67)


Ticket sales

• Pricing structure

• Perceived value

• Sales forecasting

• Discounts and special offers

• VAT

• Ticket agents and commission


Participant entry fees

• Sporting events

• What is included?

• Research similar events

• Discounts


Public funds

• Local authorities

• DMOs

• Government funding

• Subvention

• Bidding for funds


Public funds

• “The rationale for support for major events should be that, while an event may not be able to cover all of its costs through admission charges or sponsorship, it is worthy of support because the event generates benefits for [residents]. These benefits should not only cover economic factors but also embrace other community benefits”.

Victorian Auditor General, cited in Richards and Palmer (2010:214)


Public funds

• “The city of Ottawa has an excellent arms-length policy for determining levels of funding. A jury of experts… reviews all grant applications and assesses them on excellence in programming, quality of management, contribution to the community, support of local artists, economic impact and impact on tourism. All festivals that receive ongoing funding are required to submit highly-detailed reports including annual audited statements.”

Armour (2006)


Public funds

The Guardian (2008)


Charitable trusts and

foundations

• Specialist projects

• Difficult to attract mainstream funding

• Specific target groups

• Bidding for funding


Concessions and franchises







• Pitch fee vs. profit share

• Tendering

• Insurance and liability

• Legalities (e.g. catering)

Allen et al (2008:468)


Merchandising


Merchandising

• “Games Visitors spent significantly more money for tickets, and, when compared against the Casuals, they spent significantly more on merchandising. All these findings support the hypothesis that groups that accept higher outlay only do so because they expect event-related benefits in return. This expectation translated into longer stays in the host city, and increased spending on tickets and merchandise”.

Preuss et al (2007:15)


Showcase, demonstration and

information stands


Advertising

• Programmes

• Banners / sponsor boards

• Website


Licensing and broadcasting

rights


Private benefactors

• Patrons

• “Friends of…”

• Raffles

• Fundraising activity


In-kind support

• “Contra” deals

• Brand awareness

• Free tickets

• Venue use


Discussion

• Critically review ‘Event sponsorship as

a value creating strategy for brands’

(Papadimitriou, 2008).


References

Allen, J., O’Toole, W., Harris, R. and McDonnell, I. (2008) Festival and

Special Event Management, Fourth Edition, Australia: Wiley & Sons Ltd.

Armour, J. (2006) Festivals more than justify city investments, cited in

Richards, G. and Palmer, R. (2010) Eventful Cities: Cultural Management

and Urban Revitalisation, Oxford: Butterworth-Heinemann.

Bowdin, G., Allen, J., O’Toole, W., Harris, R. and McDonnell, I. (2012)

Events Management, Third Edition, Oxford: Butterworth-Heinemann.

Collier, P. (2012) Accounting for Managers: Interpreting Accounting

Information for Decision Making, Fourth Edition, Sussex: John Wiley & Sons

Ltd.

Collett, P. and Fenton, W. (2011) The Sponsorship Handbook: Essential

Tools, Tips and Techniques for Sponsors and Sponsorship Seekers, Sussex:

John Wiley & Sons Ltd.


References

Dibb, S, Simkin, L, Pride, W.M. and Ferrell, O.C. (2012) Marketing –

Concepts and Strategies: Sixth Edition, Hampshire: Cengage Learning.

EventScotland (2006) Events Management: A Practical Guide,

Edinburgh: EventScotland.

Ferdinand, N. and Kitchin, P.J. (2012) Events Management: An

International Approach, London: SAGE Publications.

Getz, D. (2010) Event Management & Event Tourism, Second Edition,

USA: Cognizant Communication Corporation.

McDonnell, I. and Moir, M. (2014) Event Sponsorship, Oxon: Routledge.

Papadimitriou, D., Apostolopoulou, A. and Dounis, T. (2008) ‘Event

sponsorship as a value creating strategy for brands’, Journal of Product

& Brand Management, 17(4), pg.212-222.


References

Preuss, H., Seguin, B. and O’Rielly, N. (2007) ‘Profiling Major Sport Event

Visitors: The 2002 Commonwealth Games’, Journal of Sport & Tourism,

12(1), pg.5-23.

Raj, R., Walters, P. and Rashid, T. (2009) Events Management: An

Integrated and Practical Approach, London: Sage Publications Ltd.

Richards, G. and Palmer, R. (2010) Eventful Cities: Cultural Management

and Urban Revitalisation, Oxford: Butterworth-Heinemann.

The Guardian (2008) Boris Johnson shakes up funding for capital's

cultural events [online]. Available at

http://www.theguardian.com/politics/2008/nov/06/boris-johnson-

london-culture [Accessed 09.11.14].


Contact

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• Twitter @chrisaustin87

• linkedin.com/in/chrisaustin87

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Education

Sponsorship and Commerciality - Event Perspectives Series