Global sponsorship spending reached $62.7 billion in 2017. Companies all over the world sponsor events, charity causes and other activities to raise brand awareness. As a small business, you may not have the budget to sponsor a big event like the Super Bowl, but you can support local sports teams and small organizations. Local sponsorship can be a great way to gain exposure and make a difference in your local community.
TL;DR (Too Long; Didn't Read)
Local sponsorship is a cost-effective way to create and raise brand awareness, gain exposure and increase your reach. This form of advertising may also help maximize your SEO efforts, leading to more website traffic via Google searches, local marketing and sales.
What Is Sponsorship?
Sponsorship is often associated with financial support for global, national or local events. However, this form of promotion may also include goods or services that companies or individuals provide to others. For example, a sports equipment store may sponsor local tennis leagues by offering ball machines, nets and posts, tennis rackets, sports apparel and other products. A catering agency may provide support for local events organized by charities.
Compared to traditional advertising, sponsorships seek to establish a stronger relationship between the parties involved. They are often considered to be good public relations, or PR, and may help advertisers increase brand awareness, expand their reach and accomplish specific business goals.
Sponsorship does not directly promote specific products or services as traditional ads do. Instead, advertisers pay to support a cause or an event about which its potential customers care. As a result, sponsors are associated with the event by attendees, customers and journalists.
If, say, you pay for events organized by environmental charities, you'll show that you care about the environment. This may help strengthen your brand and improve your reputation. Attendees will see your logo displayed on banners, associate your name with the event and check your website or visit your stores to find out more. It's a win-win situation for everyone involved — advertisers gain recognition, and event planners receive the support they need.
How Does Corporate Sponsorship Work?
What's the first thing that comes to your mind when you hear the word "sponsorship"? Most likely, you are thinking about Pepsi and the NFL, L’Oréal and the Toronto International Film Festival or Rolex and TED. While it's true that popular brands typically sponsor global events, small businesses can make a difference too. Sponsorships are not limited to large-scale film festivals and global events.
This type of promotional activity involves two parties: a sponsor, or advertiser, and a charitable organization, sports league, athlete, local organization, etc. The parties sign a sponsorship agreement that outlines the terms of their relationship. For example, advertisers may choose to have their logo or name displayed on banners, exhibition booths or the sides of the playing grounds. Sponsorships that involve charitable causes are often referred to as "event marketing."
A significant part of the increase in corporate sponsorship can be attributed to small- and medium-sized businesses. This advertising method enables them to gain exposure in a cost-effective manner. When done right, it may improve a company's image, drive customer loyalty and increase sales. Furthermore, sponsorships make it possible for small businesses to compete with popular brands that have larger advertising budgets.
Types of Event Sponsorships
Most people associate sponsorships with sporting events, but there are plenty of other activities you can support. If, say, you're a startup or small business with a limited budget, you may provide goods and services instead of cash. Prize sponsors, for example, donate products printed with their name or logo. Food sponsors offer free snacks and beverages, while digital sponsors create apps for events or help charities and other organizations promote their causes online.
As you see, financial sponsorships are not your only option. There are plenty of other ways to support a cause in exchange for brand awareness at an event. Depending on your industry and type of business, you may consider the following options:
- Financial sponsorships: Involves cash donations
- In-kind sponsorships: Involves products or services
- Media sponsorships: Involves financial sponsors that secure advertising for a cause or event
- Promotional partnerships: Involves influencers, bloggers and other individuals who promote a cause or event to their fans and followers
Media sponsors, for example, may pay for ads in local newspapers or cover the cost of video production for charitable organizations. If your small business has a large fan base, you may enter a promotional partnership and support a cause by spreading the word about it on social media. Evaluate your options to determine what kind of sponsorship best suits your needs. Ideally, you should support causes that align with your company's mission and branding efforts.
Examples of Successful Sponsorship Programs
A major difference between traditional advertising and sponsorship is that the latter is based on a stronger relationship between the parties involved. Pepsi, for instance, has been sponsoring the NFL for nearly two decades. Thanks to this relationship, Pepsi gained a lot of exposure and brand awareness, and the NFL extended its half-time show and reached a wider audience.
Another notable example is the collaboration between Coca-Cola and the Olympic Games. The company has been sponsoring the Olympics since 1928. In 2019, they extended their partnership agreement until 2032. Coca-Cola also promotes youth involvement in the Olympics through its network of influencers and bloggers.
As a small-business owner, you're probably familiar with TED conferences, but did you know that Rolex is one of the oldest sponsors of the event? The Swiss luxury watch manufacturer has been supporting TED since 2007. The company was initially a "classic" event sponsor, but its relationship with TED evolved into a true partnership. Over the years, Rolex invested in technology to develop innovative TED media platforms, create engaging content and help the organization increase its reach.
Who Needs Local Sponsorships?
Startups and small-business owners don't have the same financial resources as big brands. Therefore, they need to identify sponsorship opportunities that fit their budgets and marketing goals. Local sponsorships are a good starting point. This promotional activity benefits both large organizations in need of regional events and small companies planning to launch services in a new city.
Mom-and-pop stores, private clinics, marketing agencies and other small businesses can all benefit from local sponsorships, as they depend on community loyalty. By supporting local events, they can reach more prospects, build customer loyalty and increase their rankings in local search results. Web-based businesses that operate nationwide, such as fintech startups and Airbnb-type platforms, can leverage local sponsorships to enter new markets and reach a local audience.
Local sponsorships may also benefit national chains but in different ways. Established companies with a nationwide audience support local events for branding purposes. Unlike small businesses, they are not necessarily focused on local rankings. In this case, local sponsorships can help enhance a company's brand image and strengthen its relationship with the target market.
Benefits of Local Sponsorship Marketing
More than 70% of consumers say they positively view brands that provide quality event experiences, according to a 2016 survey conducted by the Event Marketing Institute. About 74% of those who engage with such brands are more likely to purchase their products. Sponsoring local events is a great way to build trust with your target audience, gain credibility, enjoy unique marketing opportunities and promote your brand. Furthermore, it may help your business get exposure on TV, radio, social media and other marketing channels at a reasonable cost.
As a small-business owner, you can partner with nonprofit organizations, Little League teams, local groups and noncompeting businesses whose causes align with your branding efforts. Even a small event like a food festival can help you microtarget local customers and put your business in the spotlight. Think of it as a cost-effective way to market your products, generate leads and engage with potential clients.
Local sponsorships can also maximize your search engine optimization efforts. SEO encompasses the processes and strategies used to ensure your website ranks in search results for the targeted keywords. To put it simply, you can get more website traffic and social media exposure by sponsoring local events.
The organization you support may put your logo and website address on its blog, flyers, banners or event tickets and mention it in press releases and newsletters. As a result, attendees will see your name everywhere. Some of them may click on the link to your website or blog, visit your stores or start following your business on Facebook, Twitter and other social networks. This will result in higher search engine rankings and greater visibility for your brand.
Local Sponsorship Marketing Drawbacks
Like with all marketing strategies, local sponsorship has its drawbacks. First of all, there are no guaranteed returns. Even if you do everything right, you have no guarantee that attendees will buy the products that are being promoted or show interest in your small business. Second, your brand will be linked to the people you support, so if anything goes wrong, your image may suffer.
Cyclist Lance Armstrong lost most of his sponsors, including Nike, back in 2012 when it was confirmed that he had used anabolic steroids. That's why you should research the events and brands you want to support as well as the other sponsors involved. For example, an event sponsored by a factory with dubious environmental practices isn't the best choice for a sustainable business. If you become a sponsor, people may start to question your credibility and core beliefs.
Another potential drawback is that you don't really know how your money will be used. To avoid this issue, draft a sponsorship agreement that states where your donation goes.
Furthermore, some types of sponsorships can be risky. Let's say you enter a long-term sponsorship agreement with a local sports team. At some point, the team is disqualified or begins to lose game after game. As a result, you'll lose money and have your reputation tarnished.
Is Sponsorship Worth the Money?
The marketing benefits of corporate sponsorships depend largely on your strategy. For example, a local store that sells ski equipment and accessories may not necessarily get new customers by sponsoring a local sports team. This form of promotion can help the company raise brand awareness, but it may not translate into more sales.
The key is to select sponsorship opportunities that align with your company's mission and the interests of your audience. If you're targeting ski enthusiasts, focus on events that are related to this sport. Sponsoring a basketball game may lead to greater exposure for your small business, but those attending the event may have no interest in ski gear.
All in all, sponsorships are worth the money as long as you do it right. Keep your target customers in mind at all times — think about where they gather, their interests and what they expect from your brand. Engage with your audience before, during and after the event for maximum exposure. Spread the word about it on your website, social media pages and other marketing channels.
Most importantly, choose a cause that is relevant to your products and fits with your brand. Perform a cost-benefit analysis to determine whether or not your business can achieve measurable results through the sponsorship. If you're planning to sponsor an event, ask its organizers for a custom sponsorship package that can give your business a competitive edge.
- Statista: Global Sponsorship Spending From 2007 to 2018
- EventBank: 8 Types of Event Sponsorships That Bring Value in 2020
- Event Marketing Institute: EventTrack 2016
- MBA Skool: Sponsorship
- The Atlantic: The Man Who Brought Down Lance Armstrong
- McKinsey: Is Sports Sponsorship Worth It?
- National Alliance for Youth Sports: 6 Reasons Why Businesses Should Sponsor Youth Sports
- Small Business Trends: How Sponsoring a Local Event Can Grow Your Business