Today’s marketplace is noisy. It is hard to get cut-through with your marketing and as a small business you can spend an extraordinary amount of money while not truly getting any traction.
With one of my earlier businesses I had a mentor who was a marketing guru; my experience was pretty limited. As I started working through the clutter of a marketing plan, listening to pitches from creative agencies and marketing ‘experts’, I thought I had started to get it. I had started to see where we could place some ads, what sort of spend we would be looking at and then what sort of return these would generate – based on the numbers that the agencies told me we would reach…
One of my mentor’s favourite sayings was – “Who is this activity really for?” – What he meant by this was most marketing activity and in particular adverts that companies place make the company placing them feel good about themselves but don’t really get the end result. “Look at our ad in [X magazine]” they say to their staff, their board and their customers. However, when engaging in marketing, small businesses should focus on customer acquisition (how many customers came on board because of that advert?) and/or units sold directly as a result (how many customers gave you money because of that advert?). If the marketing activity makes you feel good about yourself but doesn’t bring on any new customers or get you sales, you have probably gone down the wrong path. Unless you have the marketing budget of someone like Coke – then brand advertising is fine and advertising agencies will love you for it.
Now I am not a marketing guru. I am not going to tell you how to fix the above. What I am talking about is just one element of marketing that might get some results - sponsorship. Does sponsoring an event (charitable or not) help you to cut through the noise? The reason for my interest in this now, and for full disclosure, is because I am running a charitable event (The Matariki Charity Ball in Sydney, Australia). I wanted to know why some companies sponsor, some don’t; why some events are sponsored, and some are not. So I interviewed a number of companies big (an airline, a freight company, an electronics company and a bank) and small (two electronics manufacturers and three services companies) and the below is what I found out. Hopefully you can use this to help make that decision as to whether sponsoring an event is for you and your marketing plan or not.
Have a sponsorship strategy
As a small business owner, you probably have a business plan (whether it is in the bottom drawer or up on the wall), you probably have a budget and might even have a strategy to stick to that budget. In your business plan you probably have marketing and sales strategies. Sponsorship is an odd one as it doesn’t seem to fit nicely into a particular box – instead it lays across sales, marketing and overall goals (business and personal). Because of this all of the small businesses I spoke with had no specific ideas on how they would make decisions as to sponsorship – it was on a ‘case by case basis’, which is short form for saying that they had no idea and would go on gut feel. The larger businesses did have strategies but stated that they didn’t always follow it to the letter of the law. That is ok – following your plan 80% of the time will generally still get the desired results.
Build your strategy for making decisions about sponsorship in a structured way
The airline I spoke with utilises a structure for making decisions that very much reminded me of how we worked when I was at Toyota. If you put their process into a picture, the picture would resemble a house – with values as the foundation and goals as the pillars. Decisions are made by looking at the topic from the bottom up. For example, a value an airline might hold is around maintaining and improving the pristine environment of the destination they fly to. If the event presented was potentially damaging to the environment, the airline would not sponsor it. Similarly a goal they might have is to showcase the focus country as a destination – so a sporting event held in a beautiful part of that country would fit here and it would move to the next phase of decision making. A great tip I received was to look at relevance. If you are entering South Africa as your next market – sponsoring an event in Adelaide, Australia would make less sense than sponsoring an event in Cape Town. Yes that sounds obvious – but I have seen many ‘obvious’ decisions that have been made in ways to make your eyes water.
Commercial, brand and will it make a difference?
The next phase of the decision making process is to look at three aspects. It does not need to fulfil all three but needs to achieve results in at least one of the below:
1. Is there commercial value?
2. Can we truly make a difference with this particular sponsorship?
3. What is the impact of this on our brand?
Events are not all created equal. There are some events that bring people into your shop and help them to buy your products. For example, I used to do an evening 7km run that was sponsored by the local Adidas shop. The run started and finished at the shop and they had ‘runners specials’ on while we were there. Without fail, I bought something new at least once a month and now my ‘running wardrobe’ is full of Adidas apparel – sponsoring the run gave good commercial value for the local shop.
Charity events have no, and should have no, commercial gain. However, is the amount of money/time/effort you are going to invest actually going to make a difference? This is why many of the larger corporates have charity partners – there is a pool of value that is budgeted for corporate responsibility. Spread around the many deserving charities this pool would empty quickly with not much effect to the individual charities. However if focused on a single charity this pool could make a real difference. For example the freight company I spoke with partners with a ‘books in homes’ foundation – and makes a massive difference as that is all they do (again with minor exceptions). If they spread their money and time around five different charities, their impact on the education of children at risk (a value of theirs) would be lessened.
Finally, some sponsorships make sense from a brand value position. For example, an Australian electronics giant sponsors one of the teams in the National Rugby League purely to create greater brand awareness – every time you see one of the teams’ supporters on the street wearing their jersey, the brand name stands out. Etihad Stadium, ANZ stadium, Westpac Trust stadium – these are examples of brand awareness sponsors. I believe that as a small business, brand value advertising is not a good idea. Spend your money on acquiring customers and getting them to buy your products.
Good luck if you do decide to sponsor an event and I hope this framework helps with the decision making process. BTW - if you can somehow secure a celebrity like Beyonce then maybe just maybe all of your sales Christmas' will come at once!
About the author: Andrew is founder and CEO of Austep, an organisation that works with small business, business, start-ups and entrepreneurs developand grow. Austep is also the platinum sponsor of the Matariki Ball. For more information on how you can grow your business and succeed email Andrew on email@example.com
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