A basic guide to sponsorship agreements

Sponsorship is an associative marketing tool. It is defined by the International Chamber of Commerce as:

 

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

 

PAIL Solicitors Brazil 2014 1 300x199 A basic guide to sponsorship agreements

“Sponsorship is an associative marketing tool.”

 

According to the IEG, global sponsorship rights spend has grown from $5.6 billion in 1987 to an estimate of $46 billion in 2010. This development of investment in sponsorship has been driven by the realisation that successful longevity is achieved by contribution to the community at grass roots level. Businesses are targeting communities of people and not just demographics. They are bringing alive the brand experience at grass roots level by aligning themselves with the communities. The value of media exposure gained by a brand through sponsorship is the most valuable asset of a rights-holder. The impact the rights-holder has on the sponsor are the transferrable attributes from the sponsored property. Sports and sports personalities are the most popular sponsorship vehicles.

The drivers to sponsoring the rights-holder’s, property are: that associating their brand with the property will generate (1) additional revenues or cost savings in the profit and loss account; and/or (2) as an increase in the value of brand equity on the balance sheet, the rights-holder licensing of rights association will boost the intellectual property assets and other intangible benefits for the sponsor.

The 2 key drivers for the rights-holder are to seek sponsorship are: (1) cash; and/or (2) a defined value in kind.

 

The Contract

The benefits of the sponsorship relationship should represent a win-win partnership for both the sponsor and the sponsee. That is Rights-holder should get its cash and/or defined value in kind (personnel, access to technology, marketing or PR). Key issues to address are:

Identity of parties

Exclusivity

SLA

Force majeure

Territories

Data protection and social data legislation

Trademarks

Image rights

Copyright

Ambush marketing

Privacy

Electronic communications

Terms and conditions

Child protection legislation

Advertising and sales promotion legislation

Applicable law

Termination

Seek specialist media solicitors as non-specialist might miss important legislation that could affect the sponsorship agreement.

 

The Sponsorship Opportunity

This is an opportunity for a global sponsor to change attitudes and behaviours towards its brand or corporation by associating itself with a generation demographic and/or community. A global sponsor might be preferable to meet the needs of the different markets. A local sponsor might be more realistic if the property is unlikely to be successful outside of the local market.

 

The Plan

SMART. Specific, Measurable, Achievable, Relevant, Time Bound

 

Specific:

Rights Holder

What exactly is the property or properties that rights-holder has to license to a sponsor?

What are clear objectives for each property?

What is the most appropriate approach to sponsorship?

How best to position the property to attract sponsorship investment?

Sponsor

What is the sponsor’s brand vision?

What are its objectives for its brand?

What is its personality?

What sort of profile does it have?

How is it positioned in the marketplace, both against competitors and against other brands? How can an association with Rights-holder improve or bolster the sponsor in its marketplace?

What are the culture and values of the brand and organisation?

What are the brand’s functionality, and the benefits that it gives consumers?

 

Measurable:

How can we measure the ROO for the sponsor? Rights-holder needs to focus on target tracking against sponsor’s objectives (Rights-holder will need to be able to tell the sponsor how it is going to deliver against their objectives when pitching for sponsorship)?

Should we have sponsee performance hurdles linked with instalment payments and other deliverables by the sponsor? If yes, what are they?

 

Achievable:

Rights-holder cannot make promises it cannot keep. But it needs to make some sort of representation regarding building awareness of the sponsor’s brand.

 

Relevant:

The sponsors and rights-holder may have different drivers. What are the drivers of rights-holder? What are the drivers of the sponsor? Are their shared goals? The rights-holder must share key attributes with the sponsor to be relevant.

 

Time Bound:

There should be a clear end-date. What is the exit plan? How long will the rights-holder license rights or other assets to the sponsor? What is the exit plan? How long will the contract last?

WorldCup2014 A basic guide to sponsorship agreements

“SMART. Specific, Measurable, Achievable, Relevant, Time Bound”

 

 

Key Pitch Points

Benefits for Rights-holder

1. Cash.

 

2. Personnel, access to technology support, pr and marketing.

 

3. Strength of shared goals.

 

4. Credibility of brand endorsement.

 

Benefits for sponsor

1. A single clearly definable rights-holder with fully registered trademark and copyright.

 

2. An experienced media solicitor is on retainer to write a tailored contract.

 

3. Rights and other licensed assets.

 

4. Marketing activity including data mining – it will allow easy access to a clearly defined community, giving the ability to segment and measure this digital community.

 

5. Credibility of brand endorsement – sponsors will learn what the digital community thinks about their brand and have the opportunity to enter into a dialogue.

 

6. Brand advertising opportunities.

 

7. Strength of shared goals.

 

To book a face to face consultation for commercial legal advice you should contact a commercial lawyer (charge rates may apply and may vary).

This article was written by Peter AdediranMore About Us.

 

 

Copyright PAIL Solicitors 2012

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