Companies can benefit greatly from sponsorship, but it pays to do your homework first. Peter Bartram looks at deals big and small and gathers some top tips for making your money work
Callum MacKay, head of sponsorship for brewer Tennent's, has an eye for a shrewd deal. Last year he paid 15,000 [pounds sterling] to sponsor "T on the fringe", a series of rock music gigs at the Edinburgh Festival. Only a few companies can point to hard business benefit from sponsorship. But MacKay earnt a big pay-off from his modest investment. Tennent's generated 120,000 [pounds sterling]-worth of media coverage, sold 37,000 pints of lager at the gigs -- and signed up a major new outlet as a regular customer.
Not surprisingly, MacKay is looking forward to this year's T on the fringe, although he admits "it might cost us a little more". MacKay's experience shows that you don't have to be a big spender to get value from sponsorship, but few companies that have tried it can point to such a good pay-off.
Too often, they end up "post-rationalising" their involvement, admits Rosemary Sarginson who chairs the judging panel of the annual Hollis Sponsorship Awards. "They thought they had a good idea and after the event they work backwards to try and justify it," she says.
Rowan Andrews, managing director of sponsorship consultancy Playmaker Communications, says that sponsorship is prone to the chairman's whim. "A deal is struck on the golf course and the company ends up sponsoring a project or sports club, but there's nothing integral to the relationship that supports the business."
One reason why so few companies can point to hard business benefits from sponsorship is that financial managers are kept out in the cold: marketing and sales managers dominate decision-making. But finance professionals ought to play a greater role. There's a whole range of tough business-focused questions that needs to be asked about any sponsorship deal (see box).
10 TOUGH QUESTIONS When sponsorship is raised, it is the job of financial managers to ask 10 tough questions: 1. Strategy: is there a strategy behind this proposal which serves our business needs? 2. Objectives: have the sponsorship's objectives been clearly defined and do they align with what the business wants to achieve? 3. Fee: does the fee seem reasonable for what we're getting and can we offer some of that in kind -- such as management support or publicity -- rather than cash? 4. Payments: have we scheduled the payments...