Businesses can use effective sponsorships to add credibility to their brands, get in front of the right people and even improve their corporate social responsibility credentials. While, at its core, it is an exchange of money for services, a sponsorship can be so much more. More than a logo on an invitation or a branded banner at an event, it provides business access, connections, resource support, credibility, audience access, data, and helps to share public perception of your brand in a way that can be hard to achieve through internal marketing efforts alone.

Research by Marketing Charts found that in 2018, a company’s average spend on the sponsorship of an event was $20,000. Bizzabo also notes that at least 30 percent of businesses are allocating more than 20 percent of their total events budget on sponsoring and exhibiting at events. It is clear that businesses are open to sponsorship opportunities, and they are willing to throw a fair sum at events in particular.

While sponsorship agreements can often be mutually beneficial, it’s important for both parties to interrogate the value a sponsorship agreement can offer, and its potential pitfalls.

Understand your goal

It is essential that you have specific and measurable goals, so you know outcomes you want. What are you looking to get out of sponsoring an event, campaign or organisation? Many businesses just throw money at sponsorships as a ‘box-checking’ exercise, without thinking strategically about the value they can leverage from a meaningful partnership. What value is the sponsorship providing to your brand? How does the sponsorship fit within your broader marketing strategy? What audience will the sponsorship help you to access?

The same goes for organisations looking for funding from sponsors. While it may seem easy (or perhaps necessary) in the short term to take cash from wherever you can get it, a more strategic approach will set you up for a long-term partnership that will help to ensure you sustainability. Consider what you need to secure your short term viability, but also think about what sorts of brands, individuals or organisations will align with you in the long term. Think about what resources you need for you ‘must-haves’ and what parts of your program are optional.

A partnership, not just a sponsorship

Choosing a cause or event to support can be a challenge for an organisation. Look for sponsorship opportunities that speak to your values as a business and that offer access to your chosen audience. Think of your sponsorship as a genuine partnership, not just a marketing spend, and you will be able to leverage maximum value out of it.

Consider also the reputation of the initiative you are looking to sponsor. In the words of Warren Buffet, “it takes 20 years to build a reputation and five minutes to ruin it.” It’s easier than ever, in our current digital age, for companies to make a misstep that can immediately tarnish their image and partnering with tarnished brands will likely hurt you more than it’ll help.

The same can be said for organisations seeking sponsors. The need for funds can make for poorly considered decision making, which results in an organisation accepting sponsor funds from a business which doesn’t align with their message or even works against it. Controversial sponsorships, such as Transfield’s sponsorship of the Sydney Biennale, which nearly resulted in an artist boycott, provide high profile examples of what can happen if organisations don’t think carefully about where they source sponsorships.

Overall, you’re on the right track if you can nail down a sponsorship that understands your goals, shares your values and audience and is well respected by the market. Establish an understanding of sponsorship expectations from both parties early on, and commit, communicate and cooperate.