Blog Post

SPONSORSHIP PRICING: SPRING 2021 EDITION

Several times each week, someone asks me how 2020 impacted sponsorship pricing. No matter who asks the question, my answer is the same.

“It depends.”

In my opinion, pricing depends on which side of the table you’re sitting on and how the pandemic impacted your industry.

For properties, it’s about making up for lost time.

Many properties offered credits and make-goods from 2020. At the same time, sports properties lost in-venue revenue from canceled events. Non-profits suffered declines in donation revenue.

As we entered the First Quarter of 2021, these properties priced their sponsorship offerings to make up for lost time and revenue. I saw more than a few cases of over-enthusiastic pricing. Although the pandemic introduced uncertainty into Winter and Spring events, the successful vaccine roll-out and decreasing infection rates kept the sponsorship market relatively strong, in my view. That optimism continues into the Second Quarter, especially as we see event-related organizations hiring new staff or bringing their teams back from leave.

For sponsors, it’s about short-term caution or long-term confidence.

If a sponsor’s industry was not hit too hard by the recent recession, many buyers had cash to spend. We saw continued caution around sponsorship for events in the Spring and Summer of 2021. After getting burned in 2020, few are willing to make firm bets on how event venues would welcome attendees. 10% capacity? 40% like the Indy 500? 100% like in Texas or Georgia? For this reason, there may be some pricing softness in the short term as sponsors try to determine what level of exposure they will actually receive.

However, pricing on long-term stadium naming rights or other similar relationships rivals pre-pandemic levels or higher. This trend will continue as consumers remain confident that public health measures continue to tamp down COVID-19. These sponsorship deals represent future confidence in the viability of sponsorship as a marketing platform.

All of us should pay attention to some pricing fundamentals for the foreseeable future.

A mentor of mine taught, “Pigs get fat, hogs get slaughtered.” This adage warns against property over-pricing or sponsor over-reaching.  I remind clients to do the following:

Look for tangible benefits packages that provide an even distribution between at-event benefits (like tickets and signage) and promotional benefits (like PR, digital and social). These packages will be worth more than event-heavy packages for the foreseeable future.

Gauge whether the intangible value of the property’s brand improved or declined in 2020. Even with closed venues, some properties stayed “above the radar,” promoted their brands, spoke to their audiences, and remained relevant. These properties will command a higher price point related to their intangible value. Properties that went silent have rebuilding to do, and their weakened brand position will depress pricing for their sponsorships.

When evaluating the pricing of sponsorship packages, continue to focus on return on objectives (like brand awareness) or return on investment (like incremental sales). Now is the time to demonstrate that sponsorship pricing is commensurate with sponsorship results.

One final thought on pricing for Spring 2021. If 2020 taught us anything, it promoted our ability to be flexible and creative. Pricing is always about what a willing buyer and willing seller agree upon. To the extent both find ways to price sponsorship to address both parties’ needs in a new and creative way, we see sponsorship pricing substantially rebounding in 2021 from a dismal 2020.

 

 

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