Blog Post

THREE TIPS FOR BARGAIN SPONSORSHIP BUYERS

By Ken Ungar

Value investor Warren Buffett may be one of the business world’s great bargain hunters. So, if CHARGE invited Buffett to speak at our next sponsorship seminar, what bargain hunting advice would he have for us?

In investing, Buffett looks for stock prices that are low based on the company’s actual value. When judging value, Buffett looks for signs like strong return on equity, low debt and increasing profit margins. Of course, falling stock prices in recessions make for good times to buy intrinsically valuable companies.

Since Buffett is too busy to attend a seminar, we’ll apply his principles for the benefit of sponsors. Buffett’s value investing process yields three bargain-finding tips for smart brands looking to set themselves up for post-pandemic success.

Tip 1: Identify the Property with Solid Performance

Buffett looks for companies with strong financial fundamentals. Sponsors can identify similar qualities to identify strong properties.

First, the property is p”sponsorship ready” with a robust platform to carry the sponsor’s message. When asked, the property can articulate a clear marketing strategy and demonstrate great execution through strong metrics in audience delivery or digital marketing.

Second, the partnership has a good track record of collaboration with sponsors. Case studies and 1:1 conversations with current sponsor partners can quickly confirm if the property knows how to actively build win-win relationships.

Tip 2: The Property Has Value Transcending Live Events

Until COVID-19 infections can be managed, live events will be challenged. When events are cancelled or limited in attendees, yesterday’s common sponsorship metrics become moot. There is no present need to measure attendees, stadium signage impressions or consumer leads generated.

Before the COVID-19 pandemic, the sponsorship industry may have overvalued live event metrics, with event attendees or the exposure opportunities playing an over-important role in sponsorship valuation. With those KPIs limited by empty arenas, sponsors have shifted attention to brand value which is less dependent on live event attendance.

For a property, brand value can be measured through the property’s connection with its audience. Powerful property brands have loyal, attentive audiences who think highly of sponsors. As a result, sponsors enjoy benefits like improved image, awareness or consideration.

Properties that can demonstrate this worth to their sponsors have value which can live without live attendees. For example, 11,000 fans showed up to a Zoom party thrown by the LA Dodgers at the time when Major League Baseball games were suspended. A property that can command that kind of loyalty through their brand has value worth considering.

Tip 3: How to Identify an Undervalued Property

If the property is sponsorship ready and has a brand transcending live events, how do you identify that it’s undervalued? We look for three signs:

  • The undervalued property has an operational drawback that will disappear soon.

    Properties needing live attendees (like sports) have issues during the era of COVID-19, but will bounce back post-pandemic. However, esports has thrived operationally in a digital-heavy world. Live event sports are probably undervalued; esports are likely not undervalued.

  • The undervalued property is well-positioned to exploit emerging consumer attitudes.

    For example, with consumers caring more about a company’s corporate social responsibility (CSR) policy, properties aligned with “causes” will be well-positioned. For this reason, non-profits or cause properties may be undervalued as consumer attraction to these sponsorships increases.

  • The undervalued property can reach audiences through organic digital and social media.

    Properties rich in story-telling may be undervalued, as they can leverage long histories or fascinating participant (i.e., athlete) brands. Digital and social media, with photo and video, make ideal platforms to reach audiences no matter what is happening in the world.

And a final word about timing. If you are starting your work now to acquire new properties or shed underperforming ones, you may be starting too late. As a sponsorship industry, we’re working now for the current and post-pandemic world. That’s why the time for review and analysis is today, as bargains are the proverbial “limited time offer.”

If you’re considering how to find value in the sponsorship world, contact CHARGE today

Check out our previous Blog Posts to learn more on topics surrounding sponsorship strategy. Contact Us for specific content questions.

 

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