Inside Sponsorship Performance Guarantees

Piles of research, statistics, Q Scores, and intercepts might make a property appear like the perfect fit for your brand, but marketers never know if a sponsorship will be effective until they sign on that dotted line. In a world where a “return” cannot be quantified until an “investment” is made, sponsorships at some level are branded gambles. Even the most thorough due diligence cannot promise a home run—which is why Sponsorship Performance Guarantees are finding their way into more sponsorship contracts.

Performance clauses have been around for years, used primarily to protect a sponsor from buying media that doesn’t deliver—ratings protector pacts predict the broadcast ratings of programming blocks sponsors contractually buy time on, then deliver cash refunds or future discounts if the predicted reach was too high than actuals.

Sponsorship Performance Guarantees are born out of media protection and used to protect a sponsor from properties that over-promise and under-deliver. When the National Thoroughbred Racing Association pitched Chrysler’s Dodge unit years ago, the car maker was hesitant to sign. With such franchises as the Breeder’s Cup, the NTRA seemed a bit too upper crust for the maker of Dakotas and Rams. But as Dodge learned the NTRA was a tightly knit association of almost 700,000 loyal consumers, its marketers saw an opportunity. The deal? Dodge would commit to a sponsorship if it could double its share of sales among NTRA members.” If it couldn’t, the brand could contractually walk away.

Include Sponsorship Performance Guarantees In The Contract

Performance Guarantees should be worked in wherever possible—although marketers will find them easier to sell in with an NTRA than an NFL. Here are seven promises properties need to make before you sign on:

    • Ratings - Same as always. The property needs to provide realistic expectations of what your media is buying. The price of the media should be proportional to those expectations. Just remember that “unforeseen events” (see #5) that hurt ratings can’t trigger PG clauses.
    • Traffic - On-site efforts need to pull the right people. The property has to deliver the right numbers and demographics. Demand they execute regular research via third-parties to back up what their ticket booth-operators report.
    • Face-to-Face - Where events get quantified. Define how much square footage will be available for branded interactives and the parameters of hospitality.
    • Weather - Put a foundation in place through which discounts and refunds are applicable if the show can’t go on.
    • Event interruption - War, terrorism, a multi-state blackout—define what kinds of non-weather events would cancel the experience and trigger a refund or concession back to the brand.
    • Awareness - The guaranteed sum of all of the above. Put in the contract how many eyeballs will be reached—and hence, will about your sponsorship, saw the signage, interacted with your people, etc.
    • ROI - The Holy Grail of Performance Guarantees. Spell out exactly what the brand needs to get out of the sponsorship and find a way to get the property to sign on to make it happen.

The action you’ll take if the above parameters come up short is a negotiation in itself. Take a look and decide what’s best for the brand. Options include terminating the alliance, getting a discount on future rights fees, free media time, and even partial refunds.

Posted by Kristy Elisano | Request as a Speaker

Caffeine dependent Jersey girl. Inspired by creative risk takers and underdogs. Chief Marketing Officer, Doodle owner and lover of all things chocolate.