Is an Event Sponsorship Worth the Cost?

Let’s start with an uncomfortable truth. That event sponsorship you are considering. It’s likely going to cost more than you expect, perhaps much more.

Businesses and brands new to sponsorships are often surprised by the price tags that frequently accompany sponsorships. For example, just sponsoring a major party at the Super Bowl can cost between a quarter of a million to a million dollars.

Naturally, you don’t have to spend the annual budget of a small country to have a valuable sponsorship. There are several opportunities out there and several events vying for your attention. The question you have to ask yourself when searching for sponsorship opportunities is this: What is the sponsorship worth to you?

That’s not a nebulous query. It’s an important qualification. An opportunity needs to be worth more to you than you paid for it in order to generate value from it. But that doesn’t mean you are in a head-butting competition with the event you are looking to sponsor. In reality, this type of thinking helps you picture the sponsorship as the partnership it is meant to be.

Here’s how a true sponsorship works. An event sets a sponsorship price. This price covers the costs of the event (or some of the costs, depending on how many sponsors they are trying to procure) and some profit margin. Now, you need to look at that price and understand what you hope to gain from the sponsorship, whether that’s in the number of eyeballs that will see your brand or new exposures to your company, media opportunities, increased goodwill, or any number of reasons.

Photo Credit: Digital Surgeons

Does the value you are going to get from the sponsorship exceed the price you are being asked to pay? If the answer, based on your specific metric or metrics, is yes, then the sponsorship is valuable.

For example, look at the Budweiser Made in America Festival. This music fest, which was headlined by Beyoncé and Nine Inch Nails in 2013, was planned and sponsored by Budweiser. That year Paul Chibe, the Vice President of U.S Marketing at Anheuser Busch did an interview with Fortune. Here’s what he had to say about the festival.

“From a financial standpoint, we put more in. We didn’t make money on it,” he said. “Music is a key part of who people are. It’s a powerful pathway to create a relationship with the consumer. When people think of great music and the brands that enable it, we want them to think of Budweiser.”

I’m sure that Budweiser as a giant, multinational corporation has many excellent attributes. However, I don’t believe this music festival was put on for altruistic reasons. Mr. Chibe said as much. Budweiser did the math and found that the exposure the brand received through the activation was more significant than the cost of the festival itself.

So, now the real question. What will some of these sponsorships cost you?

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Photo Credit: Billboard

At small, regional events, you may be able to find sponsorship opportunities ranging from $500 to $5,000. The value you get from those sponsorships is up to you to determine.

If you are interested in sponsoring larger activations where the exposure is much greater, the cost is also exponentially greater.

There’s a very interesting blog on LinkedIn where the author, Christopher Ryan, details the costs associated with several major festivals aside from sponsoring the events themselves and some of the complications that can arise. I’m including a couple of examples below.

For instance, the cost of a pop up on Main Street at the Sundance Film Festival can cost between $350,000 and $1 million. That’s for a pop up open to the public or for VIP parties during the first week of the festival, which is the most media-heavy week (also, Park City liquor licenses only last for 3 days).

Now compare that to the cost of a pop up during New York Fashion Week. These costs range from $10,000 to $35,000 for a two-day complimentary beauty bar.

As you can see, there is quite a disparity between Park City and NYC. Why? Well, (in addition to the fact that management has recently changed for New York Fashion Week and the costs have come down) it’s likely the audience. Sundance appeals to a broader spectrum of people than New York Fashion Week. It also could be media coverage, for the same reason. But really, it all comes down to the perception of value.

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Photo Credit: Verdict

Let’s look at another example, this time parties.

The cost of sponsoring a party at the Golden Globes ranges from $25,000 to $250,000 for a pre-event bash to $75,000 to $300,000 for an after party (the post notes that the most expensive costs include the brand’s logo on the red carpet steps, several invites, and some advertising).

While the cost of a party at the Sundance Film Festival is only $1,000 - $50,000. That’s for a restaurant on Main Street at a duration of two and half hours. The range, by the way, depends on who the party attracts.

The cost variation continues when you look toward the Super Bowl, where a party can run you $300,00 to $500,000 or more. However, that’s just the expense of the party itself. According to the post, an event needs a big-name headline performer to attract any attention. The cost of that performer can be $250,000 to $1 million or more. Now, that’s to host the party yourself. However, even sponsoring someone’s party will range from $250,000 to $1 million for an A-list event.

Finally, we come to the Academy Awards. Parties occur throughout Oscar week. These events in the weeks leading to the ceremony can cost between $10,000 and $150,000. However, the real glitz and glamour occur after the awards are given out, and these after-parties achieve real exposure and also some real costs: $250,000 to $1 million for a top event and $50,000 to $200,000 for a studio party or a lower-tier after-party.

Compare that to the Emmy Awards where the cost of a party sponsorship can be less than $100,000 per brand.

The point is that even for the big-name events there is a lot of disparity between the costs for sponsorships. While you may wish that you could sponsor a million-dollar Oscar party, that may not be the best thing for your brand. A $100,000 Emmy party might just give you a better return on your investment.

If all comes down to the perception of cost. What audience are you looking for? What do you hope to achieve from your sponsorship or activation? What does success mean to you? Know these answers, and you’ll know which sponsorships suit your brand.

For more thoughts on finding the best event sponsorships and creating the biggest splash at those events, give Event Architecture a call at 972-323-9433.

sofia krsmanovic