What does it take to make sponsorships successfully work? Turn one-off transactions into powerful, long-term relationships between brands by picking the best partners and proving ROI.
Today’s guest is Ken Ungar, founder and president of CHARGE, a sponsorship marketing agency. Also, Ken’s a former chief executive for the Indianapolis Motor Speedway and author of Ahead of the Game: What Every Athlete Needs to Know About Sports in Business.
Ben: Hi, Ken. Welcome to the show.
Ken: Ben, it's great to be here. Thank you.
Ben: Absolutely. Would you mind taking a moment to introduce yourself to our audience and explain what you do at CHARGE?
Ken: Sure. My name is Ken Ungar and I'm the president and founder of CHARGE. CHARGE is a sponsorship marketing agency. We help organizations unlock the power of sponsorship to help them accomplish their business objectives, whether that's revenue growth or image enhancement. Whatever they want sponsorship to do, we help them accomplish that.
Ben: Very cool. If I'm a marketer, I'm listening to this episode, and I've never delved into sponsorships before, or just never really considered that being an avenue that I would consider going down, why should I consider sponsorships? If I'm either skeptical or unaware, what makes that an area of marketing that I should really strongly consider making part of my strategy?
Ken: That's a great question and it's obviously a question we get a lot. I'll start with defining some terms for everybody. A sponsorship is a type of marketing. It's a marketing platform. I know you're based in Fargo, North Dakota, so let's just say North Dakota State. North Dakota State, the Bisons are a property and they might give a brand or sponsor the right to speak to its audience (the property's audience), in exchange for a fee.
Just boiling it down, that's what a sponsorship is. It happens that sponsorship is one of the most powerful marketing platforms for a couple of reasons. First, if you look at something like advertising. Now, advertising is a great marketing platform. It's obviously the most prolific and the most used marketing platform as defined by dollars.
The marketer in advertising has to convince the consumer that the marketer’s company, its product or service has a great image. It is the marketers speaking directly to the consumer, but the convincing that has to happen is the marketer has to convince the consumer.
With sponsorship, the positive image of the property—the case we used before, North Dakota State—the positive image of North Dakota State is transferred to the sponsor simply by virtue of the relationship.
I'll use another example. I'm a baseball fan. I love the Chicago Cubs. If you love the Chicago Cubs by virtue of the sponsorship, you will love their sponsor. We call that effect transfer. But sometimes there's image transfer where if the Cubs or North Dakota State has a positive image, automatically the consumer's going to ascribe that positive image to the sponsor.
It's a lot more powerful than advertising in the sense that it's third-party validation. I, as a marketer, don't have to convince anybody of anything. Just by virtue of the relationship, the consumer feels better about the sponsor.
Ben: Sure. I think that's a pretty thorough explanation there. Our CEO, Garrett Moon, also happens to be a massive Cubs fan. I think he would appreciate hearing that for sure. Something that you touch on a little bit there is the idea of a sponsorship being a relationship. As it’s essential for any positive relationship of any sort, you need to really choose partners and collaborators wisely.
Let's say I'm sold on sponsorships as a strategy or as a tactic. What would be the first thing that you would recommend that I do to identify potential partners that might really be strong candidates for my business to partner with?
Ken: That's a great question. In that respect, we usually advise people to start with one thing and I'm going to mention this a number of times during our discussion today, and that's the audience. A marketer knows his or her audience in terms of the customers of their brand and that's super important because the most important aspect in choosing a partner to sponsor is to understand their audience. In order for sponsorship to really work, there has to be a shared target audience.
If your consumers are ages 25–44, predominantly male, have a certain household income, from a psychographic perspective they like certain pursuits, certain hobbies, your audience and the property's audience have to match pretty much like a hand in glove. When that happens, that's when all the good impacts that we talked about earlier happen. The first thing you're going to do is you're going to identify a property that has the same or similar audience to you.
The next thing you're gonna do is look at a property. If you're a brand marketer, you're going to look at a property and you're going to say, what is the reputation of that property? Whether it's a Cubs, the North Dakota State Bisons, what is the reputation of that property? Because we talked about image transfer, that great reputation is going to be transferred to you as a brand.
You're going to want to find properties that share your values, that stand for the same things that you do, but potentially are more well-known because they're in sports, entertainment, music, or fine arts. Those two things start with the audience, and then understand the brand and the reputation of the property. Those are the two best things to get you started in terms of identifying a potential partner.
Ben: I think it makes a lot of sense to start with partners that have the same or similar audiences. I guess a follow-up question I would have to that is, do you have any advice on researching potential partners or sponsorships that can really also help you grow your own audience?
I imagine if there is already some overlap there, there’s that thought of trying to use that to get in front of people who don't already know who you are. I imagine that might get a little bit complicated if you're speaking to the same people twice, so to speak, if they are already aware of you because your audiences do overlap so much.
Ken: Yeah, a great question. Let's break that down into its component parts. There's a difference between the audience being the same in terms of its demographics and psychographics and the size of the audience. Let's stick to professional sports. Probably about 75% of all sponsorship are in sports, either amateur youth, college, professional, and then the remaining part are in not-for-profits, museums, festivals, concerts, things of that nature. We'll stick with some sports examples and I'll stick with Cubs because I love the Cubs.
Let's just say that they're a family-oriented brand, so their audience are families. If I'm a company and the audience for my customers, for my products, or services or also families, that's an alignment of the audience in terms of how it's composed, but the size is really different. I might be a smallish company, maybe I sell in only a certain part of the Chicago area, but the Cubs reach millions of families.
Now, they're both family-oriented brands—the Cubs and this magical sponsor—but the Cubs are now opening the door to its significantly larger audience. Now, the company can convert many new customers, people who may not have heard of this company before by virtue of their association. That's one way that brand can grow is just by virtue of an introduction to a much bigger audience than that company could ordinarily reach by advertising or other means, digital advertising or otherwise.
Ben: That makes a lot of sense. Let's say I've identified a potential sponsorship partner. In this hypothetical example, let's say I'm a mom-and-pop shop in the greater Chicago area, and I want to make a pitch to the Chicago Cubs for why I should be considered a partner to start a partnership program. In a case like that, I'm a lot smaller, as you said, than the Cubs. I imagine my pitch to the marketing department within the Cubs organizations, I probably got to be pretty compelling.
How would you advise a marketer in that sort of situation? Or maybe some business owner who's taking on a marketing function? How would you advise them to make that pitch and really make a strong first impression, to maybe tilt the odds in their favor of that interaction going positively?
Ken: Let's look at that question from two perspectives. I'll give you two scenarios. One is a property trying to sell a sponsor and buying that sponsorship and then I'll flip it, then it's a sponsor, a company, that wants to use a property to extend its brand. I'll look at it from both perspectives.
In the first one, I'm a mom-and-pop hamburger shop. I'm not McDonald's. Maybe I have a few restaurants, but now I want to convince the mighty Chicago Cubs that I want to be their sponsor. The first thing we mentioned before, the audience. If the Cubs or another organization like that is a family-oriented brand, that small hamburger shop is going to demonstrate that it has the same audience every Friday night. You can find all the families in the neighborhood at that hamburger shop. They support families throughout the neighborhood, they do all these things, that their brand is a family brand. Right there, you're showing that that audience is the same.
But next, that hamburger shop would want to understand the Chicago Cubs and understand what its goals are. It might be a professional sports organization that wants to maximize the amount of money that it gets from potential sponsors. In that case, that mom and pop hamburger shop might not be able to help them because they don't have the resources of a McDonald's. But they might have other things that would benefit the Cubs.
First, it's authenticity. That might be something that the Cubs want to align with authentic brands, that it's not necessary for them to align with multinational corporations like McDonald's. But instead, they want to really demonstrate they're all about families, so their sponsors are family-oriented businesses and that is authentic.
Understanding where the Cubs are coming from, and their goals, and how they market their brand, that's what a sponsor wants to think about in terms of what's in it for the property. That's kind of an example of that from the small sponsor, large property perspective. Let's flip that.
Now a Double-A baseball team or Single-A baseball team wants to convince McDonald's. McDonald's needs to sponsor that particular small baseball team. Same process. Number one is the audience. The audience has to be the same. McDonald's is a family-oriented brand, so that baseball team needs to demonstrate that family orientation. But then, that property, in the case of the small baseball team, they need to understand McDonald's objectives and help McDonald's achieve what it wants to do.
In this case, it might be that in the geography where that team plays, McDonald's is not the strongest hamburger chain or not the strongest quick service restaurant in the area. But this small baseball team has a really loyal following. Again, Sunday afternoon, every Monday night, the entire community can be found at their ballpark enjoying the game.
What could be in it for McDonald's is that they're going to get greater penetration in a certain geographic area because it aligns with this smaller, yes, but very popular property in the area. Again, the audience is aligned, but understanding both marketing objectives, in this case, the large sponsor that's McDonald's, creating that win-win marketing attitude, that's in terms of creating a pitch, either attracting a sponsor or selling a sponsor. That's what you want to keep in mind.
Ben: That makes a lot of sense. I really appreciate how you can take a look at that from both perspectives. I think there are a lot of important considerations there for both sides to keep in mind.
Ken: That's another important aspect of sponsorship, is it's definitely a two-way street. It works for both because it's a relationship. It's not the marketers speaking to the consumer. These are two institutions talking to each other by virtue of their relationship. They're creating magic for both. In the case the baseball team sells more tickets, the sponsor gets more business or enhances its brand, and that's because it's a relationship. It's got to be seen from both sides.
The best sponsorships that I see are when there's that win-win, that both sides benefit from it and the worst that I see is either no one cares to work the relationship—if nothing is invested, nothing is gained—or there really isn't any activity between the two in terms of really making that relationship come to life.
Ben: Whether you're looking to place some signage at a local sports stadium or maybe work with a top-performing Twitch streamer or whatever type of sponsorship opportunity you might be looking at, success always starts by putting the audience first. A key point that Ken makes, though, that you need to consider is not only the similarities and audiences between your brand and your partner but the size of your own audience relative to theirs as well.
Whether you're a small sponsor looking to partner with big brands or a large sponsor looking to work with smaller brands, I love what Ken has to say about finding ways to make sure that those relationships can benefit both parties without the pitch of looking lopsided right from the start.
I think what's great about that too is how much it reveals about the potential value of sponsorships in general because if you're a small brand, it's tough to imagine too many other channels that can scale as effectively. For larger brands, there’s an opportunity in a lot of ways to demonstrate your values and maybe to connect on a closer level with your audience and with your potential consumers than what might be possible otherwise.
It is as Ken says, a two-way street and that's really the way that you have to think about it. Now, back to Ken.
Once a partnership program is up and running, let's say McDonald’s and the Single-A baseball team in town are hitting it off, or it's a local chain that's landed. There's this big deal with the Chicago Cubs. What should those companies be doing or keeping in mind to ensure that they are proactively fostering that relationship in order to make sure that it really is mutually beneficial in the long term success rather than just like a one-off transactional sort of thing that just fizzles out and doesn't really provide results?
Ken: This is a really important point. What I recommend to everyone is strategy, planning, and work, work, work. Because it's a relationship, you go in with certain expectations. What we find is that the mere fact of the association doesn't necessarily make it work.
If I'm the official sponsor of your podcast, it may not work for me to just say that I'm the official sponsor of your podcast. What I want to do is create an entire plan around that to do what we call either leveraging or activating the relationship. That takes many forms and there's a strategy behind it. There's obviously plans behind it and there's a lot of work. I'll give you some examples of that.
Let's stick with McDonald's and the small baseball team. They're going to activate it in a lot of different ways. From a physical perspective, they're probably going to put signs in the ballpark that McDonald's is the official sponsor of this baseball team. They're going to put things on displays, jumbotrons, and public address announcement reads. All these different things to announce to the audience that, yes, McDonald's is the sponsor of this team and is proud to do so.
But the audiences really want to know about authenticity and they want to know why McDonald’s wants to sponsor this baseball team. So McDonald’s is going to do things from a public relations and an audience relations perspective to demonstrate that they wanted to be involved with this baseball team because they wanted to make sports a better experience for this audience. They wanted to do something to improve this community, to improve entertainment opportunities, to provide more access to quality entertainment in the community.
They're going to do various things that you see sponsors do. They might provide premiums or giveaways. Free baseball bats with the McDonald's logo on it, or free hats, free sunscreen. Do all kinds of things for the audience. Maybe free Wi-Fi that enhances the audience’s experience. From a public relations perspective, there are plans that go in to make activating or leveraging that relationship.
There may be television commercials where McDonald's is going to tag at the end of its commercial that it is the official sponsor of this particular baseball team. It might help them advertise. They might have premium giveaways, like if there are two home runs at a certain game, bring your ticket stub in and you get 25% off on your next Big Mac.
There are all these different things that go into activating a relationship. It takes that strategy like, how am I going to really speak to this audience, planning to pull it all together. Email marketing, inbound marketing, there might be a variety of different things, and then there's the work. There is work to make this relationship come alive. But again, that's to get all that benefit that I talked about, to grow your business, to improve your image. Once you do those things, you get those great outcomes.
Ben: Those are all the things that companies should be doing to make sure that they're putting in the effort into those relationships to make them successful. On the flip side, are there any common sponsorship, marketing mistakes that you sometimes see that you can offer any advice on how to avoid? What are the common pitfalls that people get tripped up on, that they should be mindful of going into any sponsorship-type arrangement?
Ken: I think there are three things that I have people keep in mind. First, you're not going to be surprised. I've used this word a lot in this discussion and that's the audience, knowing your audience. If you're a brand, you need to really understand your customer. You should if you're a really good marketer; you already know that. But to have that really front of mind from a demographic, psychographic perspective, to really know what makes your customer tick.
If you're property—let's just say that Single-A or Double-A baseball team—it's for you to really understand your audience. Sometimes that's harder. We find with smaller properties, for example, that they don't necessarily have the marketing resources to really understand their customer the way that McDonald's does. A company like that knows everything about their customer.
We find a lot of properties. Sometimes they struggle a bit, but they shouldn't have to struggle because there are relatively easy ways to avoid this pitfall. One of the things we recommend is surveying, so they can survey their email list. They can survey before an event, they can survey at an event, or they could survey after.
A lot of times, we find that email marketing is the key to this. There are even free resources. Things like a free account on SurveyMonkey or even just one step up to get their paid account. There are survey templates all over the place about how to survey your audience and get some good baseline data. Find out how old they are. Find out how much—if they will share with you—what's their household income. Find out things like do you intend to buy a car in the next 6–12 months? If you understand those things about your audience, then all of a sudden car companies and auto dealerships might be more interested in aligning with you if they know that your significant audience is ready to buy a new car in the next 6–12 months up.
Find out things that they care about. Hobbies, camping, video games, playership, all these different things. But the more that you can survey as a property and find that out, wow, you've got some incredible ammunition. The pitfall is not doing that. We see properties just go to a sponsor and go, here, I've got these three packages: gold, silver, and bronze. It costs $100,000, $50,000, and $25,000. We're going to give you these things, and not understand what audiences both parties are talking to. Avoid that first pitfall.
Second is not activating the sponsorship. We find that sometimes, especially in a little bit of larger sponsorship, some sponsors think hey, I've got it covered. I just spent $100,000 or $50,000. I just spent money on what's called a rights fee—that is the money that you pay to a property for the right to use their logo, to use their name—that I have paid money. I now have the right to use it and I'm all set. I'm not going to do anything else because now I have the right to use the logo.
We talked about before, if you don't activate, leverage that relationship, and really communicate to that audience of the property why you're proud to be a sponsor, the benefits you're conferring, all these different things, you never bring the sponsorship to life.
You're really, in that case, depending on that property, that baseball team (for example) to advertise your presence and for the audience to accidentally find out that you're a sponsor. The second pitfall is companies that don't activate. They just buy the rights. And what we say is if you're at the front of the relationship. For some of your listeners who have never done this before, we talk about a minimum ratio of either 0.5:1 or 1:1 of rights fees to the amount you spend on leverage or activation.
For example, if you spend a dollar to become the official sponsor of a baseball team, you want to spend at least a dollar in activating it, whether it's the premiums you give away, or email marketing that you do, the inbound marketing, or all these different things that you do, you want to do at least $1 of rights to $1 of activation.
If in the front of the relationship, the sponsorship costs you $50,000 and you're like, whoa, that's my budget. I don't have any other money, don't do it. If you only have $50,000 as a budget to activate this relationship, then divide that by two. I can only afford to buy the relationship for $25,000 because I need to keep at least $25,000 to bring it to life. The second pitfall is not activating.
Then the third is not measuring. It's interesting, 80% of sponsors that you ask would say one of the most important things in the sponsorship relationship is to measure success. But then you find the same surveys will tell you that they only dedicate 3%–6% of their entire budget to measure it.
They all say how important it is, but they never measure enough. Not measuring success is the third pitfall, because if you fail to plan, you plan to fail in the sense that you're going to spend all this money. If you're a marketer, the CEO or the president is going to come to you and say hey, I saw that sponsorship. It looked good on TV. But what did it get us? As a marketer, it's incumbent upon us to measure results.
How do we avoid that pitfall? Determine what success looks like. If you're a brand, are you going into it for sales lift? If you are, measure your sales before the sponsorship, measure your sales during, and measure after.
If you're looking for image enhancement, you're probably going to do that through surveys. So you're going to survey before, you're going to survey during, and you're going to survey after to demonstrate because then, when your CEO comes to you, you go, hey, boss. Look, we have a 25% lift in awareness. We have a 30% lift in purchase consideration and all these great metrics is a result of this sponsorship. So don't you think that it was money well spent? That's the third pitfall. Failing to measure for success, so make sure you measure.
Ben: I think that last point applies to so many areas of marketing. I feel like it's very easy to get caught up in the excitement of doing stuff and not spend so much time looking at things like, well, I did that. It probably worked. Actually, taking a look and analyzing what happened and why as a result of your actions.
Ken: I have quite a few clients who are engineers. So I kept this all the time because in their world, if you can't measure it, it doesn't happen. If you can't use a formula, you can't do it. They look at us as marketers and sometimes there's all this magic that goes on behind the scenes or when someone asks, hey, you did an advertisement but did it really work?
Especially now, especially in the digital age, it's so incumbent upon us to measure and really demonstrate that here is the result of what we do, and here's how we can prove it. Sponsorship is no different, but the great thing is, if you do it, you can then form a strategy perspective, make it even better because from what you've done, you know what the results are from your activity.
Ben: Absolutely. So one last question I'll throw your way. I think that this is something that would be very pertinent to anything with sponsorships or advertising, but I think that this also applies to a lot of different areas in marketing.
Let's say that you are working with a client or you are working for a boss or a business owner who's a little bit skeptical of marketing in general because they're maybe of the mindset that there's got to be a clear process or an action you take that drives this really predictable outcome. Like with engineers. I imagine in their world they follow a schematic. They can see that process from start to finish, and in the end, they have a concrete product or a result of their actions so that they can point to saying like, I did this and then this happened.
Whereas with marketers, as you say, there's this perception that we just kind of go behind the curtain and a bunch of magic happens and then money gets made somehow. That's what it looks like to them. When in reality, if you're doing your job correctly, there's a lot of strategic thought, a lot of processes, and a lot of repeatable methodologies that go into making that work.
To bring this back to our topic here of talking about sponsorships, if you're trying to convince a stakeholder who is skeptical, that sponsorships are a good idea or that you can honestly measure the impact of what you're doing, measurement means showing data and all of that after you've done some things that are super important.
But let's say that if you're getting stuck on not being able to get started because you can't pass that barrier with somebody, because they're like, well, I'm not going to put money into this if you can't do a better job of explaining how this is all going to work upfront. If someone's in that position, how would you advise that they make the case?
Ken: We see that often especially when the boss or the CEO does not necessarily have a marketing background. They might approach it with a bit of skepticism which, hey, skepticism in business is a good thing. It's incumbent upon us to prove it. The way I approach it is there are two things, case studies and testimonials.
Don't trust me. I'm here telling your boss that if we do this type of activity, you'll get this kind of result. Don't trust me. Trust all these organizations that are independent third parties. This is a case of third-party validation which we find in marketing always is more persuasive than if we say it. Bring them case studies and testimonials.
I'll give you an example. When I was on the property side, I used to work for the Indianapolis Motor Speedway and the IndyCar Series back in the day. We had an aerospace sponsor and that aerospace sponsor was selling private jets.
It was a pretty target-rich environment because anywhere you look, there was a race car driver who makes millions of dollars a year or a race team owner who is a millionaire or a billionaire, and all of them want to fly in private jets. There is a sponsor who had exclusive access because they were the exclusive aerospace sponsor and they will tell you, there is a case study that for every dollar they spent on the sponsorship, they got $32 back in terms of the sales they made directly related to the sponsorship.
That's an example from a sales perspective. You bring in that case study and you go, hey, boss. I can't necessarily prove to you or guarantee a 32 to 1 return on investment, but I can guarantee that this technique, that sponsorship can provide this kind of return on investment. We just have to go in and we have to see. Or you find a case study in your industry that gets closer to the potential ROI that you would have. Or a testimonial.
When properties want to sell sponsors, they might reference other sponsors. You might have your CEO call the CEO of a current sponsor and ask them, hey, what's been your experience in the sponsorship? Have you sold more stuff? Has your image been enhanced? Is this property good to work with? And the other CEO says, oh, yeah. They've been fantastic.
Again, I recommend those two different cases of third-party validation to demonstrate, listen, these are the results that others are getting. Can't promise that we'll get them, but I can promise you the technique works.
Ben: I think that's great advice. That's really bringing it back to just the fundamentals with testimonials and case studies. I love it.
That's all I had for you, but before I let you go, were there any other lingering thoughts or anything else that you've got on your mind as it pertains to this topic, that you'd maybe like to share with our audience?
Ken: Obviously, I'm a true believer in sponsorship because I know it works and I know the power of it, especially in terms of things like image transfer and all those things that really help sponsors take their businesses to the next level.
One thing is I just recommend listeners to not be afraid of it. If they're uninitiated, they just haven't experienced it before. There are lots of ways to put your toe in the water. For example, on our website at chargesponsorship.com, in the insight section. We have dozens and dozens of blogs, ebooks, and all these different things, completely free, kind of help people get started, help them get a toe in the water.
There are books. We have one coming out next month called Sponsorship Strategy: Practical Approaches to Powerful Sponsorships. That's a $24.99 way to get your feet wet and understand it. But really, it's kind of to educate yourself a little, seek out a professional like our agency if you need one, but really try it.
There is an old expression: “Try it, you'll like it.” Our parents used to tell us that. Dip your toe in the water. Get some experience. It is a valuable addition to us to a marketer's tool belt if you don't already do it.
Ben was the Inbound Marketing Director at CoSchedule. His specialties include content strategy, SEO, copywriting, and more. When he's not hard at work helping people do better marketing, he can be found cross-country skiing with his wife and their dog.