Sponsorship - Term Overview

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Sponsorship is an advertising strategy that consists of an organization (sponsor) committing to provide financing to a third party (sponsored) in exchange for the latter presenting its brand or product.

Sponsorship consists of an agreement or agreement between two persons (legal or physical) in which one of the parties called the sponsor will deliver a consideration (monetary or material) to another sponsored call, in order for the latter to expose its brand or product publicly.

Sponsorship objective

Sponsorship is a subtle form of advertising where the company seeks customers to associate its brand with some activity or person that represents values ​​or qualities that attract its customers. These activities or people are usually outside the scope of the normal activity of the company. We refer, for example, to a prestigious event, an admired athlete or the celebration of a relevant event, etc.

The ultimate goal of sponsorship is to attract customers and increase sales.

How sponsorship works

The sponsoring company offers people or organizations related to the activity of interest to deliver a certain amount of resources as long as they commit to expose and promote their brand. For example, a company may be interested in sponsoring a famous tennis player, but in return asks her to wear clothing with her company logo in the games she plays. Another example is when a company sponsors a sporting event as long as its brand is seen in the stands, posters, etc.

The profitability of the sponsorship depends on the success in choosing the sponsor, the dissemination of their activity and the impact on the perception of consumers.

Sponsorship advantages

Among the advantages we find:

- It's a mutually beneficial relationship where both the sponsor and the sponsored benefit.
- It's a form of advertising that doesn't bother customers (unlike spam emails, commercials on TV, etc.).
- It reinforces the image and valuation of the company (when being related to positive characters or events).
- The brand is capable of integrating itself into the lives of its clients.
- It presents new channels of diffusion of the brand.

Disadvantages of sponsorship

Among the disadvantages we can find:

It can be expensive for small business brands. There is a risk that the sponsored person doesn't meet expectations or deviates from the values ​​that they supposedly represented.

Difference between sponsorship and collaboration agreement

We must not confuse sponsorship with a collaboration or patronage agreement. In the first case, the objective is to promote a brand, while in the second, it's to help achieve the objectives of the sponsored entity (which must be an NGO that meets certain requirements).

In the case of patronage, the benefit for the company is more indirect than in the case of sponsorship, since those who made the collaboration are mentioned, but their brand isn't necessarily spread. However, there is a tax benefit that can be taken advantage of by the company.

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