Menu of Options Vs. Targeted Offers: The Sponsorship Sales Conundrum

A LinkedIn post from TicketManager founder and CEO Tony Knopp last week spurred me to give more thought to how properties manage the conversation around pricing for sponsorship packages when they are in the initial outreach and meeting stages with prospective partners.

Tony correctly pointed out the danger in sharing average values for sponsorships, noting a recent study that showed the average cost of a pro sports team sponsorship across a number of major markets was just under $1 million. As he pointed out, when the range for such properties is $40,000 to $25 million, the mean average is useless data to a potential partner.

Although the hope is that all brands would be educated sponsorship buyers, that is not always the case. The risk for sellers is that a prospect could be scared off by the average, thinking, “I can’t afford $1 million,” and not engage with a rights holder even though there are more affordable levels of partnership available.

This topic led me to reconsider a question that continually pops up in discussions of sponsorship sales best practices. When first presenting a partnership opportunity, should the seller present the full menu of packages (and price ranges) or should the property target a specific level based on what it believes would best meet the needs of the prospect?

For many years, I, along with many others, have advised rights holder clients that the latter approach is best. Among the main reasons is if you present all of the options at once, you are risking that a budget-conscious brand will gravitate immediately toward the least expensive choice, even if what they really need to meet their objectives is a higher level partnership.

But the alternative approach of presenting only one package presents its own challenges. While I would like to believe that most brands would follow up on a proposed package they think is out of their price range with a request to explore other options, it is quite possible that many marketers will be put off by a number they think is too steep and simply shut the door and turn their attention to the myriad other opportunities they have for spending their marketing dollars.

Having seen that scenario play out one too many times recently, taking the formerly recommended targeted-package approach now seems to carry more risk than the menu of options strategy.

The key for sponsorship sellers who want to avoid the game being over before its begun by opting to go in the “show all your cards” direction, is to ensure that your higher tier partnership packages have valuable and distinct rights and benefits from those at lower levels. This will discourage potential partners from merely price shopping and demonstrate the value of buying in at the upper echelon of your opportunities.

Also, the sales approach a property takes does not have to—and should not—be a one-size-fits-all proposition. If your research and insights lead you to the conclusion that a particular prospect would be more amenable to one approach versus the other—take it!