How is success measured, and how are achievements monitored?
There are two general approaches. One is for sponsors to do a media analysis. Let’s stick with our example. What would the Volkswagen Group have to spend in order to get the same coverage in the media? These days there are very good technical ways of measuring what are known as equivalent advertising values. The second way is to ask the consumers: Has the company become better known? Has a certain preference for it been achieved?
What exactly are the main parts of a sponsoring contract?
The first things to agree upon of course are the duration and financial terms – including whether the funding will be on a one-time or an annual basis. Then whether other assets or consulting services will be provided in addition to money needs to be agreed. Mixed packages are also possible. Then the rights and obligations of the contractual partners have to be stipulated in detail: How large can the logo be? How many meters of perimeter advertising can you get? How many tickets will be made available? And finally there are questions like these: How often do sponsored players or the entire team have to be available for trade fairs or exhibitions? Where is the logo permitted or required to be used, and within which geographical limits? And there is also the matter of termination rights.
Why are these sets of rules becoming more comprehensive?
Because the sums of money involved are becoming larger. Because expectations on both sides have increased enormously. Because competitors could become copycats. These days contracts address every possible detail, no matter how small, which easily results in a few hundred pages. I’ll give you an example. Opel sponsors Dortmund. Marco Reus can and is also required to wear the logo when appearing with his team. But he is not allowed to do so when he wears the uniform of the national team. After all, Volkswagen is the mobility partner.
Spectators obviously notice that only one sponsor’s logo appears on the soccer kit. In Formula One, however, the drivers look like walking advertising billboards …
And that raises the prices in soccer enormously. A single logo on a player’s chest is an expensive unique selling point.
How is the size of sponsoring budgets determined?
In the specific case of the DFB or German Football Federation, a call for tender is issued. The DFB can do that because of its monopoly status of the national team. Like all the other companies that make offers, Volkswagen decides what it is willing to pay. If only one company makes an offer, or if potential sponsors actually have to be solicited, then the sums involved cannot be anywhere near as high. Especially if we assume that in addition to the actual sponsoring sum, there will be costs for perimeter ads, commercials, and ad placement. We call those the activation fees. Companies purchase rights with their sponsoring money, and put those rights into practice with their activation fees.
Soccer continues to be the preferred sport to sponsor, but are there other favorites?
Formula One is a big player in international contexts. In Germany, soccer is the unrivaled favorite, but higher sums are also flowing into basketball and ice hockey, and more and more into handball again as well. A major development over recent years can also be seen in sports with individual athletes, such as running events at big companies, or for triathletes. And a lot of investment is going into tennis, golf, track and field and biathlons.