Out of the Box

Sponsorship vs. Advertising

By Menachem Lubinsky on December 14 2007

Al is responsible for the marketing activities in his small company. Although he works with a relatively small budget, he manages to place some ads at least 3-4 times a year and to coordinate a public relations campaign twice a year. Al recently contacted me with a rather interesting question: “I have $20,000 to spend over the next two months. Am I better off using the money for some advertising or should I become a significant sponsor for an event sponsored by a large yeshiva in the community?”

Marketing people would rather not be faced by such a dilemma because in the end both contribute to the branding of a product (or for that matter business or institution). That is the problem with successful branding and marketing in general. Success is most often achieved through a combination of marketing activities and not just through one medium.

Al knows that but he also does not have the luxury of slicing up his small budget further. He would very much like his dollars to have the greatest impact and thus is seeking professional advice on where he would obtain his best return. I always repeat the story of two young entrepreneurs planning to launch a new kosher dairy product. The pair had hired a business consultant to prepare an elaborate business plan which they planned to present to banks and potential investors. To my total surprise, the section on marketing left much to be desired but what I was totally unprepared for was the $5000 amount that was allocated for marketing. When I asked the consultant how he could possibly launch a new brand with a meager $5000, he responded that he did make the two aware of the impossibility of getting much out of such a small amount, but they wanted to keep the numbers lower for now and said that they would address advertising later.

The would be dairy businessmen thought that spending the money for advertising in the local media would be the wise choice. Said one: “We just need to tell people that we are around and we (they were obviously set to do the sales themselves) will do the rest.” They must have been disappointed when I counseled against using the money for ads because it would have so little impact on generating awareness. They could not possibly achieve awareness and market share with such few dollars. “Well, what do you suggest?” they asked. “Why don’t you rent a cow, put the name of the product on its belly, and walk it back and forth in front of City Hall,” I retorted. It took awhile for the two to regain their composure.

I went on to explain that using the $5000 for advertising would result in limited exposure for the new brand. After paying for the graphics and design, the ad could at best be in one or two newspapers for one insertion. However, the cow would no doubt generate enormous curiosity from passersby and even by the large press core that work at City Hall with the potential of reaching many thousands of people if they wrote a story about a cow appearing in front of City Hall. (I, of course, am not engaging in the legalities but in a remote hypothetical just to prove a point.)

This rather humorous exchange holds the answer to Al’s question. The real issue is the potential reach of the advertising vs. the sponsorship. As an example, let us say that the ads will reach 50,000 readers but the organization soliciting the sponsorship has a marketing program in place that will reach more than double that number. That obviously favors the sponsorship over the advertising.

Al was persuaded to go the sponsorship route since the yeshiva promised that his logo would appear everywhere and there was a package of free editorials in a program booklet and so forth. He next wondered whether the people attending the event were likely to notice his sponsorship more than the people perusing the newspaper. The evidence is that the sponsorship has a far better recall than the ads, particularly in the limited exposure that Al had available to him.

As you might imagine, the big-name marketing experts counsel to integrate a sponsorship opportunity with large scale advertising as the formula for the best success. America’s large corporations routinely adopt that approach in sponsoring major sporting events. With branding “reinforcement” repeating the message or the visual is the ultimate standard, but people like Al sometimes do not have the luxury of doing both. For them it’s an either or, which in Al’s case clearly came down on the side of the sponsorship.

It is important that a would be sponsor ask many questions of the organization or business to determine just how much exposure will be achieved. The longer the period of time that the sponsor is part of the marketing, the more exposure. A potential sponsor who joins late should consider whether the limited time of the marketing will deliver the needed exposure. Perhaps the event itself is reason enough to be a sponsor. The event might be so well attended and the publicity that follows so extensive that it might not matter that there was only a limited profile prior to the event.

To the question of advertising vs. sponsorship do the math, and to the question of when is late too late do the math.

Out of the Box is a collection of strategic marketing articles that Lubicom has published on various topics, trends and ideas in the marketing world. The articles have been published in the Hamodia weekly newspaper circulated on three continents to a readership of well over 100,000.

The name, "Out of the Box" is a term used frequently in business nowadays to describe creative thinking that is not the norm. It is meant to help a business pull away from the pack or separate oneself from the competition. It is to some extent fraught with risk, simply because it is not the run of the mill thinking, but it is at the same time the key to reaching the next opportunity.