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Calculating the value of corporate sponsorship

THE process of choosing sponsorship partners is as much about financial investment as it is about corporate reputation.

And a consultancy set up to assist businesses choose sponsorship partners has developed a system to evaluate the market value of these increasingly influential relationships.

With new industries putting their hand up for corporate support every year, the science of defining what naming rights, exposure or brand alliance is worth is increasingly problematic.

For many corporations, the association with a high-profile sporting body or arts organisation is invaluable as a source of positive exposure for their business.

Melbourne-based consultancy Sponsorship Solutions has developed a method to calculate the value of a sponsorship, including the profile of the sponsored organisation.

“I was a commercial lawyer and I did sponsorship contracts so I have a knowledge of what people pay,” Sponsorship Solutions director Craig Richards said.

Wesfarmers Arts manager Helen Carroll said Wesfarmers has a clear strategy in place which guides their choice of sponsorship partners.

“Wesfarmers seeks to have involvement with key arts companies that represent arts in all the areas in WA,” Ms Carroll said

“We don’t support one-off initiatives, we work out the peak industry bodies and establish relationships.”

Wesfarmers is currently involved in 15 major sponsorship projects, including organisations outside of WA, which provide the opportunity for these groups to perform for WA audiences.

The Wesfarmers approach to sponsorship is driven by a belief in the importance of corporate support of the arts and the positive brand alliance gained from association with peak arts organisations

The financial value of the sponsorship is negotiated between Wesfarmers and the arts company.

“We are involved mainly in the arts for the goodwill it can generate,” Ms Carroll said.

“We spend quite a bit of time in negotiations and work with all of the sponsored organisations to maximise opportunities for both sides of the partnership.”

BankWest allocates 1 per cent of its net profit to sponsorship and donations. Last year this amounted to $1.3 million.

BankWest chief manager communications Don McLean said BankWest advertised biannually for organisations interested in a sponsorship relationship with the bank.

“It’s based upon the exposure the bank generates out of the individual and how that exposure contributes to the bank brand,” he said.

BankWest seeks partnerships that confirm the brand’s profile as a good corporate citizen and a level of exposure that reaches a broad slice of the population.

Mr McLean said some aspects of a sponsorship partnership have a quantifiable value but it’s often the editorial benefit of events or partnerships that are most beneficial.

“Organisations tend to come to us with a value and we analyse what it’s worth,” Mr McLean said.

The value of corporate sponsorship packages is calculated primarily by comparing the investment in previous events with similar levels of exposure.

From the perspective of an arts organisation seeking corporate investment, the West Australian Symphony Orchestra adopts what it calls a business case approach.

WASO approaches carefully chosen businesses and presents a business proposal including the perceived benefits of the relationship.

“We go to individual corporations and develop a case for developing a corporate partnership,” WASO manager corporate development Keith Venning said. “We try to look at similar business organisations and arts organisations because we all share similar needs in terms of corporate reputation.”

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