A sponsorship invoice is used by fundraisers, political campaigns, sports events, TV/radio stations, and other avenues of exposure to receive financial compensation in exchange for promoting a brand or small business. Sponsorship fees can be one-time, or contingent on a variety of factors.
What is Sponsorship?
Sponsorship is a form of marketing that focuses on the promotion of an idea, company, product, or service to audiences of varying size. The purpose of a sponsorship is multi-faceted and can be used to garner conversions (the selling of a product or acquiring of a client), be used to associate the name of a company with another positive-minded topic or event (think of Nike being a sponsor of a football or baseball team/game), or through the sponsoring of a community or political-based event or project (business sponsoring a politician that supports their industry or a local company sponsoring the building of a recreation center in their hometown).
Types of Sponsorships
Monetary sponsorships – The most common type of sponsorship used for receiving exposure. Events or brands receive financial compensation for advertising a company.
In-kind sponsorships – Material goods and/or services are provided for an event in exchange for sponsorship.
Media sponsorships – Not-for-profit or similar events are publicized in exchange for brand awareness for the media agency. This can include having the media agency’s logo on clothing or a dedicated booth for the agency, to name a couple.
Promotional sponsorships – Often for famous or highly-influential individuals that have access to a wide audience. Example: a sports athlete being sponsored by Red Bull or Monster energy drinks.
To determine the total fee charged for the sponsoring of an event, the sponsorer should add-up the total costs that go into both running the event and setting up the sponsorship itself. The PR firm Cutting Edge uses a rather simple, yet effective formula for determining sponsorship fees (the “investment”). The formula is the following:
- [Total fee (investment) requested = the cost of providing the benefits offered]
- (+) sponsorship administrative staff costs
- (+) sales costs
- (+) servicing costs
- = total cost to deliver the package
- (+) 100% margin
- = sponsorship fee
The fee that results should only be used as a starting point. After coming up with a dollar amount, the investment should be compared against competitors to ensure it is within an acceptable range. Additionally, negotiation should be expected once the investment cost is proposed to the sponsor.