HOW SMALL BUSINESSES CAN WIN THE SPONSORING GAME: SMEs may not have mega-millions to toss into the sports and entertainment arena, but by using entrepreneurial flair and initiative, they can make the most of a limited budget. Peter Crush reports

HOW SMALL BUSINESSES CAN WIN THE SPONSORING GAME: SMEs may not have mega-millions to toss into the sports and entertainment arena, but by using entrepreneurial flair and initiative, they can make the most of a limited budget. Peter Crush reports - It's al

by PETER CRUSH
Last Updated: 31 Aug 2010

It's all very well for Nike, with its 13-year sponsorship and marketing deal with Manchester United - a snip at pounds 303 million. And for Vodafone, which has paid pounds 30 million to have its logo on the Man U shirts for the next four years. Sponsorship has never been such a competitive arena for large companies eager to find new ways to win over their target audiences.

But can SMEs play the same game? For them, sponsorship money is a major investment and the returns are less predictable.

The question has been asked of Derek Vere more than once in recent weeks.

Vere is managing director of High Wycombe-based office furniture manufacturer Verco, sponsor of second-division Wycombe Wanderers for the past 12 years.

He has watched the club fight relegation battles since he was a schoolboy.

Last month, his team was in with a Roy-of-the-Rovers outside chance of reaching the FA cup final. Wycombe was narrowly beaten in the semi-final against Liverpool, after defeating premier-league Wimbledon and Leicester in thrilling penalty shoot-out and last-minute-goal clinchers. Verco-stamped football shirts had never been more heroically visible.

Vere, whose 154-employee company has been in Wycombe since 1912, is a typical small-scale sponsor. He recalls: 'When we first sponsored the club our reason for doing so was fairly specific. Finding skilled labour was tough but it had a dramatic effect in reducing the age of the workforce. I was always a lukewarm Wycombe supporter; now I hardly ever miss a match.'

Verco's continued support reflects both Vere's rekindled passion for the game and his conviction that it brings a commercial return on investment.

Just how much, though, is something that neither Vere nor his finance director, Jeff Roberts, can pin down. 'We've succeeded in establishing the Verco name locally,' he says. 'I wanted the three million viewers who watched us on ITV to be asking: 'Who are they?' Two years ago I deliberately added the words 'Office Furniture' to the Wycombe away kit for just this reason. Before, few would have known what we do.'

For such an uncertain return, sponsorship can be expensive. Supporting a second-division football team costs between pounds 15,000 and pounds 100,000 a year, depending on whether it was promoted or relegated the season before. Vere pays little more than the average of pounds 65,000 but it's still big money.

Where cost is an issue, the range of sponsorship opportunities declines.

So if you're on a budget - say, just pounds 10,000 - you must be imaginative.

Mark Knight, European manager of data measurement firm Performance Research, monitors public perceptions of companies that sponsor the Grand Prix and other sporting events. He has discovered that big money doesn't always buy results. 'Our research shows that whether you've got millions or a few thousand pounds, sponsorship will only be effective if done strategically,' he says. 'During Euro 2000, only 10% of fans could recall Pringles as one of the 12 main sponsors. The greatest success cost the least - firms that provided litter bins emblazoned with their logo.'

So what can you buy for pounds 10,000 or less? Highland Spring sponsored the Johnny Walker Scottish Open for just pounds 3,000 by giving away free water.

For pounds 7,000 to pounds 10,000 you can buy official supplier status to the London Marathon, or sponsor a grass-roots or reserve football team. The upper figure buys you business partner status for the BT Global Challenge - a good deal, because the price before the year-long sailing race started was pounds 25,000. This gives your customers access to the yachts at the different stages and dining for four corporate events.

More subtly, though, your cash buys status. 'The fact that we sponsor a team because we can sends out a message,' says Roberts at Verco, 'that we're here for the long term.'

Nevertheless, there are risks in sponsoring an event. Being associated with one that goes disastrously wrong could prove a costly embarrassment. Even Nike's millions depend on Man U staying in the premier league's top eight.

If you are inexperienced at analysing the opportunities it would be wise to hire one of the growing number of specialist consultants to take you through the process. Says Stephen Baird, deputy chief executive of SME sponsorship consultancy BDS: 'Sponsorship is not a whimsical thing. It can say more about you as a firm than any PR. There's a story about Motorola wanting to sponsor a cancer charity. With current fears about mobile phones, this wouldn't have gone down well. The key is finding out what you want to achieve and then choosing an event that will meet that demand.'

Effective sponsorship, he believes, involves wooing people in a participative way. 'Football is a passionate sport. If you sponsor it, you should be a passionate company. It's a transference of ideals. Good sponsorship talks to rather than at your customers.'

And you should seize the initiative. Marion King heads the UK arm of PeoplePC, a company that sells PCs and instals them in the homes of the teleworking staff of large corporations. Her firm is a major sponsor of the Institute of Public Policy Research's Digital Society project, at a cost of just pounds 2,500. This initiative aims to bring government, business and academics together to talk about extending IT to all. 'This wasn't about sharing letterheads,' insists King, 'IPPR is talking our language and we can use it to get in front of potential customers and network at government level.'

Strategic niche-hunting can also bear fruit. 'With pounds 10,000 it's easy to be a small fish in a big pond,' says Mike Reynolds, director at the Institute of Sports Sponsorship. 'But with ingenuity you can triple or quadruple the buying power of that money and control an entire market. Hampshire-based Criterion Assurance now sponsors the English national lacrosse team with a few tens of thousands of pounds.' It may look low profile, but most of its fans are middle-class - just the sort of people who plan for the future.

But, long-term sponsorship commitments sometimes cause problems. Can you stick with it through thick and thin? Verco's Roberts says he has been forced, on more than one occasion, to lay off staff while continuing to sponsor Wycombe Wanderers. 'That's a situation you have to manage,' he concedes. 'Staff losing their jobs will resent money going to footballers rather than them.'

But there is another dimension, he adds - 'that sense of pride staff get from feeling they're backing the local side. Ask people on the factory floor what they think it costs to sponsor Wycombe and they'll say anything up to half a million, because they pick up on how important it is for us. It's this buzz we get that takes our involvement beyond a business case. We do have an opt-out clause - but the spirit of the agreement means we'll honour the contract first.'

Baird at BDS believes all first-timers should keep their nerve. 'Firms that pull out early haven't set their expectations properly,' he says.

'You shouldn't abandon your entrepreneurial spirit just because the money you're playing with has the label sponsorship.'

Help is at hand for entrepreneurs who want to sponsor at a more tactical and community-focused level. The Institute of Sports Sponsorship and its cultural counterpart Arts and Business run a government-backed scheme to match the money SMEs pledge if the suggested activity promotes sport or the arts.

Higher grants go to those who commit for longer, and the scheme has produced the unlikeliest of partnerships. Andrew Bradshaw, director of Bainbridge & Barns Undertakers, is now a main sponsor of the annual Ryedale arts festival. For less than pounds 2,000 a year, he airs the company's name via open-air concerts. He is clear about the benefits. 'I wanted to promote the business to people from the wealthier York and Leeds area. I know people have come to me in traumatic times rather than go elsewhere. They told me they've remembered the events I've run.'

So, the message is clear. You can't buy brand awareness with thoughtless money. A small outlay can be just as effective as a larger one and it can buy you more than you expect. But sponsorship is an art rather than a science. Ask Vere and Roberts at Verco if they would give up their sponsorship tomorrow and they reply with a resounding 'no'. Ask them why and neither of them can honestly say what business is coming in as a direct result.

It's all about enhancing awareness and that's a subtle game to play.

Institute of Sports Sponsorship: 020 7233 7747, www.sports-sponsorship.co.uk

Arts and Business: 020 7378 8143, www.aandb.org.uk

Performance Research: 01491 410822, www.performanceresearch.com

SPONSORSHIP ON A SHOESTRING

- Know your objectives and build in as many methods for quantifying the effectiveness of the deal as possible. Design and distribute reader-response cards, or install a dedicated phone line or e-mail address.

- Set an upper limit for the amount you're prepared to spend - and stick to it. If a bidding war starts, you'll know how far you can go.

- Be prepared for extra costs. You might need to spend up to the same amount again in support.

- Don't get carried away and commit your company to lengthy deals. Make sure an opt-out clause is included in the contract.

- Don't cancel it after the first year; persevere.

- Write off sponsorship money as a fixed cost so that you are not tempted to tap into it.

- Remember that you can get up to 20% tax relief on the cost of sponsorship. Beware, though: corporate entertainment does not count as sponsorship. See a financial adviser to get the most from it.

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