Sponsorships Hold Potential Risks and Rewards for Ad Agencies

At a time when many companies are cutting back on sponsorships, Under Armour is working on a deal with baseball legend Cal Ripken Jr., “that could expose the public company to hundreds of thousands of youth athletes around the world,” according to the Baltimore Business Journal.

Assuming the deal is finalized, will this be a good investment for Under Armour? The Journal states that the youth apparel category made up $56.5 million, or 8 percent, of Under Armour’s 2008 revenue of $725.2 million. Sponsorships can be risky, but if they expand market share among a key audience the company is trying to reach, they can be a worthwhile investment.

Ad agencies are sometimes called on to help clients evaluate requests for sponsorships, charitable contributions and participation in events. A “blueprint” will help assess the best, most strategic opportunities through a set of clearly definable criteria. It also will answer questions such as:

• What is the goal of this sponsorship?
• What is role of the sponsorship/event in our marketing mix?
• What are the core principles that should drive our sponsorship efforts?
• How will we measure the return on investment?
• What are our competitors doing?
• Can we better leverage the sponsorships we already have?

Don Beehler provides public relations consulting services to small- and medium-sized advertising agencies and businesses.

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