Many associations are finding it increasingly difficult to sell sponsorships. Beyond the “regulars” that can be counted on year after year, finding those “new” sponsors – the ones that give you a fighting chance of hitting your goal – can be a real challenge.
Yes, there are many persons/companies you can contract with to sell for you on a commission-only basis. But I would not recommend you go that route just yet; there are a number of factors that need to be considered first.
Keep in mind that if you outsource this function and that person/company only achieves what you sold the prior year, your net proceeds will be reduced by the amount of the commission. So it’s essential to first determine why selling sponsorships has been such a challenge. If the problem is simply a lack of sales experience on staff and/or the time to commit to the process, the solution is to either staff-up properly or outsource. But it’s rare that the lack of on-staff expertise is the sole problem.
With each situation being unique, there’s no one solution. However, I feel comfortable offering up some things to consider as you work toward a decision. . .
Companies have limited marketing budgets and, therefore, tend to commit to those activities/opportunities they determine are most likely to achieve the company’s goals and objectives. The challenge for you is to get into the heads of each of your prospective sponsors to determine what’s important to them and then create opportunities that help them achieve their goals and objectives.
This is obviously a time-consuming exercise. But when it is completed, you’ll know your “customers” better than ever before, and be able to create opportunities that truly meet their needs. Even if outsourcing is ultimately the right route to go, having this insight first is very important. You’ll know what to look for in a sales partner and how to craft the terms of the agreement to meet your needs.
Anytime you can speak to customers, whether individually or as a group, you want to take advantage of it. With the (increasingly rare) exception of companies exhibiting at and/or sponsoring your events solely for the purpose of “supporting” your association, the decision to do business with you is just that – a business decision. The number of opportunities a given company is presented with each year is, typically, greater than their finite marketing budget can accommodate. So, tough decisions must be made as to where to invest those precious dollars. You are in a competition, and your success hinges on your ability to show why exhibiting at and/or becoming a sponsor of your event is an essential part of their overall marketing strategy.
You want to walk away from this focus group meeting with an understanding of the marketplace from your exhibitors’ and sponsors’ perspective. What are their goals and objectives? What challenges are they facing? Who do they need to reach with their marketing? How well does your attendance match up with their target audience? What role does your event currently play in achieving their goals and/or overcoming those challenges? And here’s the key one. . . what changes could you (reasonably) implement that would make your event essential to their marketing strategy? (The responses you get to this question should also give you insights into what you could do to drive even more of their marketing budget to your event.)
Finally, I would urge you to broaden the participation in your focus group. Current exhibitors and sponsors will give you great feedback. But you won’t get the full picture unless you also include past and prospective exhibitors/sponsors. When a company tells you why they don’t participate, they’re simultaneously telling you what it would take to make them a customer. (If you’re concerned that current exhibitors/sponsors might be adversely affected by the comments made by past/prospective companies, it’s fine to hold two separate focus groups.)
If you are currently outsourcing ad sales, the idea of bringing the function inhouse has probably crossed your mind. We’re often asked our advice on the subject. Assuming you are interested in maximizing the amount of revenue you realize from your ad sales program, determining which approach is likely to net you more – continuing to outsource vs. bringing the function in-house – is going to be a key factor in your decision.
All else being equal, I tend to lean toward bringing the operation in-house. But all things are rarely equal. Your current provider’s compensation (your “cost of sales”) is most likely performance-based: the more they sell, the more they earn. In this scenario, you have limited fixed costs (and possibly none). However, once you make the decision to bring sales in-house, you will be assuming considerable fixed costs. Even if you find some person(s) willing to work on a commission-only basis (and even if you do, you’ll probably have to provide a guaranteed minimum or at least a monthly draw – likely non-recoverable until they hit their stride), you need to factor in the cost of benefits.
A few other things to consider. . .
How many people does your current provider have working your account? If you bring sales in-house, how many people will it take for you to match your current provider’s performance?
If your in-house sales team were to merely match the gross sales achieved by your current provider, would you net more or less after factoring in all your costs?
How much experience does your current provider have selling advertising into your market? Can you find people with equal or greater experience? (Chances are the contract with your current provider prohibits you from hiring any of their employees. The people you are able to hire, regardless of their experience, will take time to develop the relationships that your current provider’s people already have – not a minor consideration, by the way.)
Do you have someone on staff now who is capable of managing an in-house ad sales team? If not, you may need to factor that additional cost into your budget.
Whether or not to bring ad sales inhouse is a decision only you can make. But how you answer these questions will likely be revealing.