What to Do When Your Sponsorship Agreement Goes Sour

Viewpoint: IEG Senior VP Jim Andrews on What Marketers Can Take Away From the Tiger Woods Scandal

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Jim Andrews
Jim Andrews
Tiger Woods' televised mea culpa did not do much to answer the question of when his sponsors will again feel comfortable using him as an out-front spokesperson and brand ambassador. He apologized and his marketing partners issued the expected pro-forma statements accepting the apology, but the larger issue of public acceptance is left unanswered for now.

While the situation remains up in the air for Mr. Woods and his sponsors, it's time for the rest of us to shift our attention from how long and winding his road to redemption will be to the relevant lessons his saga offers to marketers regarding minimizing the damage from an alliance tainted by scandal.

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It's also important to remember that these lessons apply to marketers who sponsor not only athletes and individuals, but organizations and events as well. The simple fact is that the entire spectrum of sponsorship is not immune to risk and scandal. Whether you are signing an agreement with an athlete, actor, league, team, event or other entity, there is no way to guarantee that all will be well throughout the life of the partnership.

Here are four guidelines to help reduce the fallout if your sponsorship agreement goes sour:

Understand the relationship between your partner and your target market. Specifically, how deep are the connections and what are they based on? This will tell you how serious a situation you find yourselves in and what the proper response should be. Are your customers likely to give the sponsored property or celebrity the benefit of the doubt and quickly "get over it"? Or will they feel hoodwinked and resentful?

The answers require significant insights, i.e., market research, that gives you a full picture of the relationship. It's not enough to know your customers are "loyal fans" of your sponsored partner. Loyal fans could easily fall into either the "benefit of the doubt" group or the "resentful" group depending on the nature of their involvement with the organization or individual, so dig deep.

Be able to quantify the value of the partnership. In deciding whether to stick with a relationship or let it go, it is essential to know what it is worth to the sponsor. Unfortunately, most marketers' ability to determine true return on investment, or even return on objectives, is woefully lacking.

As we have proven in numerous sponsorship measurement and evaluation projects for clients, it is possible to take the outputs of sponsorships and endorsements -- awareness gains, image enhancement, promotion-related sales, etc. -- and convert them to outcomes in terms of the actual financial value they achieve. Knowing exactly what a partnership is producing goes a long way in the determination of whether it is worth weathering the storm.

Don't put all your eggs in one basket. Sponsorship and investing share at least one attribute: a diverse portfolio is best. Being tied too closely to one organization or individual is a high-risk gamble with a potential downside that outweighs any rewards.

Contrast the approach of using Tiger, Roger Federer and soccer star Thierry Henry together as Gillette Champions with Accenture's all-or-nothing reliance on Tiger. Gillette can shelve Tiger temporarily without losing too much ground, while Accenture had to go all in or go home.

This is not an argument for spreading sponsorship dollars too thinly in an effort to try to cover all bases; sponsors still need to concentrate their efforts in order to make an impact.

Have a forward-thinking agreement and an exit strategy. Sponsorship and endorsement contracts should be drafted with an eye toward making the obligations of each party crystal clear -- including not putting their partner in a bad light through their behavior -- as well as provide an "out" under such circumstances.

If they choose to terminate the relationship, sponsors need to be prepared with an operations plan for quickly winding down the public-facing aspects of the partnership, including advertising, web pages and the like. From a PR standpoint, a sponsor should have a plan for communicating its decision to either stick with or drop a partnership that has become connected to a scandalous situation.

In a post-Tiger world, marketers would be wise to spend less time looking for answers to questions such as, "Is Drew Brees really as good a guy as we think?" "What secrets could Lindsey Vonn be hiding?" and "Will the organization I'm about to sponsor do something that will elicit howls of protest and negative media coverage?"

Most likely, the answers to those questions will be "yes," "none" and "no." But smart marketers should assume they will be "couldn't possibly be," "plenty of juicy ones" and "without a doubt" -- and plan accordingly.

Jim Andrews is senior VP of IEG, a sponsorship consulting, research, training and information company that is part of WPP's Group M. You can visit IEG's website at sponsorship.com.
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