Apr 19, 2011 at 01:20 PM
written by Michael Munson

The Greatest Marketing Medium Ever Sold

When we hire someone to paint our house, we pay the painter for the materials, and for the labor to actually do the painting. When the painter is finished we have what we want, a painted house. If I hire someone to perform a marketing service however, I am not paying for what I really want. I don’t really want an ad. I don’t really want a website. I don’t really want a brochure. I don’t really want a direct marketing campaign. I don’t really want a sponsorship. What I really want is sales. But I can’t buy sales. I want the marketing service provider to help me sell. But what if my product is just not very good? No number of perfectly executed marketing initiatives will sell a product unable to create utility and demand. It would be inequitable to pay a marketing service provider strictly for sales materialized as a result of the service provided.

Therefore, it is somewhat justifiable to price marketing services like house painting. Somewhat. When the painter paints our house, he is incentivized to do a good job, to get a strong recommendation for his work. No matter how well he paints the house however, the painter can’t provide more value than a nicely painted house. A marketing service provider similarly wants to be endorsed for doing good work, but unlike the painter, there is a real opportunity for him to deliver more value than just “one nicely painted house” if he puts in more effort. He can potentially help increase my sales more than I have budget to pay for additional service. But since the current paradigm compensates him like the painter, he gets paid a fixed amount no matter how many sales result from his work.

Where is the service provider’s incentive to perform above and beyond with this compensation model? I mean say I pay $5,000 for a marketing service. Where is the incentive for the service provider to throw in another $5,000 of his time, if no matter how many sales he helps create for me, he gets $5,000? Wouldn’t my sales potential increase if the service provider knew he would be paid more if he delivered more value to me?

This past week the SponsorPitch blog mentioned how Morgan Spurlock was seeking sponsorship for his new movie “Pom Wonderful Presents: The Greatest Movie Ever Sold.” One of his sponsors, Sheetz (a small convenience store chain based in Altoona, PA), was willing to pay him $100,000 for a sponsorship of the movie upfront, and then pay escalators based on how widely seen the movie becomes, up to $250,000. In this instance, the service provider is the movie (as a sponsorship property), and here we have a contract that actually pays the service provider more for delivering more value.

It is great to see an example where a marketing service provider is paid a bit, and then given the opportunity to be rewarded additional payments based on how it performs. And it is also nice to see an example of using the right sponsorship tool for the right job. I mean how many people have heard of Sheetz before this week? Spurlock’s film is going to create monster brand awareness for Sheetz outside of the handful of states it has locations.

Doesn’t the incentive already exist for Spurlock to get as wide a viewing of his movie as possible, however? I mean he’s going to earn more as more tickets, DVDs, downloads are sold anyway. Why tie bonus payments to the service provider based on something that benefits the service provider like distribution of the movie? It is assumed exposing Sheetz to more people is going to materially help drive revenues for Sheetz at some point, but what about the people that already know the brand? How does the sponsorship do anything to help Sheetz with people that already know what Sheetz is? I’m imagining Sheetz will promote the movie and thereby increase the amount of money Spurlock makes (and Sheetz will have to pay in performance bonuses), but where is the incentive for Spurlock to - explicitly - create sales for Sheetz?

Yes, there is value in creating awareness, but it would be a much better partnership (sponsorship program) if the sponsorship called for Spurlock to be compensated for incremental sales his movie creates for Sheetz. This way he and the sponsor would have incentives to help each other to the fullest extent possible; Sheetz pushes Spurlock movie, Spurlock movie pushes Sheetz. It would be a partnership in the truest sense of the word. As it is now, Spurlock gets paid more if the movie gets seen more, but he has no incentive to help Sheetz drive sales.

I can hear the brand marketers now. “But how can you tell how many sales are created by the sponsorship?” Well, you aren’t going to know unless activations are put in place that measure sales from the sponsorship. And unless those activations incorporate and leverage the right assets in the right way, there isn’t going to be much impact to measure because nobody will respond.

As true believer sponsorship professionals know, Spurlock’s movie, like any sponsorship property, likely has assets it can leverage into more value than creating awareness for a sponsor. Spurlock could likely do much more than product placements or simply make clear the brands that are sponsoring his movie. Sure Spurlock has the potential to earn $250,000 from Sheetz with a big movie audience, but couldn’t his potential be more like $500,000 if the movie sponsorship was leveraged in a way that also paid him for gallons of gas pumped or sandwiches bought at Sheetz stores as a result of leveraging the assets of his movie?

This is an example of how with two separate sponsorship compensation models (one for awareness and another for sales created) the sponsor and the property would have correctly aligned incentives to maximize the value of their partnership. This is in everyone’s interest because the more value can be quantified, the more equitable resource allocation becomes, and the more vested in the success of the other party, partners become. That’s how you get true accountability and that’s how to make sponsorship “The Greatest Marketing Medium Ever Sold.”

Contact Michael Munson:

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The opinions expressed herein do not necessarily represent those of the publisher, SponsorPitch, LLC.