Activation Budgets: The Fee Is Only Half the Bill

Every sponsorship has two price tags. The first is the number in the contract. The second is what it costs to make that contract do anything: the tent, the people, the samples, the travel, the giveaways, the hours spent turning a logo into customers. Brands that only budget for the first one usually come away disappointed, and disappointed sponsors don't renew.

I've said it on my Sponsorship Summit panels more than once. The rights fee is often only about half of what a sponsorship really costs, and activation can run two or three times the fee. A company joining a series or a race team needs an activation budget alongside the sponsorship itself. If it doesn't have one, the team has to take part of the fee and spend it on activation. Either way, somebody has to pay for the second price tag.

Plan the second budget before the season starts

Matt Martelli, CEO of the Mint 400, agreed when I raised this on the activation panel at the Motorsports Sponsorship Summit, and he described it as part of his job as a promoter. "That's part of our responsibility, is to help brands properly activate at our events," he said. "Ultimately we want them to be successful and maintain a long-term relationship." ▶ Watch Matt Martelli on this

That's the attitude a racer needs too. If you sell a sponsor space on your car and then leave them to figure out the rest, you've sold them half a program. The racers who keep sponsors for years talk about activation in the first meeting, put it in the proposal, and agree on who pays for what before the first race.

A logo with nobody behind it is wasted money

Martelli has watched brands pay for space and then fail to use it. He told the summit about his off-road festival on Fremont Street in downtown Las Vegas, which puts roughly 25,000 people in front of exhibitors. "When a sponsor comes and pays X amount of dollars and they show up to the event, you know, there's, for example, at Fremont Street, which is our off-road festival, there's 25,000 people there. And they come back to me and they go, well, you know, we didn't really think it was worth it. And I'm like, what? Like, we just put 25,000 people in front of you."

So his team started photographing every booth. "Now we've gotten in the habit of documenting every booth so that we can go back and look at a photo of their booth and go, oh, well, yeah, you had a 10 by 10 with nobody in it. So of course that's not going to work." ▶ Watch the full answer

His conclusion was that many sponsors simply don't have the staff or the know-how. "A lot of times our sponsors are not capable of doing good activation. So we've got to help them," he said, which means "we've got to package that in with the sponsorship deal and make sure that they have a successful activation." ▶ See Martelli explain it

He made the same point in a short clip about the measurement tools his events use: "Oftentimes they show up and they do the wrong thing and they don't do enough or they don't do anything." ▶ Watch the clip

Brands can't be everywhere. You can.

Kevin Miller, then president and CEO of USAC, sees the same gap from the sanctioning side, and he thinks it's the racer's biggest opening. "It's easy for a brand to write a check. It's hard for a brand to come out to your event and activate because corporations have travel restrictions and all the barriers in front of them," he told the summit. "So one of the lessons I've learned over my career is try to be the activator for them." With around 100 national sprint car, Silver Crown and midget races across USAC's three national series, he said, "No brand is going to come to 100 events, none." ▶ Watch Kevin Miller explain this

Read that from a racer's point of view. A brand's marketing team might get to a handful of events a year. You'll be at every race on your schedule, plus the car shows, the shop nights and the store appearances. If you're willing to staff a table, hand out samples, collect sign-ups and post about it, you become the activation the brand couldn't afford to send. That labor is a big part of what the second price tag pays for, and you can supply it.

Measure yourself against a $10,000 ad buy

Miller also gave racers an uncomfortable comparison. A marketing manager with $10,000 has options, and social ads are one of them. "I can make a post, spend $10,000 as a brand, I'm going to get a crap load of likes, follows, impressions, whatever measurement I want," he said. "If I give you $10,000 for your race car, what am I going to get? So how do you compare that? So you've got to do something for that brand to deserve that $10,000. It's not making a post." ▶ Watch the clip

That's the bar. If your whole program is a decal and a weekly post thanking your sponsors, a brand can buy more reach for less money somewhere else. The activation work is what a paid ad can't do: a person at the track who puts the product in a fan's hand, answers questions and brings the brand into the culture.

Effort can stand in for money

Activation doesn't always need a big budget. It does need ideas and work. Miller described a campaign USAC built for a little-known parts brand: fans voted by text for a driver of the night, received an automated reply entering them in a contest, and had to follow the brand's social accounts to enter. "Instead of going out to a hundred events, we're using FloSports as a medium to get to many, many more people through a text campaign to get the results and information that virtually costs nothing for us to do," he said. ▶ Watch Miller describe the campaign

Dan Dennehy-Rodriguez of the Sports Car Club of America, which runs about 2,000 events a year, gave the club-racer version. One of his own partners is a local brewery in Pittsburgh, and he brings the crowd to them. "Every time when I do my livery unveil, I do it on site," he said. "The deal that I have with that brewery is that the cover goes to me, the beer sold goes to you. But that's a great way of doing a simple activation as a club racer on a personal note that any one of us could use to generate some revenue." ▶ Watch Dan Dennehy-Rodriguez on this

The unveil party cost him almost nothing, filled his sponsor's taproom and gave both of them something to post. That's activation sized to a grassroots budget.

Write the activation into the proposal

The practical step is to stop treating activation as an extra you'll figure out later. When you build a proposal, list the activations as deliverables: which events you'll staff, what you'll hand out, how you'll collect leads, and who covers the cost of the tent, the samples and the travel. If the sponsor has no activation budget, say plainly how much of the fee you'll set aside to do the work. A sponsor who sees that you've already planned the second budget is far more likely to believe the first one will pay off.

The takeaway

• Expect a sponsorship to cost more than the fee. Settle in the first meeting who pays for activation.
• If the brand has no activation budget, set aside part of the fee and spend it on activation, and show them the plan.
• Offer to be the brand's activator at events its staff will never reach.
• Measure your program against what $10,000 buys in ads, and deliver what an ad can't.
• When money is short, put in effort: a text contest, a livery unveil at the sponsor's business, a table at the track.