Wickedly effective marketing? The great and powerful value of sponsorship

Darcy MacMillan, Solicitor

All eyes are on the upcoming blockbuster Wicked: For Good after the head turning campaign for Wicked: Part I raised attention to the important value of sponsorship. Wicked is defying the possibilities of sponsorship through targeted promotions in markets including fragrance, cookware, toys, clothing, suitcases and beverages, targeting a wide fan base and increasing exposure for both the film, and the sponsored brand’s products.

Agreeing the commercial rights is the starting point of any sponsorship deal, but a well-drafted agreement shapes the terms to define the rights, responsibilities and expectations of both the sponsor and sponsored. The following elements are key, but often overlooked:

1. Who is involved?

A sponsorship deal may extend beyond the sponsor and sponsored, to a third party whose services the sponsored party has agreed to procure.

For example, Wicked may have agreed to having the stars of the film promote sponsored brands and their products. A sponsored party that has agreed to procure the services of a third party for the sponsorship deal should seek to protect itself through direct contracts with those third parties, to mitigate the risk of being unable to deliver on such sponsorship rights.

2. What happens if the agreed sponsorship rights cannot be delivered?

Parties often spend a vast amount of time negotiating the sponsorship rights but may not consider what happens in the event such rights cannot be honoured. For example, a brand agrees to sponsor an event, but the event is cancelled – will the event be rearranged, will the sponsored party look to offer an alternative event or will the sponsored party agree to a reduction or refund of the sponsorship fee?

Depending on bargaining power, a sponsorship agreement will need to strike a balance between offering security to the sponsor, and flexibility to the sponsored party. Agreeing a mechanism for alternative rights and changes to the sponsorship fee at the outset is key for clarity.

3. Promotional and marketing costs and risks

Promotions and marketing are fundamental in any sponsorship deal and parties should give consideration to:

• Who is responsible for the production and cost of the promotional and marketing content?
• What approvals are needed to release the promotional content (for example, a brand may require approval of any promotional content released via a third party, such as an influencer or brand ambassador)?
• What material or permissions are needed to deliver such promotional and marketing content (for example, a right to use the name and logo of a brand or the image rights of an influencer or brand ambassador releasing promotional content on the sponsored party’s behalf)?
• What laws, rules and regulations are applicable to such advertisement (for example, the Advertising Standards Agency)?

4. Exclusivity

Parties may agree to provide for exclusivity, which can be one-way in favour of the sponsor or sponsored party, or mutual.

It is important to consider the scope of exclusivity in relation to a particular sector and territory, but each party should also give thought to whether it has agreed to promote the same or similar products or services of a third party, and this should be noted before agreeing to exclusivity in future agreements also.

Sponsorship agreements can be a powerful tool in increasing brand exposure for both parties, but having thought to all possible outcomes at the outset reduces the risk of the deal taking a “wicked” turn.

Our commercial team have significant experience with sponsorship and brand ambassador agreements. If you would like any advice in respect of this, please get in touch at info@kuits.com