In 1990, 4,000 companies spent $2.5 billion on sponsorships in North America,according to Special Events Report, a newsletter published by Chicago-basedInternational Events Group. Jim Andrews, Editorial Director at IEG, notes thatsponsorships are big business, with more and more companies incorporatingsponsorship dollars into their marketing programs, alongside advertising, publicrelations and sales promotion budgets.

Sporting events continue to claim the lion's share of the sponsorship dollar, with popmusic and entertainment coming in second. But festivals, fairs and annual events willattract an estimated $333 million in sponsorships in 1993 -- up from $250 million in1990. And, it's in this latter category that expositions happily find themselves.Although, as Andrews points out, sponsorship of expositions is a newer phenomenon andpresently geared more to public shows.

Show sponsorships have been around in varying degrees for decades. Joan Zimmerman,President of Southern Shows Inc. in Charlotte, NC, has used sponsors for her regionalshows for more than 33 years. "Now," she says, "the level of interest by nationalcompanies in sponsoring regional shows is escalating." Her company's public shows drawbigname sponsors, such as Oldsmobile, Ford, Philip Morris and Prevention magazine.

It's only within the past four or five years that show managers and corporations haveactively sought a marriage on a sophisticated, big-ticket basis. According to IEG,companies are recognizing the effectiveness of sponsorships in achieving goals notattainable through traditional marketing channels. Corporations cite heightened visibility, positive associations and differentiation from competitors as reasons for their increased interest in sponsorships.

For show managers, aside from the benefit of having their shows associated withprestigious corporations, sponsorships are an additional revenue source. KoAnn Vikoren,Group Show Director at Miller Freeman Inc. in San Francisco, has been aggressivelysoliciting sponsorships for activities at her computer trade shows as a way to diversifyrevenue streams. "For us, sponsorships began as a way to offset costs, then snowballedinto a revenue source."

Sponsorships offer show managers the opportunity to offset existing costs, or to addactivities not budgeted -- thus enhancing the show. "Three and a half years ago, we didn'tallow sponsorships," says Charlene Eisinger, Manager of Expositions and AdvertisingSales for the Association of Legal Administrators. At her urging, the ALA began lookingfor ways to underwrite costs. Today, the organization has a formal procedure forobtaining activity sponsors at their annual show. "I'm very concerned about being fair,"Eisinger says, and sees to it that everyone has the same opportunity to become a sponsor.

What can be sponsored?
What kinds of things are show managers getting sponsored? Just about anything andeverything, it seems, except the official educational programs for the event. Typically, trade shows get sponsors for coffee breaks, lunches, dinners and entertainment, message centers, press rooms, speaker's lounges, shuttle service, tote bags, information desks, sports events, spouse programs and other special activities.

At the annual meetings for the International Association for Exposition Management,suppliers in the expositions industry can sponsor the primary elements of a show itself:decorating, freight handling, security, signage, registration processing and audio visualequipment. For its 1993 Summer Meeting, IAEM lists 33 marketing opportunities forsponsors, including a Contributing Sponsor category, which gives companies anopportunity to provide money "toward the overall success of the meeting."

Public shows, where national sponsors are now flocking, offer title sponsorship of theshow itself or of special attraction areas within the show. At the women's expos produced by Southern Shows, Prevention magazine sponsors an entire kitchen set-up, and brings in its food editor and major advertisers in the magazine, for whom it purchases exhibit space on the floor. Philip Morris sponsors the designated smoking area; national grocery chains, such as Kroger and Food Lion, sponsor food pavilions; and Oldsmobile and Ford, through their local dealer network, sponsor attraction areas featuring theirautomobiles.

Media sponsorships can be essential to a public show's success. Many consumer showproducers seek a relationship with the dominant television and radio stations, and the major newspapers in the market. Media sponsors provide valuable advertising exposure at little or no cost.

Selling sponsorships
There are a variety of methods used for pricing and selling show sponsorships, with adiscernible difference in public and trade show approaches. Invariably, trade showproducers allow only exhibitors to be sponsors. They do not solicit title sponsorship ofthe show itself, and they more closely limit the types of things that can be sponsored.Eisinger sends a mailing six months before the show which includes a list of the itemsavailable for sponsorship, and their cost -- without a markup. Also included is a contractand a list of the rules and regulations to which sponsors must adhere. She follows upwith telemarketing, sometimes enlisting association members to make calls since theyoften have more influence with the prospective sponsors.

For the Software Development, Windows and OS/2 shows produced by Vikoren's group atMiller Freeman, sponsorship opportunities are included in marketing support kitsmailed to each exhibitor. The initial offering is followed up with a fax and telemarketingcampaign. Vikoren says pricing is based on recovering costs plus a markup that takesinto consideration the impact the sponsoring company gains relative to booth space.

Public show managers consider sponsors to be exhibitors -- whether or not they havebooth space -- and they aggressively sell and price sponsorships. "Almost any of theactivities connected with my event would be available for sponsorship," says DianeStone, Show Director of Time of Your Life Expos, managed by Expocon ManagementAssociates in Los Angeles.

Stone offers two types of sponsorships, "small ones and big ones." The dollar value of thesponsorship, she explains, makes the distinction. Stone herself sells, via proposals, thesmall sponsorships of special areas of activity within the shows, such as health andfitness, cooking and nutrition and arts and crafts. These special areas, priced forsponsorship in the $5,000 to $10,000 range, grew as companies saw the success othershad through sponsorships.

To sell the sponsorships of higher value, usually involving title sponsorship, Stone usesthe services of an event marketing firm (see Sponsorship brokers). "It has worked for our shows," she says enthusiastically. "What the show manager is buying is the marketing firm's access to the people in corporations who make the sponsorship decisions. The major hurdle is access. On your own, you could spend a lot of time trying to find the right person."

Zimmerman uses EGs newsletter and Directory of Sponsorship Marketing to identifypotential sponsors. She personally phones the contact person, then follows up by sendinga sales packet. She often makes personal sales visits. Her regional shows have become sostrong, she says, that local representatives for national companies have put her in touchwith the corporate person who makes the sponsorship decision. Pricing is based on thenumber of shows the sponsor participates in, the exclusivity required and the level ofmedia coverage.

"We absolutely believe we give sponsors 10 times the value of their cost ofparticipation," says Zimmerman. Sponsors, she points out, have the best of all worldsthrough their participation in shows: exposure in direct mail, print and electronicmedia, and face-to-face contact at the show. But, Eisinger sees sponsorships gettingharder and harder to sell because sponsors want more bang for their buck.

Just what are sponsors getting in return for their investment? Recognition tops thelist -- in signage and in the show directory, show daily or official program. Other benefits often include free ad space in the program, VIP and free registrations at certain levels of participation, mailing lists of attendees, booth space at little or no charge andopportunities to "take the stage" for product presentations.

Sponsorship legalities
Show sponsorships in general are more than a marriage of convenience: marketersachieve sales and promotion goals, and show managers gain an income source whileadding value to the event. However, the relationship is becoming more complicated. Newregulations proposed by the Internal Revenue Service, and guidelines recently set by theAmerican Medical Association and other medical groups, have many association showmanagers rewriting their sponsorship policies.

Associations are generally exempted from paying federal income tax on membershipdues, booth space revenues and other income "related" to the purpose of the organization.Unrelated business income tax is paid, however, on income, not related to the purpose ofthe organization income generated from rent paid by tenants in buildings owned by theassociation, for example.

Under current UBIT rules, sponsorship funds for banquets, coffee breaks and the likeare tax exempt because these items meet the UBIT standard of being "substantiallyrelated" to an organization's purpose. But in 1991, the IElS determined that the fundsreceived from the Mobil Corporation by the not-for-profit organizers of the MobilCotton Bowl should be considered paid advertising -- thus, taxable under UBIT statutes.This landmark case precipitated the IRS proposed regulations issued in Januaryamending UBIT; further hearings will be held in July. The key factor in the newregulations is determining when sponsor income is advertising and when it is not. (SeeProposed UBIT regulations.)

Managers of medical shows, in addition to the UBIT issue, have to contend with restrictions on sponsorships set forth byguidelines from the AMA and their own associations. Linda Karson, Director of MeetingServices at the American College of Cardiology, says the AMA guidelines on gifts tophysicians -- issued in December 1990 -- set the stage for further guidelines from theFood and Drug Administration and the Accreditation Council for Continuing MedicalEducation. "We have been very much affected by all the guidelines," she notes. The ACCethics committee's review of activities receiving sponsor support resulted inexcluding those that are primarily social and retaining those that are educational orhealth-related.

Michael O'Connor, Director of Exhibits and Exposition Services at the RadiologicalSociety of North America, doesn't have to worry about his show's compliance withguidelines, as their board of directors determined years ago not to accept sponsorships.Indeed, exhibitors can't even hand out tote bags. While it runs contrary to his trade showinstincts, not accepting sponsorships, says O'Connor, makes his job easier and keepsrelationships with exhibitors "clean."

Liability is another aspect of show sponsorship that concerns show producers, andexperts at John B. Buttine Tradeshow Insurance and Huntington T. Block Insurancerecommend that show managers add sponsors to their commercial general liabilitypolicy, which can be done at minimal or no cost. Many sponsors, in fact, are now askingto be added. Also, they advise, that as show managers add sponsors to an event, theyincrease the amount of liability coverage. A show, for example, with $1 million inliability insurance that then adds two sponsors, no longer has the $1 million coveragebecause it is now split among three companies.

Legal components of sponsorship liability, says industry attorney John Foster, should beaddressed in a show management/sponsor contract. He recommends the main agreementinclude the following points:

• Clarify what the sponsor receives and what rights show management retains for itself or to sell to others.
• Preserve the value of sponsor's exclusivity (sponsorships not sold to competitors).
• Define who is responsible for liability.
• Spell out the show's and sponsor's rights to use each other's logos and where thoserights stop.
• Specify any other proprietary interests of both show and sponsor that need to beincluded.

Although liability issues and new regulations may make sponsorship more complicated,they should not dissuade show managers from persuing corporate sponsorship dollars.Instead, industry experts advise show managers to learn the rules and create specificsponsorship policies. The benefits of corporate sponsor dollars far outweigh the effort ittakes to comply with the regulations.