Why companies are moving away from advertising and focusing on sponsorships.

As someone who teaches entrepreneurs and nonprofits how to get sponsors for a living, it still surprises me how many people are confused as to what the difference is between sponsorship and advertising. Many people use them interchangeably, and that simply makes the issue more confusing.

But before we delve into why they are different, let's talk about their similarity:

Both sponsorship and advertising are forms of marketing. Both help a company get their name out to a target audience so they can encourage that market to buy.

But that's where the similarities end.

Unlike advertising, where any company can pay to have placement in the media, sponsorship provides exclusivity, meaning that other companies can't invest in that venue (whether a physical venue, an event, or even a virtual promotion) to reach the same target market.

Sponsorship also gives a company more control, allowing a company to be more creative as to how they reach a target market as a sponsor. Essentially, a sponsorship leverages the power of the sponsee's personality to affect the target. On the other hand, advertising may never impact a target market.

So which one is better?

It depends. If you are hosting a limited time sale, or some other kind of promotion, advertising is more likely to be a better return on investment.

However, if you are looking to gain more brand awareness, or an increase in a know-like-trust factor, sponsorship is the right choice. That's because sponsorship helps you build a relationship with a specific, motivated target market, who already have 'good feelings' about what or who the company is sponsoring.

Many companies are cutting advertising budgets and putting more into sponsorship marketing because they see the greater ROI for long-term brand loyalty. The old days of companies telling to people to buy just aren't as effective as they used to be because today's marketing (thanks to the internet and social media) because people having discussions about brands and products instead of just buying. They see sponsorship as a way to get into that discussion.

Today, sponsorship is more than a $17 billion business, and companies aren't just looking for big names to sponsor. They realize that small businesses and not-for-profits capture a unique, very focused target market and they want to capitalize on that to get the most reach.

Will you be seeking more sponsorships for your endeavors in the future?