Written by Abby Gee
Endorsements, sponsorships and synchs offer artists great ways to fund their music, but bands and their teams need to be very careful about how they approach the world of corporate brand alliances. The road is fraught with all sorts of potential challenges and bumps. We’ve tried to unpack the key hotspot elements for you here so you can identify what to watch for when navigating into the world of endorsements.
Grab a cuppa, get comfy and hunker down, you’re about to get stuck into some heavy reading. Let’s do this!
When Beyonce appears in TV commercials for Pepsi, or 50 cent for Vitamin Water, they are directly affixing their name and reputation to a product. They are endorsing, approving and often affirming they use it exclusively. This product’s direct association provides a benefit to the brand, the perceived value of which results in a payment to you, the artist. The greater the perceived value, the greater the fee.
As a general rule, endorsements are done with individuals i.e. a drummer and a cymbal manufacturers endorsement. However, a clothing brand may seek and endorsement deal with the entire band.
But what does it all mean?
When a logo appears on a poster, for example, or digital content from a concert is branded by a company’s product and circulated online e.g. Optus Presents Pink’ The Truth About Love concert tour, the brand simply aligns its brand with the tour in a broader and more passive sense. Individual artists are not vouching for its use nor its reputation or perceived quality, personally.
Endorsements Trigger Greater Legal & Ethical Responsibilities
Endorsements dictate much greater responsibilities than sponsorships.
The members of the general public who rely on these testimonials, and personal artist endorsements, are able to pursue claims if a product fault causes detriment. Artists must be sure to protect the interests of their own brand, and only align with corporations (and products) whose values, ideals and perceptions are not detrimental to their own.
The Legal Low-Down on Endorsements for bands
- What is the legal 411, if a bands shareholders agreement has a clause stating that all income relating to the business of the band inc endorsements and sponsorships is to be shared equally amongst the band? Note: This is of particular interest given many endorsements for brands such as instruments are for individuals
It depends on the particulars of the specific clause and its drafting. If the endorsement trades upon the individuals profile created by the band, then there is an argument that the band should retain a share. Obviously if there’s personal services involved, then the personal services (unless they can only be rendered via a company) could be billed separately.
- Isn’t it the custom and practice that usually sponsorships are ‘the band’ and endorsements are with ‘individuals’ from the band?
Often band members are ‘endorsed’ individually by equipment suppliers and the like, but it really depends on the specifics of the deal.
- Given these types of clauses, are band endorsements common place? Or are they reserved for individual band members?
Individual endorsements are common, though endorsement deals involving the band aren’t rare, though they usually involve the endorsement of more general products, such as clothing.
Artist Ideals vs. General Corporation Brand Alignment (and a synch deal gone very, very wrong)
While not an endorsement deal nor a sponsorship, notable vegan, Xavier Rudd’s sync deal for KFC’s TV commercial in 2015 triggered a heated response from fans. Arguably ALL corporate involvements are subject to scrutiny.
Approaching Sponsorship & Endorsements
Sponsorships and endorsements are hard work to procure. Soliciting corporations should not be seen as an easy way to raise funds for albums, buy new gear or to keep tours afloat.
A sponsorship or endorsement deal is a business arrangement, which yields a commercial return for the sponsor/endorsee and in exchange provides an ‘in kind’ or cash benefit to the artist. An artist will have to prove to a prospective sponsor/endorsee that they are a worthy partner that will deliver tangible benefits and genuine results.
And remember, once the sponsorship is secured, the hard work really starts. So before deciding to go down the sponsorship or endorsement route, artists should consider the following questions:
- Will all band mates’ support entering into the sponsorship or ‘collective’ endorsement arrangement? Or will they fear being perceived as having ‘sold out’? It is essential that all band members and crew are willing to support the sponsorship/or ‘collective’ endorsement.
- Does the band have a Sponsorship Policy? If not, creating one ahead of soliciting deals is a crucial first step. A policy outlines: -collective objectives; and administrative processes involved with a sponsorship e.g. approvals, contracts, review and evaluation; -accountability and responsibility; -and specific issues relevant to the bands ethos such as exclusions e.g. tobacco industry and limitations.
- Does the band have a nominated person and resources to conduct a successful sponsorship/endorsement? Who will: -sell the sponsorship; -be the primary contact; -ensure all funds are accounted for; -maintain and service sponsors; -report on and acquit the arrangement.
- Does the band have a marketing and promotions plan? Is the audience/market segment known (demographics/psychographics – existing/potential)? Note: Facebook Insights have detailed demographic summary functions. What are similarly placed artists doing? What sponsors/endorsees have they procured? Are the artists core brand values clear to every member of the band and fan base? What are the artists brand values? What is the unique selling proposition of the artist?
What’s in it for them? Developing the benefits
In general terms, a sponsor/endorsee wants three things from an artist:
- Image Association: to be associated with the artists core values and attributes with the intention being to introduce or reinforce those attributes within its company or product.
- Target Audience: to access one or more of the artists target markets and to reach these music lovers with the sponsor’s/endorsee’s marketing message in a meaningful (and often interactive) way.
- Tangible Benefits: to gain a range of benefits from the artist, ensuring the impact of the previous two points is maximised and provides mechanisms and tools to achieve specific marketing outcomes.
An artist can maximise their odds of establishing a strong brand alignment and creating a receptive response with a sponsor, if they understand fully what they can offer (in a tangible sense) in each of these areas. The more precisely they can define these benefits, the better.
Artists need to grab the butchers paper and draft a benefits inventory to establish what they have to offer. Resource low, high perception benefits are the essential glue in corporate dealings, with often cash poor artists.
The essential driver to an exceptional benefits inventory, is creativity. Artists need to detail unique ‘money-can’t-buy’ opportunities alongside the complimentary basics such as corporate hashtags and logo inclusion. For example: Meet & Greets post gig for 20 of their sponsors competition winners or a Pot n Parma with the band after sound check. These have virtually no costs associated with the benefit (and the band can charge back the 20 pot n parmas to the sponsor if they’ve negotiated their arrangement correctly). Not to mention they have a huge social media engagement driving potential, and allow the forging of invaluable ‘super fan’ relationships.
The next step involves the artist deciding upon what they truly need (both from a financial and an in kind perspective) and how they will structure their sponsorship ‘hierarchy’. For example, artists may choose to find sponsors for particular tours or shows e.g. naming rights for one off boutique events (Mastercard Priceless Concerts) or association with an entire national tour (Amy Shark’s Night Thinker tour proudly brought to you by Triple J).
Artists may take a tiered approach (Naming Rights Sponsor, Major Sponsor, Supporting Sponsor) for the tour overall; or may decide on one sole sponsor…Whatever the structure, artists must ensure all benefits are clearly defined for each level so there’s no confusion as to who gets what.
What’s the sponsorship worth?
Usually, the most difficult step in the ‘package stage’, is confirming what the artists sponsorship benefits are worth. This can be assessed in the following ways:
- What is the real cost to the artist? (Benefits provided, administration, actual costs). As a general rule, any notable direct costs that result as part of the sponsorship ‘rights’ arrangement should be billed back to the sponsor. For example: An artist may offer a sponsor ‘signage rights’ in the form of a banner at their album launch. These rights are what the sponsor is paying for, not the banner itself. They either supply the banner or the artists has the banner manufactured (with their sign off of course) and bills the banner cost back to the sponsor in addition to their sponsorship fee.
- What is the market price? Make sure that the sponsorship is correctly valued in the marketplace. What are similar artists/or event properties charging? How does the artists sponsorship opportunity measure up (benefits, audience reach, profile, marketing support)?
- How does the artist marketing benefits compare to mainstream media costs? How much would it cost a sponsor to reach the artists audience, through digital advertising, TVCs, street press and radio channels etc?
Tip: Never tell a sponsor how the sponsorship money will be spent. This undermines your value and indicates your need, not your worth. It is not unusual, however, for a sponsor to request a breakdown of marketing and promotional expenditure.
The Dilemma of Contra
Contra or ‘in kind’ sponsorship (where a company’s products or services are provided in lieu of cash) can be just as useful as cash. The question is whether the contra will really assist the artist financial bottom line, e.g. contra freight for the artists upcoming Australian tour compared to $2,500 worth of Levi’s. While Levis are a band staple, they don’t remove or reduce expenditure from the tour budget.
The artist and the sponsor will then finally need to decide how they value that contra support – whether it be costed at retail price or at the company’s cost or wholesale price.
Standby for Part 2 in which we highlight all the big ticket needs of a sponsor and introduce the lingo that music business peeps need to know.