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CSD-13-105 - Municipal Sponsorship Strategy
REPORT TO: Planning and Strategic Initiatives Committee DATE OF MEETING: December 2, 2013 Michael May, Deputy CAO, Community Services SUBMITTED BY: Department (519-741-2200 ext. 7079) Jeremy Dueck, Supervisor, Sales & Business Development, The Aud (519-741-2200 ext. 5264) PREPARED BY: Dylan Matthews, Business Analyst (519-741-2200 ext. 7078) Kathleen Woodcock, Manager, Service Coordination & Improvement (519-741-2200 ext. 7597) WARD(S) INVOLVED: All DATE OF REPORT: November 27, 2013 REPORT NO.: CSD-13-105 SUBJECT: Municipal Sponsorship Strategy RECOMMENDATION: 1. That the following guiding principles be approved as the foundations for a Municipal Partnership Program and future sponsorship agreements: a) Sponsorship revenue should not be used to fund core programs and services; b) A portion of the revenue generated through future sponsorships should be allocated towards establishing and/or improving the sponsored program, service, facility or enterprise; c) The contributions of municipal sponsorship partners should be acknowledged by the City in a public manner on a regular basis; d) Sponsorship recruitment should match a prospective partner with the audience/participant interests to ensure there is a good fit between the partner and the audience/participant; e) The focus of the “ask” to potential sponsorship partners should be marketing-based objectives and not philanthropic or charitable in nature; f) The products, services and brand of sponsorship partners should not reflect negatively on the municipality; g) The City should not enter into any sponsorship agreements including naming rights with companies that are a direct competitor of the municipality or its enterprises. 1 - 1 2. That staff be directed to complete the following activities in 2014, prior to reporting back to City Council on the full implementation of a Municipal Partnership Program: a) Consult with the public on the initial inventory of municipal assets and partner benefits of a Municipal Partnership Program, as outlined in Appendix B of the Municipal Sponsorship Strategy; b) Consult with the local business community to test the concept of a Municipal Partnership Program and refine (if necessary) the initial inventory of municipal assets and partner benefits to be included in the program (as outlined in Appendix B of the Municipal Sponsorship Strategy); c) Develop a comprehensive Municipal Sponsorship and Corporate Advertising Policy which will guide future decisions regarding the solicitation, management and termination of sponsorships; d) Develop staffing and funding options for City Council’s future consideration that would effectively implement a corporate-wide Municipal Partnership Program; e) Establish an internal steering committee of staff responsible for providing ongoing strategic direction into the development of a Municipal Partnership Program and reporting back to City Council on the results of the work identified above; and further, 3. That staff be directed to issue a request for proposals (RFP) to engage the services of an outside vendor to support increased advertising sales through municipal assets such as: corporate publications (e.g. Your Kitchener, Leisure, Best of Times); municipally owned and operated websites, and facility/vehicle advertising (e.g. parking garages, aquatics facilities, fleet vehicles). BACKGROUND: Like most municipalities across Canada, the City of Kitchener is looking for ways to make investments in the quality of life of residents, while at the same time minimizing the financial impacts on taxpayers. To that end, the City of Kitchener owns and operates a wide variety of “assets” (e.g. physical buildings, programs, services, special events) that could potentially be leveraged through increased sponsorship partnerships and/or advertising opportunities with the private sector and other organizations to generate new non-tax based revenue for the municipality. According to the City’s Municipal Sponsorship Strategy (attached as Appendix #1, page 7), “There is a diverse set of revenue-generating opportunities that can be considered through private sector partnerships. These opportunities include naming rights, signage, product placement, advertising on vehicular assets, website, co-branding, exclusivity agreements, supplier agreements, loyalty programs, event sponsorship and a range of opportunities that companies will bring forward if they feel the climate is open for new ideas.” Currently the City of Kitchener has no comprehensive policy or program regarding sponsorships, and no strategy focused on exploring these partnership opportunities and capitalizing on them when they make sense for the municipality. As a result, the City has no coordinated and unified approach to identifying, costing and selling these opportunities for the benefit of the municipality and its residents. Nor are there any corporate-wide processes or 1 - 2 guidelines in place to encourage, plan, implement, monitor and control sponsorships. The City’s historic ad hoc and decentralized approach to selling sponsorships and advertising has for the most part focused on cost recovery instead of maximizing this potential source of non-tax based revenue through sponsorships sold at fair market value. Kitchener is not alone in this regard. Indeed, the concept of municipalities taking a comprehensive and proactive approach to sponsorships is relatively new in Ontario. In recent years, municipalities such as Ottawa, Whitby and Vaughan have begun to explore sponsorships more aggressively and comprehensively. However, it is important to note that this remains a significant shift in thinking and approach for most municipalities, residents and businesses. To be successful in taking a more proactive and comprehensive approach to sponsorships and advertising, Kitchener will need to adjust some of its policies, practices and most importantly its internal corporate culture. As noted in the Municipal Sponsorship Strategy, in order to capitalize on these revenue generating opportunities, municipalities like Kitchener “must embrace a culture that encourages businesses of all sizes to participate in civic-oriented activities by taking a “client-driven” approach towards establishing partnerships that support facilities, programs, services or events and encouraging the private sector to come forward with their own ideas on how they can contribute to community life in Kitchener such as building legacy facilities, improving the environment and parklands and supporting cultural or economic development initiatives.”. (page 4) As a result of the scale of this shift (internally to the corporation and externally), the successful implementation of any municipal partnership program will require several years to effectively plan, rollout and execute. Moving too quickly to implement a full partnership program without the appropriate policies, guidelines and/or resources in place could negatively impact the potential long-term success of the program and hamper the City’s ability to generate these non-tax based revenues for the benefit of the community. Glossary of Terms: Given the concept of taking a comprehensive and proactive approach to sponsorships is relatively new for the City of Kitchener, it is important to ensure a clear understanding of a number of terms that are used throughout this staff report and throughout the Municipal Sponsorship Strategy (Appendix #1). For that reason, the following glossary of key terms has been developed: Sponsorship:A marketing-oriented, mutually beneficial contractual agreement between the City and a third party where the City leverages a municipally owned asset (e.g. building, program, service, special event) to receive financial support in exchange for recognition, exposure, activation opportunities, and/or other marketing benefits for the third party. Sponsorships can come in the form of financial assistance, non-cash goods or a contribution of skills or resources. Sponsorships are not eligible for charitable income tax receipts. Naming Rights: A form of sponsorship, naming rights are opportunities for a sponsor’s name to be added to a City facility name (e.g. Activa Sportsplex) for an extended term. Advertising: Commercial advertising opportunities (e.g. Leisure Guide, arena rink board ads) where there is no implied relationship between the City and the advertiser. 1 - 3 Municipal Sponsorship Strategy (Appendix #1): A guiding strategy document that identifies the challenges and opportunities associated with the City of Kitchener taking a more comprehensive and proactive approach to selling sponsorships. The document also includes implementation recommendations for how the City can improve the likelihood of successfully increasing revenues through sponsorships and advertising. Municipal Partnership Program: A multi-year program executed by the municipality in order to take a more comprehensive, coordinated and proactive approach to identifying, costing and selling sponsorship and advertising opportunities. Municipal Partnership Office: A functional/organizational office of staff within the municipal corporation which is responsible for implementing a Municipal Partnership Program. Municipal Sponsorship Strategy Development: On April 29, 2013, City Council directed staff to engage a consultant, The Centre of Excellence for Public Sector Marketing (CEPSM), with specific experience and expertise in the area of municipal sponsorships to support the creation of a Municipal Sponsorship Strategy. In May 2013, the consultant (CEPSM) and staff began work on a strategy intended to: (1) develop an inventory of municipal sponsorship/advertising opportunities; (2) provide initial revenue projections for different types of sponsorship/advertising opportunities; (3) outline a set of guiding principles for future sponsorship agreements; and, (4) provide recommendations on the implementation of a full Municipal Partnership Program. The work plan developed to create the Municipal Sponsorship Strategy was divided into two phases: (1) opportunity assessment and valuation, and (2) sponsorship strategy development. The following outlines the key activities undertaken during each phase of the project: Phase 1 Work Completed: (Opportunity Assessment and Valuation) Initial review of the City’s objectives, core activities, target audiences and primary delivery mechanisms to reach target audiences (e.g. facilities, events, programs, publications, etc.); Review of existing sponsorship programs to determine the value of the City’s current offerings and how they can be improved to generate additional revenue for the organization; Identification of potential new sponsorship/advertising/naming rights opportunities; On site tour and consultations with key City staff to explore issues and opportunities; Development of a master inventory of sponsorship assets (or benefits) that can be leveraged including civic-wide and facility/program-specific benefits; Determination of a baseline value for a wide range of sponsorship and naming rights opportunities; and, Development of an overall sponsorship framework which provides a strategic direction for the initiative including high-level revenue estimates. Phase 2 Work Completed: (Sponsorship Strategy Development) Detailed review of the environmental conditions and other key factors (strengths, weaknesses, opportunities and threats) that may influence the City’s ability to successfully implement a municipal partnership program; 1 - 4 Recommendations on how the City’s assets can be leveraged to generate new non-tax based, corporate revenue streams; Consultation with members of City Council regarding their expectations and ideas for potential opportunities to increase sponsorships/advertising; Creation of baseline partner benefits; and, Recommendations regarding resourcing for program implementation. Opportunities and Constraints Analysis: As identified above, a significant body of work completed during Phase 2 of this project was a detailed review of the strengths, weaknesses, opportunities and threats that will influence the potential success of a Municipal Partnership Program. The full details of that analysis are included on pages 16-24 of the Municipal Sponsorship Strategy. However, the following chart highlights those strengths, weaknesses, opportunities and threats staff believe are most important to consider when creating a Municipal Partnership Program. Municipal Strengths The City of Kitchener is a well-known and respected Well-known and organization. Any company considering participating in the 1. Respected Institution City’s sponsorship or advertising program can feel confident that they are dealing with a reputable organization. The City has the ability to reach a wide range (and large Diversifiednumber) of audiences with specific needs and interests. This 2. provides the City with significant flexibility in being able to Audience Reach respond to the individual needs of companies. Scope ofThe City has a diverse range of high quality facilities, some of 3. Marketable Assets which attract hundreds of thousands of participants annually. Opportunities Companies are demonstrating increased interest in sponsorships and other forms of partnerships as a core Growth of Sponsorships 1.business model. In addition, the growth of cause marketing and Partnerships as part of a company’s social responsibility strategy will create opportunities for new sponsorship revenue for the City. Many of the sponsorship and advertising opportunities Uniqueness of City presented by the City will be offered for the first time, 2.Sponsorship and increasing the appeal of these opportunities to potential Advertising Opportunities corporate partners. 1 - 5 The City has some unique advertising opportunities that could be leveraged for significant non-tax revenue such as 3. Advertising high profile locations for digital advertising billboards and landscaped “berms” at key traffic intersections. Municipal Weaknesses (internal to the corporation) Internal Culture for 1. Corporate Partnerships By-and-large, municipalities do not operate in the type of entrepreneurial environment that is often required to be successful at generating corporate sponsorship revenues. Entrepreneurial 1aThis is likely to impact the level to which staff consider Approach sponsorship and advertising in the planning process, and identify and capitalize on opportunities and deliver on agreements. The City’s procurement policies, like most public sector operations, may have an impact on the entrepreneurial 1b Procurement Policy approach that is often used in sponsorship development (e.g. negotiating exclusive supplier arrangements outside the RFP process). Approval processes will need to be streamlined to ensure that the momentum gained in any sponsorship negotiation 1c Approval Processes process is maintained throughout the various discussion stages, otherwise companies will become frustrated with the process and/or lose interest in pursuing the opportunity. Kitchener currently does not have a specific sponsorship policy to guide corporate sponsorship activities. This could 1d Sponsorship Policy lead to many areas being open to interpretation (i.e. partner fit, benefits, endorsements) and could have a negative impact on the City’s reputation. Most companies do not see municipalities as a destination for their “contributions” and would rather see their philanthropic Company Perceptions dollars allocated towards recognized charities and non-profit 2.of Dealing with a organizations. Therefore, Kitchener will need to emphasize Municipalitythe “business value proposition” and “contribution to community life” of its opportunities in order to be taken seriously by potential sponsors. 1 - 6 Threats (external to the municipal corporation) The City will need to articulate a clear value proposition that differentiates its sponsorship and advertising programs from 1. Competition for Dollars the “competition” and offer tangible value to compete in a crowded marketplace. The overall program will need to be effectively positioned with Perception of various stakeholders (e.g. tax payers), otherwise the City 2. Commercializationcould risk its image by appearing as though they are “selling out” to the corporate sector. The City’s expanded sponsorship and advertising program could be perceived as competing against other community organizations (e.g. community associations, non-profits, 3. Perception of Competition charities, festivals, etc.) as well as current advertising contractors, so the City will need to be mindful of these sensitivities in the delivery of these programs to minimize fallout and discord from these sectors. By opening the door to corporate involvement on a wide- spread scale, it is quite conceivable that businesses that are competing with municipal programs at some level may want to take advantage of an expanded partnership and 4. Competing Interests advertising portfolio to promote their products and services. This increased competition could have an impact on revenues that the City currently/or could generate through its own programs as well as partnership revenues from these competitors. Review of Existing Sponsorship and Advertising Initiatives: In addition to the work identified above, as a part of this project staff also conducted a high-level review of the City’s existing municipal sponsorship and advertising initiatives. That review (which was not fully exhaustive) identified approximately $442,000 in annual revenues already generated by the municipality through sponsorship and advertising arrangements, including: Pouring rights: $121,000 (The Aud & Arenas, Golf Courses) Billboard Ads: $61,000 Special Events: $34,000 Sponsorship of Swims: $13,000 *The Aud & Arenas Ads: $35,000 The Aud & Arenas Sponsorships: $14,000 Dom Cardillo Arena Advertising: $101,760 Publication Advertising: $42,400 Program Sponsorships: $20,100 *Currently The Aud & Arenas has a 5 year agreement with a third party sales vendor to sell advertising in all arena facilities except the Dom Cardillo Arena, which is maintained by the Rangers and the City gets a portion of revenue generated. The City’s third party agreement for all other arenas expires in September 2015 (with a fulfillment date of 2016 for existing contracts) and distributes revenue on a 75% (vendor), 25% (City of Kitchener) split. 1 - 7 For the most part, these initiatives are performed on an ad-hoc basis without a rigorous process in place to put a fair market value on the City’s assets being sold. As a result, these initiatives are often done on a cost recovery basis as opposed to maximizing revenues through the market value of the City’s asset. A significant component of a corporate-wide municipal partnership program would be to add a more extensive valuation process to municipal assets to help ensure the municipality is generating maximum value out of its sponsorships and advertising. REPORT: Staff Recommendation #1: Guiding Principles for a Municipal Partnership Program The concept of taking a comprehensive and proactive approach to levering municipal assets to generate revenue through sponsorship agreements is relatively new in Ontario, and it is very new for the City of Kitchener. Given the significant shift in municipal policies and culture that will be required to successfully implement a Municipal Partnership Program, it is important to start by identifying and agreeing upon a set of core guiding principles for the program. If endorsed by City Council, staff would follow these guiding principles as work is completed to fully develop and launch a Municipal Partnership Program. In particular, these principles would provide staff with significant guidance as they work to create a detailed municipal sponsorship policy for Council consideration in 2014. At a later date, once the program is launched, these principles would be used by staff when negotiating sponsorship agreements. Pages 24 and 25 of the Municipal Sponsorship Strategy outline a number of the guiding principles suggested by TheCentre of Excellence for Public Sector Marketing. The staff steering committee responsible for the development of the City’s Municipal Sponsorship Strategy reviewed those suggestions, made some adjustments where it felt appropriate, and added some guiding principles to the following list which is being recommended to City Council: a) Sponsorship revenue should not be used to fund core programs and services; b) A portion of the revenue generated through future sponsorships should be allocated towards establishing and/or improving the sponsored program, service, facility or enterprise; c) The contributions of municipal sponsorship partners should be acknowledged by the City in a public manner on a regular basis; d) Sponsorship recruitment should match a prospective partner with the audience/participant interests to ensure there is a good fit between the partner and the audience/participant; e) The focus of the “ask” to potential sponsorship partners should be marketing-based objectives and not philanthropic or charitable in nature f) The products, services and brand of sponsorship partners should not reflect negatively on the municipality; 1 - 8 g) The City should not enter into any sponsorship agreements including naming rights with companies that are a direct competitor of the municipality or its enterprises. Staff Recommendation #2: 2014 Municipal Partnership Program Work Plan As outlined above, a significant amount of work was completed in 2013 to develop the attached Municipal Sponsorship Strategy. With that work now complete, staff has identified a number of activities referenced in the strategy document that should be completed in 2014, prior to launching a Municipal Partnership Program. The following is an overview of the major activities identified for completion in 2014. All of this work is required prior to launching the program, regardless of how the program is eventually implemented (decentralized system, dedicated staff, outsourced support, etc.). 1. Consult with the public on the initial inventory of municipal assets and partner benefits of a Municipal Partnership Program (Appendix B of the Municipal Sponsorship Strategy, page 47). A major factor in the success of a future Municipal Partnership Program is the public’s acceptance of an increased private sector presence in municipal facilities, services, events, etc. Private sector companies will not want to participate in a program that is not positively received by the general public – their customers. For this reason, it is important to develop a program that appeals to the business community and is acceptable to residents. To that end, in 2014 the City should consult with the public to gauge their support for the inventory of municipal assets and partner benefits (Appendix B of the Municipal Sponsorship Strategy, page 47) being considered for inclusion in the Municipal Partnership Program. Feedback gathered through these public consultations would then be considered before finalizing the municipal assets and partners benefits (some may be added, some may be removed) that would form the basis of a sustainable partnership program. By providing the public with an opportunity to comment on which municipal assets will be a part of the program and which benefits will be offered to private sector partners, the City can increase the potential for the program to be positively received by the community – thereby making it more appealing to the private sector. In addition, by specifically asking residents which municipal assets they are comfortable including in the program, the City can limit the potential of a significant public relations challenge in the future that could negatively impact the program and its potential partners. It is important to note that removing assets from the program would lead to a decrease in the revenue projections outlined in the Financial Implications section of this report. Some initial public consultation regarding the increased use of sponsorships was completed as a part of the August 2013 Leisure Facilities Master Plan Update. As part of the public consultations for this project, citizens were asked, “Are you supportive of corporate sponsorships/community fundraising as a primary approach to pay for leisure facilities and services?” 85% of the 128 residents who responded to this question said “yes”. In addition, when asked about other alternative approaches to funding leisure facilities and services, “corporate sponsorships” was the preferred alternative to tax increase (44%), debt financing (27%), or a reduction in service levels (14%). 1 - 9 2. Consult with the local business community to test the concept of a Municipal Partnership Program and refine (if necessary) the initial inventory of municipal assets and partner benefits (Appendix B of the Municipal Sponsorship Strategy, page 47). As highlighted in the Municipal Sponsorship Strategy, one of the significant risks to the success of a Municipal Partnership Program is whether or not the local business community will be interested in the municipal assets and benefits the program will offer. If the program does not offer assets that are of interest to local businesses, and/or does not add value to their operations, the city’s partnership program will not be successful. To this end, staff believe it is important to consult with the local business community in 2014, to test the concept of a Municipal Partnership Program and to refine the inventory of municipal assets and partner benefits (Appendix B of the Municipal Sponsorship Strategy, page 47) that would be included in the program if necessary. By testing the program with local businesses, the City would be able to: gauge the overall potential response to the program; determine what types of municipal assets would be most attractive to the private sector; identify which partner benefits are of most interest to the private sector and therefore have the highest value as part of a partnership agreement; identify potential partners with an interest in the program; gather industry intelligence related to the barriers to private sector participation; and, provide staff with business intelligence that supports the overall program (due diligence). Similar to the feedback that would be gathered through consultations with the public, the input received from the local business community would assist staff in finalizing the list of municipal assets and partner benefits (Appendix B of the Municipal Sponsorship Strategy, page 47) that would be included in the program, prior to asking City Council for its endorsement in 2014. 3. Develop a comprehensive Municipal Sponsorship and Corporate Advertising Policy for consideration by City Council in 2014. The Municipal Sponsorship Strategy highlights the need to create a comprehensive sponsorship and advertising policy that will set the conditions and parameters by which the City will recruit, manage and terminate future sponsorship agreements. In the past, the City has created corporate policies and practices (e.g. website policy) to specifically limit private sector presence in municipal facilities, services, etc. For this reason, a Municipal Sponsorship and Corporate Advertising Policy will need to be integrated with a variety of other corporate policies to create an overall policy framework that will support future sponsorship agreements. Staff proposes to begin the development of a comprehensive Municipal Sponsorship and Corporate Advertising Policy early next year for consideration by City Council in 2014. The corporate policy would be comprehensive in nature and would lay out a number of administrative requirements and policy objectives for future sponsorship agreements. It will also provide direction on where revenues generated through municipal enterprise assets (e.g. parking garages) should be allocated. In addition to these details, the policy would 1 - 10 contain direction on two core components discussed in the Municipal Sponsorship Strategy: (a) the allocation of sponsorship funding, and (b) the delegation of sponsorship approvals. The following section of this report provides an overview of these two significant topics: a) Allocation of Sponsorship Funding: As stated in the Municipal Sponsorship Strategy, the method by which the City allocates revenue from future sponsorship and advertising initiatives, the impact of any new revenues on existing operating budgets, and the ability to “roll-over” funds to the next fiscal year are all viewed as significant factors in gaining a broad level of internal support for the program. To help increase the attractiveness of the program to the private sector and to encourage a supportive internal culture, the following allocation strategy is being considered for inclusion in a future sponsorship policy: A portion of future sponsorship revenues (15-25%) should be allocated towards improving the sponsored program and/or audience experience. This will provide frontline staff with an incentive to support the program as well as demonstrate to sponsors that their investment is being put to good use. A portion of future sponsorship revenues (25-50%) should be allocated to a reserve account for future investments in the community as approved by City Council (e.g. leisure facilities and services, TDM projects, economic development initiatives). A portion of future sponsorship funds (5-10%) should be earmarked to fund the direct servicing costs of partnership arrangements (e.g. the preparation of partner/ facility signage, official announcement events, changing names on publications, etc.). A portion of future sponsorship revenues (15-20%) should be allocated for program implementation costs (e.g. staff, overhead, admin expenses, marketing). A percentage of future corporate advertising revenues (i.e. online ads, corporation publications, facility/fleet signage) should be allocated to general revenues. b) Delegation of Sponsorship Agreement Approvals: The Municipal Sponsorship Strategy recommends the creation of a streamlined approval process for non-naming rights sponsorship opportunities. This streamlined approval process will help ensure momentum is maintained throughout any partner negotiation process which will increase the chances of achieving successful agreements. If a potential partner is asked to wait on negotiations while staff seek approval authority from City Council, this delay could negatively impact the sales momentum and result in a lost sale. The following is an example of the streamlined approval process for non-naming rights agreements that could be included in a Municipal Sponsorship and Corporate Advertising Policy when it is brought back to City Council for consideration: 1 - 11 Managers are responsible for approving all agreements up to $10,000 per annum and under 3 years; Directors are responsible for approving all agreements between $10,000 and $25,000 per annum and up to 3 years; DCAOs are responsible for approving all agreements between $25,000 and $100,000 per annum and/or up to 5 years; CAO and/or City Council are responsible for approving all agreements for amounts over $100,000 or where any partnership or advertising agreement exceeds 5 years in duration. Given the high profile nature of naming rights on a city facility, and the longer duration for this type of sponsorship, a more substantive approval process (including City Council involvement) would be required for these types of agreements and would be built into the city’s comprehensive sponsorship policy. 4. Develop staffing and funding options for the implementation of a Municipal Partnership Program. As part of the Municipal Sponsorship Strategy, consideration was given to the most effective method of staffing, funding and implementing a Municipal Partnership Program. The staffing models considered ranged from outsourcing all, or parts, of the program, to the creation of a Municipal Partnership Office with two City FTEs dedicated to running the program. Based on their expertise and experience with other municipalities, The Centre of Excellence for Public Sector Marketing has concluded, “It is the consultant’s professional opinion that the City should assume overall responsibility for recruiting corporate partners and managing all aspects of the partnership program through a centralized office of municipal staff. However, like any situation, it will be important to have qualified professionals that are supporting the City’s best interests in any business situation, especially in the early stages of the program implementation when the program will be establishing its value in the marketplace.” (Municipal Sponsorship Strategy, page 42) Preferred Staffing Model: After considering the analysis completed to date and the advice of The Centre of Excellence for Public Sector Marketing, the City’s Municipal Sponsorship Strategy identifies the following preferred staffing model for implementing a Municipal Partnership Program: Municipal Partnership Office A centralized consisting of two dedicated City staff. Responsibilities would include: coordination of activities amongst departments, recruiting corporate partners, negotiating and establishing agreements, servicing/implementing partnership agreements, managing contractor agreements, marketing the program and reporting to the Steering Committee and City Council on the progress of the program; external vendor An contracted to sell corporate advertising opportunities on behalf of the municipality (see recommendation #3 of this staff report); 1 - 12 Existing, non-dedicated frontline city staff who would work with the Municipal Partnership Office to identify any significant new sponsorship opportunities and to recruit partners for their individual programs (e.g. sponsorship less than $5,000 annually); and, External consultants/vendors to provide expert and professional support to City staff in the early stages (1 – 3 years) of the program as in-house knowledge and expertise is developed. While staff and the consultant have identified this preferred staffing model from a sales and functional perspective, more work is required to determine how this model could be funded in order to minimize the impact and financial risks to taxpayers. For this reason, staff are recommending further analysis be completed in 2014 on the following staffing options: 1) No new city staff dedicated to the program. Strengthen internal policies, procedures, coordination and evaluation method for use by frontline staff. 2) Hire an outside vendor to implement a Municipal Partnership Program. 3) Create a Municipal Partnership Office (one dedicated FTE plus 20-40% of an existing FTE) to implement a Municipal Partnership Program. Hire an outside vendor to sell municipal advertising opportunities. 4) *Create a Municipal Partnership Office (two dedicated FTEs) to implement a Municipal Partnership Program. Hire an outside vendor to sell corporate advertising opportunities. (MUNICIPAL SPONSORSHIP STRATEGY PREFERRED STAFFING MODEL) *It is important to note that the revenue projections included in the Financial Implications section of this report are based on implementing the preferred staffing model identified above. If an alternative staffing model is ultimately chosen to implement the program, the revenue projections for the program will need to be reduced by 25-90% depending on the model put in place. After completing additional analysis on the staffing and funding options for a Municipal Partnership Program, staff will report to City Council with a recommendation in 2014. 5. Establish an internal steering committee responsible for providing ongoing strategic direction into the development of a Municipal Partnership Program. The Municipal Sponsorship Strategy (page 28) recommends a steering committee of staff be created to oversee the development, roll-out and ongoing management of a Municipal Sponsorship Program. Made up of representatives from various areas of the corporation and individuals with specific knowledge and skill sets that would be valuable to the program, this committee would oversee each of the following activities to be completed in 2014: a) consulting with the local business community and general public regarding the inventory of municipal assets and partners benefits (Appendix B of the Municipal Sponsorship Strategy, page 47) proposed to be included in the Municipal Partnership Program; 1 - 13 b) developing a comprehensive Municipal Sponsorship and Corporate Advertising Policy for consideration by City Council in 2014; c) developing staffing and funding options for City Council’s consideration for the implementation of a Municipal Partnership Program; and, d) issuing an RFP for an outside vendor to support increased advertising sales through municipal assets such as: corporate publications (e.g. Your Kitchener, Leisure, Best of Times); municipally owned and operated websites, and; facility/vehicle advertising (e.g. parking garages, aquatics facilities, fleet vehicles); and, e) reporting to City Council on the outcomes of the 2014 work identified above and making final recommendations on the implementation and launch of a Municipal Partnership Program. Once the City’s partnership program is finalized and launched, the steering committee would be responsible for the following ongoing activities: a) overall stewardship of the Municipal Partnership Program; b) setting strategic directions and priorities for the program; c) overseeing the sales and servicing process; d) monitor the program to ensure it continues to meet the City’s ethical standards; e) consider unsolicited or new partner benefit requests from the private sector; f) consider sponsorship requests not previously considered by the municipality; g) report to City Council on the annual performance of the program (metrics based). Staff Recommendation #3: Issue RFP for Increased Corporate Advertising As a part of the Municipal Sponsorship Strategy, staff and the consultant identified several opportunities to generate non-tax based revenues through the increased sales of advertising at a variety of municipal assets. These assets include, but may not be limited to: Corporate publications (Your Kitchener, Leisure, Best of Times); Municipally owned and operated websites (Kitchener.ca, TheAud.ca, etc.); Facility/vehicle signage advertising (parking garages, aquatics facilities, fleet vehicles). Residents have been generally accepting of the City’s existing advertising efforts (e.g. ads in Leisure and Best of Times, signage ads and rink boards at our arenas). Staff have identified the assets above as they build upon existing advertising initiatives and are seen to be less contentious than other possibilities such as advertising in our community centres or parks (which are NOT being recommended). In exploring these opportunities, the Municipal Sponsorship Strategy (page 29) notes, “Advertising (online, publications, signage) is a very competitive area that usually requires a substantial “on the ground” force that is constantly looking for opportunities in the marketplace and is able to leverage existing contacts with agencies and company advertising personnel.” For this reason, the Municipal Sponsorship Strategy (page 42) concludes, “External contractors should be engaged to manage and deliver the City’s ongoing advertising sales program.” To 1 - 14 that end, staff recommend undertaking an RFP process in 2014 to engage the services of an outside vendor with the expertise and resources (staff) to sell an increased level of advertising on a variety of municipal assets. The outside vendor would return a portion of the proceeds from the sale of that advertising to the municipality’s general revenues. The exact nature of that financial agreement and the final set of assets that may be a part of this corporate advertising program would be determined through the RFP process and brought back to City Council for a decision on the recommended vendor. Note:As part of the 2014 budget process, staff submitted an issue paper to City Council for its consideration which identifies the potential to generate approximately $45,000 in increased advertising revenues through an agreement with an external vendor. Should City Council choose not to approve the third recommendation of this report directing staff to begin the RFP process, this $45,000 will not be achievable and should be removed from consideration as a part of the 2014 budget. ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: The implementation of a Municipal Partnership Program would assist in creating a more efficient and effective government through the strategic management of city assets and by reducing municipal reliance on taxes through the exploration of new sources of sustainable revenue. FINANCIAL IMPLICATIONS: The body of work recommended by staff for completion in 2014 (consultations, policy development, advertising RFP) will be done within existing resources. Financial Implications of Municipal Partnership Program: The following information provides an overview of the financial implications (project revenues and program costs) for a Municipal Partnership Program based on details gathered in 2013 through the Municipal Sponsorship Strategy. Staff recommend further analysis be completed in 2014 to determine an optimal funding model for a partnership program, prior to bringing that information back to City Council for final consideration. Projected Revenue from Municipal Partnership Program: The following chart provides an annual breakdown of revenue projections for the program, as identified in the Municipal Sponsorship Strategy (page 44): Year 1 Year 2 Year 3 Year 4 Year 5 $169,550$339,100$518,900$753,200$986,500 (gross) (gross) (gross) (gross) (gross) As noted in the Municipal Sponsorship Strategy, “the first 5 years need to be viewed as building blocks to a sustainable partnership program”. It is important to note that these revenue projections assume the creation of a Municipal Partnership Office consisting of two dedicated staff members. If the City ultimately chooses 1 - 15 not to proceed with this staffing model to implement the program, these projections will need to be reduced by approximately 25-90%. Annual Implementation Costs (Municipal Partnership Office): Based on preliminary analysis of the preferred staffing option for a Municipal Partnership Program, the following annual costs have been identified: Item:Annual Costs: Two FTEs (salary & fringe) $193,495 Program and Admin Expenses $25,000 Promotional Expenses $20,000 Total $238,495 As noted above, additional analysis is required to explore all potential staffing models more closely and to better understand the impacts each option would have on the potential revenue to be generated through the program. This analysis will be completed in 2014. Preliminary Financial Projection for Municipal Partnership Program: Based on analysis completed to date, the following financial projection has been developed for the Municipal Partnership Program (assumes preferred staffing model): 2014 2015 2016 2017 2018 2019 Total Annual Projected Revenue $45 $170 $339 $519 $753 $987 $2,813 (Gross) ($193)($197)($201)($205) ($209) ($1,004) Annual Staff Costs ($45)($46)($47)($48) ($49) ($234) Annual Operating Costs ($25)($15) ($40) Start-up Costs ($30) ($30) 5 Year Review Costs Sponsorship Servicing (5% ($9)($17)($26)($38) ($49) ($138) of project revenue) $20($92)$79 $245 $463 $650 $1,366 Net Benefit Net benefit already allocated through 2014 $45$45 $45 $45 $45 $45 $270 budget issue paper (re increased advertising) Remaining Net Benefit of Municipal Partnership ($25)($137)$34 $200 $418 $605 $1,096 Program Cumulative position ($25)($162)($127)$73$491$1,096 *Assumes 2% inflationary increase to staffing and administrative costs. 1 - 16 COMMUNITY ENGAGEMENT: Staff is recommending that prior to finalizing and launching a Municipal Partnership Program, the City should consult with the local business community and the public to receive feedback on the overall program and on the inventory of municipal assets and partner benefits (Appendix B of the Municipal Sponsorship Strategy) that may eventually be a part of the program. Consultations with the local business community will allow the City to gauge the overall response to the program (would they be interested?), and to determine what municipal assets and partner benefits would be most attractive to the private sector. This information would assist the City in setting priorities and values for potential assets and partnerships prior to launching the program. Public consultations will allow the City to gauge the overall response to the program and to assist in identifying any municipal assets or partner benefits that would not be supported by residents for inclusion in the program. This information would assist the City in identifying which municipal assets and partner benefits should and should not be open to sponsorships with the private sector. Having this information in advance of launching the program would significantly reduce the likelihood of public relations challenges at a later date that could negatively impact the program and potential partners. ACKNOWLEDGED BY: Michael May, Deputy CAO ATTACHMENTS: Appendix A – Municipal Sponsorship Strategy 1 - 17 AppendixA CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 MunicipalSponsorshipStrategy November 2013 SS& PONSORSHIP TRATEGY C ITY OF IP MPLEMENTATION LAN K ITCHENER 1 - 18 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 4 ¡«¤ ®¥ #®³¤³² EXECUTIVE SUMMARY ................................................................ 4 D ................................................................ 5 EFINITIONS SUMMARY OF MAJOR STRATEGY RECOMMENDATIONS ................................................................ 6 BACKGROUND ................................................................ 6 ENVIRONMENTAL SCAN ................................................................ 7 CPE ................................................................ 7 ORPORATE ARTNERSHIP NVIRONMENT CPAA ................................................................. 10 URRENT ARTNERSHIP AND DVERTISING CTIVITIES SPONSORSHIP AND ADVERTISING FRAMEWORK ................................................................ 11 MIFA ................................................................ 12 ASTER NVENTORY AND RAMEWORK NALYSIS AVCPAA ................................................................ 12 SSIGNING ALUES TO ITY ARTNERSHIP AND DVERTISING SSETS OPPORTUNITY AND CONSTRAINT ANALYSIS ................................................................. 16 OA ................................................................ 16 PPORTUNITY NALYSIS 3³±¤¦³§² ................................................................ 16 /¯¯®±³´¨³¨¤² ................................................................ 17 CA ................................................................ 18 ONSTRAINT NALYSIS Weaknesses (internal)................................................................ 18 Threats (external) ................................................................ 21 CITY OF KITCHENER MUNICIPAL SPONSORSHIP STRATEGY ................................................................ 24 O ................................................................ 24 VERVIEW GP ................................................................ 24 UIDING RINCIPLES I(P)D ................................................................ 25 NVENTORY RODUCT EVELOPMENT C ................................................................ 26 OMMUNICATIONS CP/ASR ................................................................ 27 ORPORATE ARTNERDVERTISER OLICITATION EQUIREMENT PC ................................................................ 28 ROGRAM OORDINATION IC ................................................................ 31 NTERNAL ULTURE RECOMMENDED SPONSORSHIP/ADVERTISING INVENTORY AND BENEFITS .................................................. 31 SAF ................................................................ 31 TRATEGIC REAS OF OCUS BPB ................................................................ 32 ASELINE ARTNERSHIP ENEFITS RSAA ................................................................ 35 ECOMMENDED PONSORSHIP AND DVERTISING SSETS PROGRAM IMPLEMENTATION ................................................................ 35 S-YR-OSPY(20142019) ................................................................ 36 IXEAR OLLUT TRATEGY INCLUDING LANNING EAR ASR ................................................................ 37 LLOCATION OF PONSORSHIP EVENUE MSCAP ................................................................ 37 UNICIPAL PONSORSHIP AND ORPORATE DVERTISING OLICY MCPAP ................................................................ 38 ARKETING OF THE ITYS ARTNERSHIP AND DVERTISING ROGRAM IEP ................................................................ 39 NTEGRATION OF XISTING ARTNERS AP ................................................................ 39 PPROVAL ROCESSES TR ................................................................. 40 ECHNOLOGY EQUIREMENTS AI.EMP ................................................................ 40 NALYSIS OF NTERNAL VS XTERNAL ANAGEMENT OF THE ROGRAM REVENUE ANALYSIS ................................................................ 43 RM/P ................................................................ 44 EVENUE IXROJECTIONS PIC ................................................................ 44 ROGRAM MPLEMENTATION OSTS Centre of Excellence for Public Sector Marketing | 2 1 - 19 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 AASAF................................................................ 46 PPENDIX PONSORSHIP AND DVERTISING RAMEWORK ABIMA&PB ................................................................ 47 PPENDIX NVENTORY OF UNICIPAL SSETS ARTNER ENEFITS Naming Rights ................................................................ 47 Program Sponsorships ................................................................. 48 Event Sponsorships ................................................................ 49 Themed Community Initiatives ................................................................ 50 Web Site/Online Advertising ................................................................ 51 Interior/Exterior Signage Display Advertising ................................................................ 51 Publications/Brochures/Direct Marketing Advertising ................................................................ 52 Other/General ................................................................ 53 Activation ................................................................ 54 ACRPDAA ................................................................ 55 PPENDIX EVENUE ROJECTION ETAILS AND SSET SSUMPTIONS Centre of Excellence for Public Sector Marketing | 3 1 - 20 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 %·¤¢´³¨µ¤ 3´¬¬ ±¸ Municipalities across Canada are increasingly turning to collabo means of generating alternative sources of non-tax revenue to as opportunities include naming rights on civic facilities, signage event sponsorships, exclusive supplier arrangements and a wide r improve the lives of their citizens where they live, work or pla At the same time, with the current shift from traditional market partnership spending continues to grow in Canada and North Ameri with audiences and differentiate themselves from their competiti, corporations are still willing to invest in community partnershi branding and visibility to a more comprehensive approach that in so that these audiences are ultimately more receptive to corpora a more thoughtful involvement and engagement. Kitchener is well-positioned to capitalize on the growth of priv touch the lives of Kitchener citizens every day. For any company groups or contribute to the community where their employees and/ opportunities for partnerships are plentiful. In order to capitalize on these opportunities, Kitchener must em sizes to participate in civic-oriented activities -drivends establishing partnerships that support facilities, programs, services or even forward with their own ideas on how they can contribute to commu facilities, improving the environment and parklands and supporti Of critical importance will be positioning corporate partners as and not a . In developing a sustainable culture for private sector partnersh and responsibilities to its citizens as well as the need for eff collaborative arrangements. : Adopting policy and guiding principles that set the conditions a and conduct business with potential corporate partners; Ensuring that all businesses have the opportunity to participate Taking a coordinated (centralized) approach towards marketing op agreements and servicing partners; Developing streamlined processes for negotiating and approving p Ensuring that citizens participating in sponsored programs benef Active acknowledgement of corporate partners by the municipality; and, Ongoing communications with the public that articulates how these collaborative arrangements are benefiting the citizens of Kitchener. Estimated new revenue that could be generated through the progra, ranges from $800,000 to $1 million annually (gross revenue beforup five-year cumulative gross revenue total of $2.5 million to $3 million. Achieving this level of revenue an investment of approximately $200,000 - $250,000 per year for Partnership Office within the municipality. market its Centre of Excellence for Public Sector Marketing | 4 1 - 21 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 opportunities and demonstrate flexibility in negotiating win/win sector. Definitions The following definitions provide a context for the research and completion of this project. Advertising: Commercial advertising opportunities (e.g. Leisure Guide, arena implied relationship between the City and the advertiser. Municipal Partnership Office: A functional/organizational office of staff within the municipa responsible for implementing a municipal partnership program. Municipal Partnership Program: A multi-year program executed by the municipality in order to t comprehensive, coordinated and proactive approach to identifying opportunities. Municipal Sponsorship Strategy: A guiding strategy document that identifies the challenges and associated with the City of Kitchener taking a more comprehensiv The strategy document also includes implementation recommendatio likelihood of successfully increasing revenues through sponsorsh Naming Rights: A form of sponsorship, namin facility name (e.g. Activa Sportsplex) for an extended term. Partnership: Any form of cooperation or collaboration between individuals or sharing of financial, material, intellectual or human resources Sponsorship: A marketing-oriented, mutually beneficial contractual agreement where the City leverages a municipally owned asset (e.g. buildin financial support in exchange for recognition, exposure, activat for the third party. Sponsorships can come in the form of financ skills or resources. Sponsorships are not eligible for charitabl Strategic Philanthropy (Cause Marketing): Cause marketing or cause-related marketing refers broadly to a t marketing -profit organization for mutual benefit. Cause marketing differs from corporate giving (philanth donation that is tax deductible while cause marketing is a marke donation. Through these arrangements, the partner enhances their their strategic association with the cause. Contributions can co goods or a contribution of skills or resources. Centre of Excellence for Public Sector Marketing | 5 1 - 22 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 3´¬¬ ±¸ ®¥ - ©®± 3³± ³¤¦¸ Recommendations Recommendation Reference Pages in Report 1.That the City adopts a series of guiding principles that will be considered as foundations of the Municipal Partnership Program and future sponsorship Page 24 agreements. 2.That prior to formally launching a Municipal Partnership Program, the City test such a program with the local business community and consult with the Page 36 general public (to confirm acceptance of asset inventory and partner benefits). 3.That a Steering Committee comprised of key representatives from v divisions, and possessing specific skill sets, be established to monitor the Page 28 program on an ongoing basis and make strategic decisions to ensure that the program aligns with corporate objectives. 4.That a be established prior to the formal launch of a Municipal Partnership Program, Page 28 overall efforts in this area. 5.That the municipal assets and baseline partner benefits recommended f inclusion in the Municipal Partnership Program (Appendix B) be Pages 32-35 approved by City Council prior to launching the program. Appendix B 6.That a portion of the revenue generated through sponsorship be allocated towards improving the sponsored program, service, facility or Page 37 audience/participant experience. 7.That a formal Municipal Sponsorship and Corporate Advertising Policy be adopted to govern activities in the sponsorship area. Page 37 8.That a formal approval process be adopted for sponsorship and naming rights agreements policy. Page 40 Background Like most municipalities, Kitchener is looking for ways to minim provide for a high quality of life for its residents, businesses naming rights is one of the areas that the City is considering a While the City of Kitchener already enjoys a certain level of su currently does not have a formal sponsorship strategy in place t the sustainability of existing and future assets as well as enhancing or expanding services to the community. Centre of Excellence for Public Sector Marketing | 6 1 - 23 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 There is a diverse set of revenue-generating opportunities that partnerships. These opportunities include naming rights, signage assets, website, co-branding, exclusivity agreements, supplier a and a range of opportunities that companies will bring forward i opportunities need to be fully explored as potential revenue opp The purpose of this document is to provide a detailed strategy to implement Partnership Program. Environment « 3¢ #®±¯®± ³¤ 0 ±³¤±²§¨¯ Environment Even with the current shift to online marketing away from tradit sponsorship spending continues to grow in North America as compa audiences and differentiate themselves from their competitors. S Corporations are taking a more strategic approach towards sponso these collaborative arrangements more closely with business obje the performance of their investments; Growth of community-based partnerships as a means of associating viewed as important by the customer; Increased empha to leverage opportunities and increase audience impact; Increased integration between partnerships and social media chan Despite the recent economic turmoil, corporations are still will value to the customer experience so that they are ultimately mor have an impact on the way that the City of Kitchener must approa successful in this area. Kitchener is not alone in pursuing this opportunity. In a recent Public Sector Marketing (CEPSM) of municipal sponsorship/partner 81% of municipalities are involved in some form of partnership facilities or other community assets or generating financial and community initiatives. The survey also indicated varying levels with some municipalities such as Burlington, Calgary, Mississaug recruiting corporate partners, while others took a more passive Examples of these initiatives include: The (population = 1,096,833) Adopt-A-Park Program educates volunteers and users about appropriate park use and recognizes corporate partners on their community meetings, sponsored projects and media coverage. The City of Ottawa (population = 883,391) has adopted one of the most comprehensive sponsorship programs North America; seeking partnerships for naming rights, program, initiatives around municipal priorities i.e. environment, active Centre of Excellence for Public Sector Marketing | 7 1 - 24 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 The City of Toronto (population = 2,615,060) offers a wide range of partnership opportunities including its Across Toronto environmental initiative, Doors Open Toronto and The City of Whitby (population = 122,022) has a wide range of advertising, sponsorship and naming rights opportunities. Sponsorship revenue directly benefits the commun supporting festivals and events, and by keeping rates and fees a The City of Winnipeg (population = 663,617) has one of the most pro-active sponsorship programs in the coun green space/parks/ environment; high traffic infrastructure and city marketing-rela facilities; transportation; sports facilities and programs; soci The City of Chicago (population = 2,714,856) offers a wide range of sponsorships for its special event progra The City of Denver (population = 634,265) offers a wide range of opportunities including event sponsorship sponsorship, program sponsorship, site sponsorship, community sp concessionaires and associated park conservancies. The City of San Diego's (population = 1,307,402) Corporate Partnership Program promotes mutually beneficial business arrangements between the City and organizations which g the City and provides marketing benefits to the partners. The City states that it will work closely with partners to develop a package of benefits that fits the specific marketing n Services Partnerships through an established RFP process. Industry Research Industry-wide research also indicates that the public is support activity or cause that they deem worthwhile. According to Profit magazine (March, 2009), 68% of Canadians said they would remain loyal to a brand through a recession if it sup available. This and other studies clearly show an appetite for s corporations, provided that there is a strong association betwee example, the recently published Edelman Good Purpose Study (2012) illustrated the impact between corporate social responsibility and consumer attitudes towards companies w community: (18% increase over 2007); 69% of respondents would help brands promote their products or s them (a 23% jump since 2007); 67% of Canadians trust a company that actively supports a societ 84% would be more likely to give their business to a company tha than a company that simply offers discounts; 80% of Canadians say it is okay for brands or companies to make This research would indicate that there is a high level of consu support worthwhile community activities. This will be an importa positions its municipal partnership program and recognizes compa services. Another barometer of the current sponsorship environment is the Canadian Sponsorship Landscape Study which Centre of Excellence for Public Sector Marketing | 8 1 - 25 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 including industry size, spending by sector, activation trends, outlook. Key findings from the 2012 study include: The size of the Canadian sponsorship industry has grown yearly s2007, reaching approximately $1.5 billion in 2010; An average of 22.3% of marketing communications budgets is being the majority of sponsors expect their budgets to remain the same In terms of sponsorship activation, the five most popular areas hosting/hospitality, public relations, branded content/events an was in branded content which is ; Significant increase in the diversity of sponsorships being purs social media; The biggest challenges sponsors are facing include measuring pri activating sponsorships to leverage each opportunity and how to Biggest growth areas include digital marketing, social media and Municipal Naming Rights Survey In February 2013, CEPSM conducted a national survey of municipal snapshot of current practices in this area. Survey Respondents Overview A total of 41 surveys were completed. Responding municipalities Manitoba, New Brunswick, Ontario, Prince Edward Island and Saska representation at 21 responses, with 65% from larger municipalit jurisdictions. The responses were roughly split between larger a Current Activity 63.4% are currently actively involved in seeking naming rights s 66.7% of respondents that are not currently actively seeking nam future. Types of Facilities Naming rights are applied to a wide range of facilities includin childcare facilities, community rooms, convention centres, dress rooms, pools, recreation complexes, soccer fields, skateboard pa Naming Rights Terms The most common term for naming rights 37.7%), with the next highest term at 10 years (24.4%) and the third highest at 5 years (15.5%). 66.7% of respondents feel that the ideal term for naming rights 5 years and 20 years. Naming Rights Policies 71.4% currently have a Naming Rights Policy. Use of Internal Staff/External Contractors 66.7% of municipalities use internal staff to market and sell th Of the 33.3% that use external contractors: 60% use a combination of retainer and commission to compensate c o 40% use straight commission; o Centre of Excellence for Public Sector Marketing | 9 1 - 26 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 the most common commission rates are 10% and 20% (both at 40% of o Council Involvement 88.2% report that Council members are involved in the naming rig naming rights prospects, attending meetings with prospects and/o Revenue Allocation The money received through naming rights is allocated in a numbe 17.6% allocate the money to a general revenue account 41.2% use the money to improve/enhance the facility 41.2% use a combination of revenue account and facility enhancem Summary So, while the timing is right for municipalities to explore reve fund facilities and community programs, the City will need to be marketing (sponsorship) or community investment (philanthropic) proposition attached to the opportunity for companies to invest must balance good policy and governance with the ultimate goal o provide citizens with cost-effective, high quality programs and The City also needs to be cognizant of the fact that sponsorship and advertising initiatives and need to rationalize - prospect to develop corporate partnership packages that meet the plan that effectively positions the opportunities to corporate p among all stakeholders that the City is taking a responsible, pr #´±±¤³ 0 ±³¤±²§¨¯ £ !£µ¤±³¨²¨¦ !¢³¨µ¨³¨¤² The City of Kitchener currently enjoys success with a number of raising approximately $442,000 annually in these revenues. This Sponsorship of City events which includes media, cash and in-kin Pouring rights for beverages at The Aud & Arenas as well as Golf$121,000 per year); Advertising in the Leisure Guide and Best of Times publications ($42,400 per year); Sponsorship of programs such as the Youth Action Council Awards, activities and events ($33,100 per year); Leasing of outdoor billboard space ($61,000 per year); Arena advertising programs ($35,000 per year); Arena advertising in Dom Cardillo Arena ($101,760 per year); Centre of Excellence for Public Sector Marketing | 10 1 - 27 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Sponsorship of multiple events at The Aud ($14,000 per year); Variety of in-kind and media partnerships to support various pro Sponsor²§¨¯ £ !£µ¤±³¨²¨¦ &± ¬¤¶®±ª The first step in creating an expanded structure for a City-wide development of a master inventory of all potential properties an partners; either as stand-alone opportunities (i.e. naming right packages (i.e. environmental initiatives, Learn-to-Swim). This master inventory was compiled by examining the wide range of programs and services offered by the City with a v involvement could be leveraged to the benefit of the City, the c master inventory, a high-level framework was established as a means of creating a outlined eight core categories un: 1.Naming Rights Opportunities where a sponsor name can be added as a prefix to Recreation Complex and receive a wide range of supporting visibi 2.Facility Partnerships Opportunities where a company name cannot be added as a prefix facility commemorations (i.e. Breithaupt Centre), but can still within the facility over an extended term. 3.City-Wide Programs and Services Opportunities to support City-wide programs or services that are o to citizens under a centralized or common delivery system i.e. p 4.City-Wide Initiatives Opportunities to support multiple programs under a common cause tive Living, A Clean, Green Kitchener, A Safe Kitchener. 5.Audience Bundled Programs Opportunities to support multiple programs delivered through va that cater to similar (homogenous) audiences i.e. all adult fitn 6.Special Events Opportunities to support annual or one-off Special Events prese Y Eve, Active Kitchener Day, etc. 7.Advertising Commercial advertising opportunities such as the Leisure Guide and Best of Times where there is no implied associative element or relationship between the City 8.Other Unique Opportunities Other opportunities for partnerships that are not necessarily r the above categories i.e. funding of community facilities, employee benefits program, official suppliers to the City. It is important to note that while the framework establishes the will need to be considered are not viewed as practical from an appeal/implementation perspe policies or administrative (budget) process. Centre of Excellence for Public Sector Marketing | 11 1 - 28 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 - ²³¤± )µ¤³®±¸ £ &± ¬¤¶®±ª ! «¸²¨² Once the master inventory was assembled under the framework, the determine the synergi implementation and revenue perspective. The following is a summa Research indicates that the City has a tremendous number of prop the private sector, ranging from naming rights and city-wide cam programs. In its broadest sense, the City has opportunities for depending on the audience they want to reach through program par hundreds of potential assets, the challenge will be how to posit to Kitchener companies and national brands and this will be discuss report. Further to the above, the City has the ability to appeal to a wig and image-building (i.e. naming rights), marketing specific prod cause marketing (Active Living) to creating community legacies b facilities. This is viewed as a major stren communications needs of companies and a major point of different While the framework (and master inventory) outlines the full sco opportunities, many areas will need to be further explored and r opportunities to the corporate sector. are viewed as a significant potential revenue generator, further before they can be presented as opportunities to the private sec In addition to the above, for many of the opportunities identifi assets for which potential audience reach or exposure numbers ar never been a mandate to collect the type of information that is corporate sector. Given the evolving nature of the Citymaster inventory needs to be considered as inventory for administrative, operational or policy reasons. In evolve as the city increases the level of sophistication of its Given the exhaustive range of potential partnership and advertis approach will be to implement the program in phases. Over the long-term, the master inventory of partnership and adve important planning tool. By identifying and cataloguing assets, approved opportunities available, mix and match benefits (where t needs and determine the value of these packaged benefits. !²²¨¦¨¦ 6 «´¤² ³® #¨³¸ 0 ±³¤±²§¨¯ £ !£µ¤±³¨²¨¦ !²²¤³² One of the biggest challenges in implementing any Municipal Partair ompany receives in return for their investment. Oship and advertising assets were identified, the consultant conducted an assets using a formula that has been used to valuate hundreds of Centre of Excellence for Public Sector Marketing | 12 1 - 29 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 As a result of this valuation exercise, the City of Kitchener wi assets, more easily able to rationalize its partnership and adve pricing strategies. To determine the , the following factors were considered: Value of Tangible Assets Tangible benefits refer to quantitative elements that may be mea non-measured elements (impressions). These include such elements sampling opportunities. In calculating tangible values, the number of impressions (trans by a pre-determined dollar value to arrive at a total tangible v to arrive at a tangible benefit value of $500.00. The same princip such as the number of people exposed to a banner, ad or logo, th placement on print ads and so on. In cases where the potential reach is insufficient to warrant pe, flat values are assigned to sponsor benefits, depending on the potential impact a case-by-case basis depending on the sponsorship opportunity. It should be noted that t element inherent in sponsorships, are similar to other forms of advertising or promo present a strong link between the corporate partner and the audi prospects will likely compare its offering against other traditi Value of Intangible Assets In addition to assigning tangible values to benefits, there is a Intangible values are those associative or qualitative benefits that add value to a benefits package and in the intangible assessment include the uniqueness of the oppor organization that can be leveraged by the corporate partner, the audience, amount of partner and the potential for leveraging the associative elements to th the partner. Upon completion of the tangible asset valuation using establishe for its intangible attributes and awarded additional value based property(s). The following is a general intangible ranking that total value for each partnership opportunity associated with the value for most sponsorship properties, the values may increase o factors, depending on the specific opportunity. Intangible Asset Considerations Assigned Rating Factor City of Kitchener Value Uniqueness of The city offers a number of unique opportunities to reach variou20% Opportunity audiences that cannot be easily replicated. Audience Through its activities, the City provides opportunities to inter20% Desirability with large number of audiences with specific interests and lifes- Centre of Excellence for Public Sector Marketing | 13 1 - 30 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Intangible Asset Considerations Assigned Rating Factor City of Kitchener Value wide or within defined geographic regions. Prestige/ The City is a well-known and trusted organization. Organizations that 20% Recognition/ partner with the City believe that they are working with a credi Reputation respected partner. Industry Exclusivity/ The City has full control over its locations and activities creating an 25% environment rich in exclusive opportunities for companies that w differentiate from their competitors. Total Intangible Value 85% *Industry Exclusivity is a unique benefit and is defined as giving one partner exclusive rights to a spec or category inside a partnering arrangement. It is viewed as a s exposure of other similar organizations. Assigning Total Value to City of Kitchener Partnership Opportuni To determine the total value for any City partnership opportunit tangible values with the assigned intangible values to arrive at the total value. For example, if a value of $10,000 was placed on a tangible bene applied to determine the total intangible and subsequently, tota Uniqueness of the Opportunity $2,000 (20% of $10,000) Audience Desirability $2,000 (20% of $10,000) Prestige/Recognition/Reputation $2,000 (20% of $10,000) $2,500 (25% of $10,000) Total Estimated Intangible Value $8,500 To arrive at a total value of the benefits package, the total tangible and intangible values would be combined as follows. Total Estimated Tangible Value $10,000 Total Estimated Intangible Value $ 8,500 Total Estimated Value of Partnering Arrangement $18,500 By following the above formula, the City of Kitchener will have assessing the true market value of any particular partnering opp value to the corporate sector. Centre of Excellence for Public Sector Marketing | 14 1 - 31 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Other Principles Applied to the Valuation and Pricing Process In determining value for each City sponsorship or advertising as 1.Uniqueness of Each Property There is no one proven formula for assigning a value to a sponso property. Each property is unique with its own set of individual affected by elements such as timing, supply and demand, economic 2.Baseline Value of a Property The assessment of tangible assets establishes a baseline value partnering opportunity based on quantitative measurement. The mo such as passes, use of valuation is almost never just based on tangible assets. 3.Variances to Tangible Assets Every tangible asset can have a variable asset rating, depending delivery of the benefit. For example, a logo ID among many other value than a stand-alone logo ID on the cover of the same public 4.Intangible Value of a Property Assigning an intangible value to a sponsorship can be highly sub depending on the unique characteristics of the property and its objectives. Therefore, the value range of intangible assets will asset value of the property to allow for variances (and flexibil 5.Ability to Impact Audience Generally speaking, the more targeted the audience or the greate the benefit to impact the audience (e.g. generate sales opportun Tangible and Intangible perspective. 6.Passive vs. Interactive The more interactive the benefit, the more value it holds from a intangible perspective. For example, a passive benefit such as l than a hands- 7.Consumer vs. Business Valuations Given the broad reach of most consumer-oriented sponsorship pro the general value of tangible (impressions) and intangible asset business-to-business or trade sponsorships. 8.Extended Family of Benefits While most of the benefits may be focused on specific facilitie also possible to leverage the value of a partnering opportunity opportunities for profile and reach such as year-round web sites educational resources, etc. 9.Media Measurement The most accurate method to measure media is to apply a percent card media value towards sponsor visibility. For the purpose of applied for placement of a logo ID (among multiple logos) in an logo placement. 10.Value for Dollars Invested For every dollar spent on sponsorship rights fees, the sponsor s between $1.50 and $2.00 in benefit value. 11.Exclusivity Values Exclusive rights by industry or product/service category can in sponsorship property by as much as 50%. Centre of Excellence for Public Sector Marketing | 15 1 - 32 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 12.Business Case Considerations ultimately impact the amount of money a company is willing to pa audience? . /¯¯®±³´¨³¸ £ #®²³± ¨³ ! «¸²¨² As part of the preliminary research, the consultant examined theship and advertising revenues and some of the barriers that will need to /¯¯®±³´¨³¸ ! «¸²¨² The following factors are viewed as forces that will posiship and advertising program. 3³±¤¦³§² Well-known and Respected Institution The City of Kitchener is a well-known and respected organization Financial Resources and Capability The City has the resources and capability to deliver on programs any sponsorship or advertising agreement. Diversified Audience Reach The City has the ability to reach a wide range (and large number This provides the City with significant flexibility in being abl Economy has decreased in recent years; however, 20% of the labour force - internationally-recognized finance and insurance and manufacturi clusters are emerging within the City, and in particular within its sponsorship program. Employment Prospects The Kitchener-Waterloo area is home to the University of Waterlo graduate students and Wilfrid Laurier University with 17,000 stu 9,300 full-time students, 35,000 part-time students and 4,000 ap vibrant economy and could prove to be useful in recruiting compa education environment. Quality of Programs/Staff The City has a highly trained employee base that delivers qualit companies that want to minimize risk and ensure that their brand Centre of Excellence for Public Sector Marketing | 16 1 - 33 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Scope of Marketable Assets The City has a diverse range of high quality facilities, some of annually. Trusted Provider of Programs and Services The citizens of Kitchener trust that the City is acting in the b individual and/or family needs are being met with a high degree /¯¯®±³´¨³¨¤² Growth of Sponsorships and Partnerships Companies are demonstrating increased interest in sponsorships a create opportunities for new sponsorship revenue for the City. Diversity of Audience/Size of Audience The City has a tremendous number of assets that can be leveraged diversity of audiences, coupled with the significant numbers of corporate partnership opportunities. Opportunity to Deliver Timely Messages Further to the above, the City has tremendous potential in its a are most receptive to receiving these messages (e.g. receiving a Kitchener market. Uniqueness of City Sponsorship and Advertising Opportunities Many of the sponsorship and advertising opportunities presented increasing the appeal of these opportunities to potential corpor Goods In-Kind Another area that could see significant sponsorship benefit for goods or services; either for 100% of the sponsored product/serv will be to identify those areas that would be suitable for in-ki comply with procurement policies. Advertising The City has some unique advertising opportunities that could be high profile locations for digital adve Potential Sales Force In order for the Municipal Partnership Program to be sustainable ram. By providing staff with an orientation to the program, they will be better equipped at identifying potential opportunities a Centre of Excellence for Public Sector Marketing | 17 1 - 34 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 #®²³± ¨³ ! «¸²¨² The following factors need to be considered as potential barrier advertising revenue objectives. We ª¤²²¤² (¨³¤± «) Inconsistent Application of Sponsorships Cash or in-kind sponsorship arrangements are currently being dev fair market value) on an individual basis for certain programs a consistency as to how these opportunities and assessed for value inconsistent approach could have an impact on the professionalis over-valued sponsorship arrangements. Solution(s): Conduct training on the use of the Valuation Inventory and proce sponsorship opportunities. Develop consistent wording for sponsor benefits. Develop template agreement documents. Vet opportunities through a central Municipal Partnership Office Internal Culture for Corporate Partnerships Entrepreneurial Approach By-and-large, municipalities do not operate in the type of entrepr successful at generating corporate sponsorship revenues. This is sponsorship and advertising in the planning process, identify an agreements. Solution(s): Program and managerial staff that can play a possible role in pa be trained on the primary skills that are required to effectivel commitment to generating partnership and advertising revenue, pe appraisals (where applicable) should include revenue generation/ Areas of the corporation/staff that contribute positively to the Procurement Policy approach that is often used in sponsorship development (e.g. neg the RFP process). Solution(s): equitable access to partnership and advertising opportunities, at least once a year, post the opportunities on MERX (Open Bidding System) and include a year-round Opportuni Financial Policy/Systems Critical to gaining City-wide staff support, will be alleviating reduction to their operating budgets. This fear is understandabl partnerships, in-so-much as corporate funding is never guaranteed and any drop-off impact program delivery. It will also be important to recognize budgets and/or expenses to support activation and servicing cost Centre of Excellence for Public Sector Marketing | 18 1 - 35 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Solution(s): Partnership revenue should not be used to replace core funding f Partnership revenue should be reported in gross as well as net r each agreement. Allocation of New Revenue Further to the above, if a portion or all of the sponsorship revin the operating area or program, there will be reluctance on the part of City st and advertising initiatives; thereby diminishing the ultimate im Solution(s): Where partnerships are generated for a specific program or servi, a portion of revenue generated through these partnerships should remain within the program and/or work area for the purpose of off-setting cos making improvements to that specific program/service/event; For facility naming rights, a portion of revenue from these arra and/or improvements that benefit all users. Consideration should purpose reserve to allow for future investments by the municipal For revenue generating areas that do not fall under a specific p billboards, web site advertising), revenue should be directed to. Rules of Business Engagement Not-withstanding City ethics policies, there needs to be an overall recognition that in orde revenue, relationships need to be established and that the proce corporate events, lunch m Solution(s): Corporate policies may need to be adjusted to reflect the inhere negotiation (i.e. travel to business offices outside of Kitchene assets such as complimentary admissions to sponsor clients/staff Senior Management/Council Support Critical to City staff playing an active role in identifying and opportunities, will be the support and encouragement they receiv council for their efforts. Therefore, it will be important that initiative and actively support efforts in these areas. Solution(s): Inclusion of partnership and advertising revenue objectives in t Formal and informal senior management recognition of staff that revenue objectives. Approval Processes Approval processes will need to be streamlined to ensure that th negotiation process is maintained throughout the various discuss frustrated with the process and/or lose interest in pursuing the Solution(s): Baseline sponsor benefits packages approved before being markete Delegation of authority for various levels of partnerships. Program steering committee established to approve unsolicited or Use of template proposals and agreements that provide a standard Centre of Excellence for Public Sector Marketing | 19 1 - 36 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Sponsorship Policy Kitchener currently does not have a specific Sponsorship Policy could lead to many areas being open to interpretation (i.e. part eputation. Solution(s): To ensure transparency and consistency, it will be important to conditions and parameters by which the City will recruit and con partners before implementing the program. The policy will also n risk and allowing staff to be flexible in the types of arrangeme Any sponsorship policy should also be integrated with other existing po municipal partner Level of Expertise Most staff are not trained in key disciplines related to solicit servicing these agreements. To implement a sustainable program, program and trained on basic elements that will contribute to a Solution(s): To implement a sustainable program, core staff will need to be o elements that will contribute to a successful City-wide outcome statistics and analysis, identifying potential partners and part Size of Organization The size of the City, coupled with the cross-jurisdictional natu bundled programs) will mean that many people are likely to be involved in decisions related to the solicitation and/or delivery of sponsorship and advertising benefits programs need to be established that allow for the timely discussion of n Solution(s): Similar to the approval processes, a program steering committee will need to be established that will the timely discussion of new opportunities. Current City Contracts for Advertising advertising contractors (i.e. arena advertising, etc.) are likel Solution(s): Short-Term Clearly differentiate between partnership and advertising progr has a clear idea of the value proposition associated with each m Long-Term All advertising and partnership activities should be can set clear parameters for each revenue-generating opportunity Long-Term stigate combining new advertising opportunities into bundled contracts, rather than se Political Environment Politically, the City needs to temper or differentiate its effor served by the City. Solution(s): Position the program so that it effectively highlights the benef Centre of Excellence for Public Sector Marketing | 20 1 - 37 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 -h each partnership and communicate the benefits consistently so that the public is awar Launch the program in phases with the first phase focusing on no Company Perceptions of Dealing with a Municipality d rather see their philanthropic dollars allocated towards recognized charities and order to be taken seriously by potential sponsors. Solution(s): -oriented language in communications rather than . Ongoing communications to educate citizens about the benefits of Integrating Existing Sponsorships The City of Kitchener currently uses partnership contributions t existing partners will need to be thoughtfully integrated into t the same time, allow current partners to gravitate to the new mo Solution(s) opportunities or initiatives. Media Scrutiny The Municipal Sponsorship and Advertising program is likely to b be important to effectively and consistently position the overal Kitchener. Solution(s): Effectively position the overall program and its direct benefits Demonstrate transparency at all times. Exclusivity Most sponsors rely on a certain level of exclusivity through spo marketplace and often, this is contrary to municipal policies. Solutions: Conduct a once-a-year posting of sponsorship opportunities to enes are aware of the opportunity to partner with the City. Although the municipality cannot provide city-wide, exclusive ar provide exclusive opportunities in the specific area(s) for whic Demonstrate transparency at all times. 4§±¤ ³² (¤·³¤± «) The Economy/Corporate Expectations The slowdown in the economy and the increase and impact in socia amount of funds that are available for traditional advertising c looking for activation activities (those activities that can hel Centre of Excellence for Public Sector Marketing | 21 1 - 38 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 committing almost the same amount of funds to sponsorship but ex therefore, if the City is not able to compete at this level, it Solution(s): -benefits of being associated with the City of Kitchener (see Implementation, Communication Strategies). Spend more time with sponsors developing activation plans that b participants involved in the program. Competition for Dollars Further to the above, with over 160,000 not-for-profit organizat dollars is fierce. In addition, with an increased emphasis on sp many organizations, competition for sponsorship dollars has been to articulate a clear value proposition that differentiates its and regional Solution(s): Impact of Increases/Decreases in Sponsorship Revenue -ees for various programs and services. If sponsorship revenue is used to establi activities, the issue will become how to deal with increased cus sponsorship revenue falls off. Solution(s) Dollars generated through partnerships should not be used to rep rather linked to equipment purchases and/or program/service enhancements that pro additional value to participants or citizens. Central office (partnership) staff should be kept to a minimum t and taxpayers for any revenue shortfalls. City staff should be trained in partnership development and soli revenues across the broader corporation vs. relying on the centr partnership revenue targets. The use of outside contractors should be encouraged for specific (e.g. facility signage, digital screens, online and publication Corporate Expectations With increased focus on demonstrating value for marketing dollar expenditures in this area. For organizations seeking partnership on how the partnership will positively impact the company in a w objectives. This also means building in measurement processes th compete in this environment, they will not be seriously consider Solution(s): Upfront understanding of the partnersuccess will be measured. Focus on providing summary reports that demonstrate the value re Centre of Excellence for Public Sector Marketing | 22 1 - 39 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Political Interference from the political level may either delay or discou that they are getting involved in a potentially volatile or nega becoming involved with something that may never come to fruition Solution(s): Consistent positioning of the partnership program and the associ Pre-approval on baseline benefits packages and agreement formats. Perception of Commercialization The overall program will need to be effectively positioned with image by appearing as though they Solution(s): Articulate the benefits of the overall program and demonstrate h of Kitchener and/or program participants. Conduct a twice-annual ad campaign that thanks partners and comm brings to City of Kitchener residents. Focus on activation as a means of providing partner value instea Perception of Competition sponsorship and advertising program could be perceived as compet community organizations (e.g. community associations, non-profit advertising contractors, so the City will need to be mindful of to minimize fallout and discord from these sectors. In addition, move their funding from traditional city programs and services t opportunities, resulting in a funding shortfall for long-standin sponsorship dollars to succeed. Solution(s): Focus on audience fit by aligning with companies that want to re environments and activities i.e. recreation/sporting products. Competing Interests By opening the door to corporate involvement on a wide-spread sc are competing with municipal programs at some level may want to and advertising portfolio to promote their products and services. This increased competition could have an impact on revenues that the City currently/or could generate through it from these competitors. Solution(s): Overall, the sponsorship policy should reflect the limitations w not be allowed to p to refuse any advertising or partnership opportunity that is not municipality; Provided that they conform to City policy, for the most part, an advertising in approved locations because advertising generally partnership; Because corporate partnerships generally offer more audience eng have the option to exercise its competitive advantage for partne audience (i.e. a fitness business sponsoring a City fitness prog Centre of Excellence for Public Sector Marketing | 23 1 - 40 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Business Perception of the Program Business wants to be involved with a program that has a positive operated. In this regard, the City needs to take the time to ens marketing the program to the business sector. Solution: Ensure that the assets to be offered, the policies, agreements a launching the program. #¨³¸ ®¥ Kitchener -´¨¢¨¯ « 3¯®²®±²§¨¯ Strategy Overview In order to successfully develop and implement a full, corporate key strategic areas that must be planned and executed in tandem. 1.Guiding Principles 2.Inventory (Product) Development 3.Communications 4.Partner Solicitation/Recruitment 5.Program Coordination 6.Internal Culture Each of these areas is discussed at a strategic level below. '´¨£¨¦ 0±¨¢¨¯«¤² At a strategic policy level, there are several guiding principle the CitMunicipal Partnership Program. 1.Sponsorship and advertising revenue should not be used to fund c Sponsorship and advertising revenue is subject to the constantly changing ec corporate priorities and unless long-term agreements (three - fi would be at risk if they relied for the most part on these reven 2.The sponsorship program needs to be positioned as a positive col corporate partners to enhance the quality of life in Kitchener a programs and services. To be successful, the program cannot be positioned sole messaging will need to be sustained and consistent to ensure con 3.-If the participants or citizen benefit in some way from the sponsorship, they will be m sponsorship as a benefit rather than an intrusion. This is viewe By allocating a specific percentage (e.g. 25%) towards program/service delivery enhancement, the audience exper better motivated (rewarded) and corporate partners will see the 4. is that it has the ability to help companies reach large numbers of audiences with specific need Centre of Excellence for Public Sector Marketing | 24 1 - 41 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 company products/services with audience needs/interests, the City will likely have and acceptance from the audience, leading to a higher success ra 5.a to potential partners needs to be marketing-based objectives an motivations. For the most part, companies do not view a municipality as a d contributions, so the business case for investment needs to be f competitive based principles. 6.The contribution of partners needs to be acknowledged by the Cit By constantly reinforcing the value that the corporate partnership has brought more the public and the corporation will feel good about these c conducting Official Ceremonies for naming rights agreements, pro sponsors and creating a Partner Wall of Honour at City Hall. )µ¤³®±¸ (0±®£´¢³) $¤µ¤«®¯¬¤³ In order to recruit the number of corporate sponsors and adverti, the City will need to offer a wide range of opportunities that f beliefs, long- portfolio that provides many options for companies to participat -term. The added value of this approach is that the City will not be dependent on a few partners to carry the load, one of the major sponsors discontinues their involvement. In addition to the above, in order to be successful in a volatil towards revenue development by working with each company to deve terms of investment. This includes offering an inventory of changing corporate priorities. In order to be effective in the inventory (product) development its inventory with a view to expanding with new products, re-pos to the corporate marketplace or removing products that no longer Impact of Changes to the Proposed Inventory of Assets The proposed inventory of marketable assets (as outlined in Appe Changes to the inventory can positively or negatively impact ant For example, if Council approves a commemorative name for a Tier no longer have the revenue potential that can be achieved throug proposed facility will have the opportunity to generate in the r these facilities do not proceed, the revenue opportunity will be also includes new advertising initiatives (i.e. increased outdoo opportunities are not approved, the initial revenue projections In addition, City Council may choose to remove some sponsorship (Appendix B), which were assumed as the basis of this strategy, due to concer public may not want to see the private sector involved in a part important for the City to test the specific components of the in to partners) prior to finalizing and launching its Municipal Par Centre of Excellence for Public Sector Marketing | 25 1 - 42 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Naming Rights Products Naming rights is potentially, one of the most lucrative areas th sustained revenue for the corporation, although it also requiresto achieve an agreement (can take as long as 18 months to complete) that they are longer-term agreements that require minimal servic municipalities, the following are key considerations for implemea naming rights revenue program: ance for a naming rights partner. In this regard, the best candidates are generally those who can offer direct value to facility participants (i.e. sports Although the duration of naming rights agreements can range from the ideal term may be in the range of eight - ten years. This al integrated with the facility as well as establish than ten years, an escalation clause should be considered to account for To encourage longer-term agreements, the City might consider str -after a certain period. This will make it easier for a partner t conditions change. h naming rights asset. The valuation process outlined in this strategy provides a useful to The City might consider providing incentives for condensed payme the entire fee upfront might be provided with a discount of 20% within five years, 10% - 15%. Communications Next to product development, communications is likely the most c Kitchener sponsorship program. With the amount of public and med communications plan that positions the program in the best possi which partner investments are positioned as beneficial to the ci this order), companies will see themselves as contributing to th This positioning cannot be achieved by words alone. By ensuring every partnership and communicating these contributions in a pub media, sponsors, community stakeholders and the political level increasing its brand appeal in the marketplace. There are three strategic communications perspective, as outlined below. Overall Positioning ider positioning its Municipal marketing p communication pieces directly aimed at corporate audiences. Public Positioning: Public positioning will be critical to gaining wide-spread ac messages include: The City is committed to providing value for the taxpayer dollar Centre of Excellence for Public Sector Marketing | 26 1 - 43 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 ship/advertising program is aimed at reducing or minimizing cost of programs and services to the public; Revenues received through municipal partnerships will be used to citizens participating in various programs and services offered Corporations know that a strong community (and quality of life) opportunity to make a meaningful contribution to the community w work, live and play. Corporate Positioning: While somewhat similar to public messages, effective positioning tone of the program and value proposition for companies that are include: The City has a proud history of delivering a diversified range o The City is interested in developing marketing partnerships with employees and/or customers and create a strong balance between b responsibility; Companies can chose from one of the many partnership opportuniti innovative ideas to make Kitchener a better place to live, work Funds generated through the program will be used to maintain and enhance the experience of the audience participating in City pro Companies that participate will be making an investment in, and employees and/or customers live, work and play. In order to be effective, positioning will need to be consistent collateral, Council reports and media relations. #®±¯®± ³¤ 0 ±³¤± !£µ¤±³¨²¤± 3®«¨¢¨³ ³¨® 2¤°´¨±¤¬¤³ To ensure that the City provides fair and equitable access to Ci recommended that the following activities be considered: Opportunity Awareness Ad Campaign This campaign will include consistent advertising in local paperon-line, to promote the partnership opportunities in general with the City of Kitchener. As well, th can become a partner, submit a proposal for consideration, or be MERX (Open Bidding System) ers should be posted on MERX to allow for the broadest possible range of responses. In addition, the C Interest to encourage companies to respond to the range of oppor own ideas for collaboration. Webpages A series of webpages should be developed around the partnership benefits of the program and opportunities available, as well as received by Kitchener residents as a result of their contributio Partnership Prospectus Distributed through Kitchener-based business organizations, prom Kitchener. Centre of Excellence for Public Sector Marketing | 27 1 - 44 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Municipal Partnership Program E-Newsletter Distributed through an opt-in mailing list, City suppliers and b n 0±®¦± ¬ #®®±£¨ ³¨® The City needs to take a strategic, coordinated approach towards recruitment and servicing perspectives. If the City is to presen will be necessary to put the processes and tools in place that e implemented. There are several elements that need to be consider Overall Stewardship of the Partnership and Advertising Program To oversee the roll-out and management of the program, it is rec of key representatives from various departments be established t ensure that the program aligns with corporate objectives. This would include setting a strategic direction for the program, app programs, overseeing the sales and servicing processes and monit Centralized Sponsorship/Advertising Function (Municipal Partners Municipal Partnership In addition to providing a coordinating function among City depa the following activities: recruiting corporate partners, establi programs, managing contractor agreements, marketing the program Steering Committee on the progress of the program. This is not to say that all current partnership activities need departments involved in existing partnerships should be coordina ensure a consistent and coordinated approach towards partner rec accomplished by: Annual list of partnership opportunities submitted to the centraby frontline staff to examine where synergies lie between the various opportunities; Frontline staff reporting to central office in advance, the comp are not duplicating or competing proposals going to the same com Maintaining an up-to-date database of current partners on a City-wide basis (see bel To support a program that generates sustainable sponsorship reve place to complete the following functions: Municipal Partnership Office & Other Frontline Municipal Staff Function Responsibility Promotion of Partnership and Advertising Opportunities to the Coordinated through a centralized Municipal corporate sector at-large Partnership Office Partnership/Naming Rights Sales (Major Properties) identifying, contacting, presenting proposals and negotiating partnership/ Municipal Partnership Office naming rights agreements Community-Based Partnership Sales identifying, contacting, Frontline staff trained in the skills required to Centre of Excellence for Public Sector Marketing | 28 1 - 45 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Municipal Partnership Office & Other Frontline Municipal Staff Function Responsibility presenting proposals and negotiating sponsorship agreements for implement an effective, community-based community or individual program-based opportunities program Coordinated through Municipal Partnership Partner Servicing servicing sponsorship/naming rights/ advertising Office to ensure the completion of agreed- agreements to ensure that the City delivers on agreed-upon benefits as well as renewing partnership/naming rights/advertising interests. Frontline staff to support agreements implementation. Internal Communications and Coordination promoting the benefits of the program internally and providing staff with the tools to Municipal Partnership Office engage the corporate sector Contracted Services/Support Function Responsibility Contracted service coordinated through Web Site and Publications - Advertising Sales Municipal Partnership Office Signage Advertising Sales identifying, contacting, presenting Contracted service coordinated through proposals and negotiating advertising agreements Municipal Partnership Office The rationale for the recommended function allocation is as foll Overall responsibility for implementing the partnership and advein one centralized area to ensure that efforts in all areas are coordin recruiting corporate partners and delivering on agreed- interests are maintained. Major partnerships/naming rights (i.e. more than $20,000 per ann technique than advertising, often requiring intimate knowledge o needs are aligned. In addition, often times, companies consideri (internal city staff) and often, the decision requires senior c can easily be represented by contracted services. Advertising (online, publications, signage) contacts with agencies and company advertising personnel. Ultimately, it is envisioned that City staff should be able to t have the training to be successful in this specialized area. Als culture through on going communications, that City staff across development as an everyday part of their job function. Consolidation of All Advertising Initiatives Further to the above, in the medium to long-term all corporate a through the Municipal Partnership Office in the same manner as p Centre of Excellence for Public Sector Marketing | 29 1 - 46 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 sets, (revenue) in all areas. While the central o program as well as new, corporate-wide advertising initiatives, own products. Solicitation of Sponsorships Given the scope and potentially complex nature of the partnershi number of sales options including internal staff and external co achieve revenue targets. The following model provides a high-lev Centralized City staff (managed by the Municipal Partnership Off partners for major City-wide initiatives; External advertising contractors to market and sell commercial a Front line or program staff responsible for bringing new (major as well as recruiting partners for their specific programs (i.e. Events staff who would continue to solicit partnerships for majo a centralized function. It is believed that to achieve sustainability for the program ov corporate culture that encourages staff at all levels to proacti as part of their day-to-day business function. To this end, front-line program staff sh and pursue potential opportunities that can impact their specifi need to be trained in partnership revenue development, provided they can pursue (and pre-approved benefits they can offer) and p this area. Consideration will have to be given to coordination o which are currently managed by staff in the communications divis Also important to the implementation of an effective partner rec . For example, a potential partner may be approached about a speci initiative, but may be in fact more suited to a broader proposal coordinated, strategic approach, the City will a) demonstrate a recruitment, and b) Sponsorship and Advertising Database To support the coordination of partnership sales, a central regi current partners and active pros City. This database and management system is viewed as essential for sn approaching potential partners and reduces the frequency with wh initiatives. It will also give partners the sense that the City confidence that the City is taking a professional and strategic Retained Advertising Inventory For any area where the City has contracted advertising sales, a e included in partnership benefits packages. This will ensure that the City has flexibility in customizing partner a commercial advertising element. Approval of Benefits and Agreements Prior to approaching potential sponsors, the types of benefits t well as a standard agreement format should be approved in advanc Centre of Excellence for Public Sector Marketing | 30 1 - 47 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 throughout the negotiation process. This will also ensure that d or unwanted delays. )³¤± « #´«³´±¤ The final element of the strategic areas is the development of a is conducive for partnership innovation. Most sponsorship progra throughout the organization does little to motivate staff to tak partnership innovation is one that: Provides the flexibility and tools for staff to do their job; Is customer-driven vs. organization-driven; Is supported by senior management; and, Recognizes staff for achieving corporate objectives. The following are viewed as critical elements for establishing a ship and advertising objectives. Internal Communications An ongoing internal communications strategy that educates staff they can do to contribute to the program and the benefit of the . Cultivating Senior-Level Buy-in Regular reporting at senior-level management meetings by the cen progress of the partnership/advertising program and how it is co Supportive Middle Management By including revenue-based performance measures in annual work p recognize and reward staff who make the effort to recruit corpor Community of Sponsorship Practices By establishing a community of practice that brings staff involv in-person or online) to discuss key issues and success stories. A Supportive Council By providing City Council with annual status reports about the p elected representatives to make announcements and attend events naming rights ceremonies. 2¤¢®¬¬¤£¤£ 3¯®²®±ship/!£µ¤±³¨²¨¦ )µ¤³®±¸ £ "¤¤¥¨³² As mentioned in previous sections of this report, it is recommen advertising opportunities be phased in over a number of years as staff and new opportunities emerge. 3³± ³¤¦¨¢ !±¤ ² ®¥ &®¢´² As the Sponsorship and Advertising Framework illustrates (see Ap potential assets that can be leveraged with potential corporate there are several areas that r Centre of Excellence for Public Sector Marketing | 31 1 - 48 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 for the City to implement while minimizing push-back from variou political level. Recommended initial areas of focus for the firs Strategic Areas of Focus Examples of Opportunities Naming rights for high profile facilities that are viewed as less New and relatively new facilities, arenas, controversial in nature because they are either new, individual ice pads, pools and multi-purpose geographically named or in a recreation category that is rooms within recreation complexes, artificial commonly associated with sponsors (i.e. sports and turf fields and ball diamonds entertainment. Facilities that are on main traffic arteries.) City-wide programs, services and events that are delivered Public swims, public skates, pools, water primarily by City staff and coordinated through a central office parks and splash pads, TDM/cycling program, outdoor rinks, business start- programs Selected registration-based programs (primarily adult and senior Adult fitness and wellness, aqua fitness, adult) where communications can be facilitated between the summer day camps (parents) sponsor and the intended audience City-wide initiatives that contribute to a safer, healthier and An Active Kitchener, A Clean, Green sustainable community Kitchener, A Safe Kitchener, Volunteer- Friendly Kitchener, Business-Friendly Kitchener Opportunities where excluVending machines, concession operations, -competing WiFi services suppliers Advertising opportunities that offer a unique value proposition City-wide brochures and on line guides, the market and/or measurable transactions municipal websites, digital screens, facility e.g. arena advertising, distribution networks, selected fleet vehicles, pay and display ticket backs, parking garage advertising. " ²¤«¨¤ Partnership Benefits The following section outlines the range of common baseline bene benefits package, with actual benefits offered subject to the sp partner as worthwhile in investing. Approval of the following benefits is required to proceed with t be noted that in cases below where variations of the specific as ad), the actual benefits package offered to a sponsor for any pr depending on the nature of the a program or initiative. In cases where partners are delivering a all such scripts, messages, coupons or ads would require prior approval from the City to ensure that these messages reflect the values of the City and of the sponsorship. Centre of Excellence for Public Sector Marketing | 32 1 - 49 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Potential Asset to Sponsor Benefit Specification be Leveraged Web Site Text with Name and On landing page of sponsored program or service. Variations Link XX hanks to the following Web Site Logo ID and Link On landing page of sponsored program or service. Variations hanks to the following corporate Web Site Text/Logo ID with On landing page of sponsored program or service. Variations call to action include a script in the text body with a link or a stand-alone text box with approved script. Web Site Banner Ad or Pre-determined space on landing page of sponsored Program or Promotional Space service. Partner to provide ad artwork using City specifications. Program or Facility Name Program-specificXX by Publication hanks to the following Program or Facility Logo ID Program-specificXX Presen by Publication hanks to the following Program or Facility Coupon or Ad Program-specific. Partner to provide ad artwork using City Publication specifications. Leisure Guide/Best Name Sponsor the whole guide, or on page of sponsored program or of Times serviceXX hanks to the following Leisure Guide/Best Logo ID On page of sponsored program or service. Variations include: of Times hanks to the following c Leisure Guide/Best Full Page, 1/2, 1/4 On page of sponsored program or service. Partner to provide ad of Times or 1/8 Page Ad artwork using City specifications. Distribution Promotional Distributed by staff or partner or un-aided (for a pre-determined Network Literature period of time) at the sponsored facility or program location. Distribution Promotional Item Distributed by staff or partner or un-aided (for a pre-determined Network i.e. sunscreen period of time) at the sponsored facility or program location. Distribution Product Sample Distributed by staff or partner or un-aided (for a pre-determined Network i.e. juice period of time) at the sponsored facility or program location. Promotional Promotional Passes Offered by the partner with the purchase of a product or Discounts Centre of Excellence for Public Sector Marketing | 33 1 - 50 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Potential Asset to Sponsor Benefit Specification be Leveraged Facility Space Use of space for Limited duration depending on the activity static or manned displays Facility Space Use of facilities for Complimentary use of facilities based on availability; up to a corporate activity certain dollar value Targeted Stand-Alone Mailing Program-specific opportunity in print or electronic format to Communication registered and/or opt-in participants. Targeted Sponsor message Message sent with Online Registration Confirmation or other Communication and/or offer direct correspondence delivered to registered participants by th Fitness Registration. XX is pleased to offer 25% off any fitnes apparel to anyone registered in t Signage Name or Logo ID on Located at sponsored venue or activity for a pre-determined City-produced sign by hanks to the following Signage Sponsor-produced Located at sponsored venue or activity for a pre-determined sign period of time. Size and placement mutually agreed. City Ad Name Name on City-paid ad related to a specific program or activity. XX hanks to the following City Ad Logo ID Name on City-paid ad related to a specific program or activity. XX hanks to the following corporate City Ad Acknowledgement Ideally, two times a year, paid by City thanking all Corporate and Logo ID Partners. Verbal Recognition By Instructor / City Program-specific, one-time acknowledgement of the corporate Representative partner. Sample script: It is important to note that the baseline benefits outlined abov that any major partnerships will likely require customization, e agreements. In more timely approval of partner benefits packages. Centre of Excellence for Public Sector Marketing | 34 1 - 51 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Activation Opportunity Specification Product Demonstration Opportunity for a partner to conduct a demonstration of a relevant product or service (at a mutually agreed time) as part of the pr content i.e. new piece of fitness equipment to a fitness class. Use of Complimentary Admissions Opportunity for a partner to receive a pre-determined number of complimentary or significantly reduced admissions for a program service for distribution to employees or customers through a spe promotion i.e. public swims. Use of Venue Opportunity for a partner to make use of a City venue for a corporate function at no charge or on a cost-recovery basis i.e. employee or customer appreciation event. Presenter of a Special Activity Opportunity for a partner to receive added visibility as a presenter of a special activity conducted through a facility or program at no c on a cost-recovery basis, depending on the nature of the activity i.e. presenter of Family Skate Day, contest, online engagement element. 2¤¢®¬¬¤£¤£ 3¯®²®±²§¨¯ £ !£µ¤±³¨²¨¦ !²²¤³² Included in Appendix B there are specific programs or services that are recommended invent of the program. Other opportunities may be identified by potenti consideration. For areas where baseline benefits have not been p parameters within which any benefits packages may be offered, de opportunity. For each of the assets identified in the appendix, initial partn change depending on the nature of the property and the needs of Exclusive Level limited to one partner; Presenting Level typically, limited to one presenting or title partner, on occasion two co-presenting (non-competing) partners; Major Level typically, ranges from one to six (non-competing) partners, depending on the property; Supporting Level can range from one to eight partners, depending on the property. 0±®¦± ¬ )¬¯«¤¬¤³ ³¨® The following section provides recommendations related to the impartnership and advertising program in the following areas: Six-Year Roll-Out Strategy (2014 2019) Allocation of Partnership Revenue Partnership Policy Markeship and Advertising Program Promotional Collateral Launch and Recruitment Strategies Integration of Existing Partners Centre of Excellence for Public Sector Marketing | 35 1 - 52 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Servicing Strategies Technology Requirements Analysis of Internal Vs. External Management of the Program Six-9¤ ± 2®««-/´³ 3³± ³¤¦¸ ¨¢«´£¨¦ 0« ¨¦ 9¤ ± ( 2019) To be sustainable over the long-term, the City will need to buil with the private sector as well as develop its resource capacity following is the recommended focus for the Six-Year Roll-Out Strategy. 2014 (Planning, Preparation, Market Testing Year) Consult with the local business community and public prior to fi benefits (Appendix B) that will be included in the initial phase Ensure policies and standard sponsorship agreement templates are advertising guidelines related to the management of advertising Develop full marketing plan for the program, including collatera opportunities to the private sector. Develop the internal infrastructure to effectively manage the pr internal procedures, etc.). -reased advertising and special event sponsorship revenues. Implement corporate advertising program through third party vend Focus in Year 1 of Program 2015 (Launch Year) Initiate formal launch of Municipal Partnership Program. Collect ongoing industry feedback on the initial inventory and p have the greatest appeal for partnership and advertising. achieve revenue objectives. Explore the expansion of to all municipal facilities. Develop data collection processes and begin to collect/compile p more strongly support each asset. Build program staff capacity to identify potential partnership o Focus in Year 2 of Program (2016) Build on inventory and partner benefits packages based on indust 1. Focus on increasing corporate take-up on existing partnership an Implement a fully integrated advertising program. Expand advertising capacity in facility/program-based collateral Build database capability for the integration and sharing of par Build program staff capacity to recruit and service partners and Focus in Year 3 of Program (2017) Build on inventory and partner benefits packages based on indust 2. Expand partnership program to include new opportunities for nami initiatives and bundled registration-based programs. Conduct three year review of the Municipal Partnership Program a Build program staff capacity to recruit and service partners and Centre of Excellence for Public Sector Marketing | 36 1 - 53 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Focus in Year 4 of Program (2018) Build on inventory and partner benefits packages based on indust 3. Build program staff capacity to recruit and service partners and Focus in Year 5 of Program (2019) Build on inventory and partner benefits packages based on indust 4. Conduct an extensive review of the program to determine its impa municipality, and make recommendations on the programs future op Build program staff capacity to recruit and service partners and !««®¢ ³¨® ®¥ 3¯®²®±²§¨¯ 2¤µ¤´¤ The method by which the City allocates revenue from sponsorship new revenues on existing operating budgets and the ability to ro as major factors in gaining a broad level of internal support fo supports the program, and to help maximize interest in the progr consider the following: 1. A portion of the sponsorship funds generated should be allocated program, service, facility and/or audience experience. This will the program as well as demonstrate to sponsors that their invest 15% - 25% should be allocated to the sponsored program, service or enhancements. 2. Some revenue generated through sponsorships should be allocated drawn upon for future investments in the community as approved b economic development initiatives, TDM measures); 3. City-wide corporate advertising revenue (i.e. online, publicatio general revenues, potentially for assistance in minimizing future Agreement Servicing Costs It should be expected that Kitchener will incur direct servicingto facilitate its end of any partnership arrangement. This includes signage, official announcement events, changing names on publica -´¨¢¨¯ « 3¯®²®±²§¨¯ £ #®±¯®± ³¤ !£µ¤±³¨²¨¦ Policy To effectively positiship and advertising efforts, it is recommended that a Sponsorship and Advertising Policy be partnerships and the manner in which these arrangements will be A formal partnership policy should also be integrated with other municipal partnership efforts such as the Bylaws and Municipal C Naming of Properties. Centre of Excellence for Public Sector Marketing | 37 1 - 54 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 ²§¨¯ £ !£µ¤±³¨²¨¦ 0±®¦± ¬ A successful marketing the most to gain through an association with the municipality. T about the opportunities and feel confident that they are receivi branding the program and presenting opportunities that are relev sales cycle and increase the odds of a successful, long-term rel Pricing Strategies With the exception of naming rights which are traditionally excl allow for a range of companies to participate in any given activ capacity. This strategy will increase ship program to a broader range of companies The advantages of a multi-tiered pricing strategy to the City is of investment over time. As an overall strategy, most partnership opportunities could hav depending on the opportunity, up to three pricing points. The fo pricing of various partnership properties. Level Specifications Pricing Strategy Exclusive Partner Properties limited to one partner. Priced at full value, based on level of Usually applied to naming rights exposure and benefits received Presenting Partner Typically, limited to one company in Priced at full value, based on the level of a presenting or title partner role exposure and benefits received through the associated with a specific program, opportunity. service, activity or event. i.e. Title Sponsorship = $50,000 Major Partner Typically, ranges from one to six Priced at 40% to 50% of the value of the partners, depending on the nature of presenting partner package, based on a the property. Usually exclusive by lesser level of exposure and benefits. industry sector. i.e. 40% to 50% of $50,000 = $20,000 to $25,000 Supporting Partner Typically, ranges from one to eight Priced at 15% to 25% of the value of the partners, depending on the nature of presenting partner package, based on a the property. lesser level of exposure and benefits. i.e. 15% to 25% of $50,000 = $7,500 to $12,500 On occasion, the City may want to consider adding an additional c applies to in-kind contributions or those occasions when a local activity. Centre of Excellence for Public Sector Marketing | 38 1 - 55 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Valuated Price vs. Market Price The value of each partnership opportunity using the above formula based on the procedure outlined in the Sponsorship and Advertisi market conditions or in Kitchener recommended value. In cases where the current price paid is significantly lower tha options that can be used to adjust the pricing or leverage the s Gradual increases in the current price to eventually achieve par Offer a value-add(s) that makes it easier for the current sponso (e.g. ad on web site to support print ad); Offer an incentive to keep current pricing by signing to a longe )³¤¦± ³¨® ®¥ %·¨²³¨¦ 0 ±³¤±² The City currently has arrangements with a number of corporate p overall Municipal Partnership Program. Current partners ompanies that already have established relationships with the City, they should be rel existing partnerships as well as new opportunities that emerge aMunicipal Partnership Program unfolds. A select number of these companies should be included i market testing expanded program. In addition to providing feedback, existing pa testimonials that could be used in promotional collateral and ev companies and contacts (referrals) that may benefit from the opp. early as they have already demonstrated an interest in collaborating wit initiatives. To capitalize on this opportunity, existing partner approached about the new opportunities identified in the first p - investment. Provided they continue to invest with the City, existing partner and receive the same level of recognition as any new partners to that they can continue to support the current activities they ar City initiative. !¯¯±®µ « 0±®¢¤²²¤² Naming Rights With the high profile surrounding naming rights and the length o arrangements, a more substantive approval process should be requ naming rights agreements is as follows: 1.Initial Letter of Intent signed by the potential naming rights s that outlines the proposed term, payment schedule and benefits; Centre of Excellence for Public Sector Marketing | 39 1 - 56 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 2.Approval by City Manager who will consult with the affected Ward the opportunity and the potential corporate partner; 3.Formal approval of the naming right partner (and terms) at City Council. This approval process will ensure that long-term agreements have avoid any embarrassing moments that could arise from Council not Approval of Other Partnerships The City of Kitchener should consider a streamlined approval proon-naming rights opportunities as this will help maintain momentum through any partner negotiation proc agreement. The following is an example of how the approval proce appropriate customization for the City of Kitchener organization Managers are responsible for approving all agreements up to $10, Directors are responsible for approving all agreements between $ three years; DCAOs are responsible for approving all agreements between $25,0 five years; CAO and/or Council is responsible for approving all agreements f partnership or advertising agreement exceeds five years in durat It will be important to have approval processes in place prior t may be maintained throughout the discussion/negotiation phases. that a general agreement be put in place by Legal that can be us details (e.g. payment terms and benefits) added as an appendix t there will be little need to review each agreement in detail wit 4¤¢§®«®¦¸ 2¤°´¨±¤¬¤³² To effectively manage the activities associated with the program that can accomplish the following: Cataloguing and storing ship and advertising prospect database; Shared capability across departments and staff (all involved in servicing); Sorting capabilities for identifying specific types of prospects Reporting; Notes fields to allow for updating contact notes; E-mail campaign capability; Controls to ensure data is seen only by those who need to see it Analytics. ! «¸²¨² ®¥ )³¤± « vs. %·³¤± « - ¦¤¬¤³ ®¥ ³§¤ 0±®¦± ¬ In determining the role of internal vs. external Municipal Partnership Program, a number of key factors need to be considered: Partner acquisition and retention in any environment, is a long- property brand as well as relationships over a sustained period Centre of Excellence for Public Sector Marketing | 40 1 - 57 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Partner acquisition is generally a difficult process that involv because it involves addressing more complex issues than commerci advertising can be sold more as a commodity, partnerships involv the marketing discipline to develop and negotiate benefits packa property; Partner acquisition requires an extensive knowledge of the munic that companies can be aligned with the opportunities that meet t stakeholders can be recruited and/or managed as it relates to fu Partner acquisition is just the beginning of the corporate/prope term, just as much emphasis needs to be placed on executing thes the municipality are followed, maintaining communication with pa the end of each agreement; Most times, partners (vs. a contracted salesperson) in order to leverage the relationship be as ensure that there is a strong level of buy-in from the munici The City needs to protect the interests of the corporation as we ethics or foregoing opportunities in order to ensure fair and eqby regional businesses. In addressing the advantages of each approach, the following are Consideration Pros Cons Internal vs. External Management Internal vs. External Management Developing Internal Internal Partnership Would have the internal knowledge and -of- Packages ongoing relationships with City staff to the- identify and build integrated partner packages due to history with the benefits packages as well as encourage buy-program and/or internal pressures. in from various departments. External External May have an unrealistic view of what Would likely bring a wider range of ideas to can be offered to potential partners, the table due to broader exposure to the resulting in lost time or frustration market. with the program and/or process. Recruiting, Internal Internal Negotiating Possible higher degree of trust due to May not have the skills to Partnership association with the City. immediately perform required agreements Direct relationships would be established functions to a high level of between the City and Partner vs. through a proficiency, which could affect the third-party. reputation of the program. External Low skill level could result in missed Will likely have the skills to immediately opportunities, poorly negotiated perform required functions to a high degree agreements. of proficiency. External Possible higher level of confidence in May have an unrealistic view of what opportunities being presented. can be offered to potential partners. Could lose interest if approval processes too onerous. Servicing Internal Internal Agreements Would likely allocate more effort towards Likely higher cost due to Centre of Excellence for Public Sector Marketing | 41 1 - 58 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Consideration Pros Cons Internal vs. External Management Internal vs. External Management servicing partners remuneration packages. reputation. External External Would likely spend less time on Would likely have lower servicing costs. servicing, unless compensated for the service. Brand Internal Internal Management May have a biased view of the interests and long-term reputation of the program/City reputation that program. prevents critical self-analysis. External External Would likely bring more innovative ideas to May be more interested in short- the table on how to promote the program term gain than long-term reputation brand. of the City. Financial Internal Internal Ability to ramp-up operation as required to Would likely cost more to implement service the program. the program, based on remuneration External packages. Would cost less overall to service the External program. Would likely be reluctant to spend Potential to focus on shorter-term, lower more dollars executing the program, revenue opportunities, rather than more unless there was a direct financial significant opportunities that require a benefit. longer investment of time to achieve (i.e. naming rights can take up to 18 months to achieve). professional opinion that the City should assume overall respons partners and managing all aspects of the partnership program thr. However, like any situation, it will be important to have qualif best interests in any business situation, especially in the early sta will be establishing its value in the marketplace. as well as practices from other partnership and advertising ini is recommended that: The City aim to use internal, dedicated resources (staff) to manMunicipal Partnership Program; That the City consider the use of a professional contractor, kno operations to assist City staff in establishing the program (i.e the knowledge and skills required to implement a successful City Within a three year periorogram aims to be self-sustaining, not requiring the use of external contractors; External contractors should be engaged to manage and deliver theongoing advertising sales program. The benefit of this approach is that it will allow the City to u the same time, build the infrastructure and capacity for City st Centre of Excellence for Public Sector Marketing | 42 1 - 59 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 2%6%.5% !.!,YSIS As part of the preliminary planning process, the consultant cond to determine the potential new revenue that could be generated t to be finalized after City Council has approved the assets and p part of the Municipal Partnership Program. Changes to these two be generated through the program. For example, if City Council d inventory of assets that will negatively impact the potential re In order to determine a set of initial revenue projections for a assumptive partner benefits were established for each of the fol Sponsorships: 1.Naming Rights To estimate potential revenue from naming rights, only high pro facilities, individual arenas and pools were considered, as they corporate sponsorships. 2.Program Sponsorships Revenue estimate considerations included the size of the audien composition, the types of benefits offered, combined value of be the property. 3.Event Sponsorships Because full attendance and exposure benefits are not available difficult to assess potential revenue that could be achieved thr where full data was not available, industry standards were used 4.Themed Community Initiatives Estimating revenue that could be achieved through these program difficult to do until the specific programs under each chosen ca benefits that sponsors will receive as part of their sponsorship Advertising: 5.Publication Advertising First phase advertising should focus on increasing current adver as well as launching new opportunities that show the most potenton-investment. To determine the potential value of publication opportunities, base included the potential publication inventory, number of exposure 6.Online Advertising To determine the potential value of these opportunities, baseli considerations included the level of visibility and number of un box ads (unless indicated) were initially recommended. 7.Interior/Exterior Signage Display Advertising Phase 1 Interior/Exterior Advertising should focus on those areas that can be serviced by an external contractor as we high degree of acceptance by the public. 8.Other Opportunities In addition to the core revenue opportunities described above, other initiatives that have the potential to generate additional the areas below, it is anticipated that businesses will come for Centre of Excellence for Public Sector Marketing | 43 1 - 60 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 Further details on the assumptions made in developing the revenu Appendix C of this report. 2¤µ¤´¤ -¨· 0±®©¤¢³¨®² The following chart provides an annual breakdown of revenue proj will take to ramp up revenue generation: Year 1 Year 2 Year 3 Year 4 Year 5 $169,550 $339,100 $518,900 $753,200 $986,500 (gross) (gross) (gross) (gross) (gross) It is important to note that the first five years need to be vie program. After the first five years, the City could potentially new gross revenue annually. Prior to finalizing revenue projections and a full financial mod Program, the program should be market tested with members of the public. Consultation with the business community to confirm thei partnership program with the City should occur in 2014, prior to It should be noted that revenue estimates are conservative in ap public services are introduced and/or removed from the inventorymix and projections will be subject to change. 0±®¦± ¬ )¬¯«¤¬¤³ ³¨® #®²³² Currently, the City has no dedicated resources allocated to esta advertising program. To establish a successful program, market the number and variety of opportuniti manage the sponsorship and advertising program, a centralized of positions and a budget to retain, on an as-needed basis, consult marketing and sales of the significant sponsorship opportunities revenue targets discussed above will need to be reduced. Based on preliminary analysis, the following provides a high-lev Item Annual Costs 2 FTEs (salary & fringe) $193,495 Program and Admin Expenses $25,000 Promotional Expenses $20,000 Total $238,495 In addition to the above, an ongoing variable cost needs to be i benefit activation costs for items such as City-installed signag partnership fee). Centre of Excellence for Public Sector Marketing | 44 1 - 61 CITY OF KITCHENER SPONSORSHIP STRATEGY AND IMPLEMENTATION PLAN November 2013 It should also be noted that increases in resources may be requi corresponding revenue should be tied to any new positions. By st support the sponsorship and advertising program should be in the cost is in line with marketing sponsorship programs on an industprogram during the five years and the net revenue targets are identified 2014 2015 2016 2017 2018 2019 Total Annual Projected Revenue $170 $339 $519 $753 $987 $2,768 (Gross) Annual Staff Costs ($193) ($197) ($201) ($205) ($209) ($1,004) Annual Operating Costs ($45) ($46) ($47) ($48) ($49) ($234) Start-up Costs ($25) ($15) ($40) 5 Year Review Costs ($30) ($30) Sponsorship Servicing (5% of ($9) ($17) ($26) ($38) ($49) ($138) project revenue) Net Benefit ($25) ($92) $79 $245 $463 $650 $1,321 * Assumes 2% inflationary increase to staffing and administrative . Issues and Risks The establishment and reliance on revenue from an enhanced partn its issues and risks. 1.One of the major risks is whether there will be uptake on the op order to get a better sense on the degree of potential participa opportunities, some selected market testing of the program needs market testing will be to gather industry feedback on the overal results of the business intelligence will allow the City to: Gauge overall potential response to the program; Determine what types of opportunities and benefits will carry th and advertisers; Gather industry intelligence as it relates to competitive factorup; Provide City staff with business intelligence that supports the Initial market testing should be completed in 2014. While the overall reaction is expected to be positive, it is anticipated that the feedback received will provide the City wit prior to launching the full initiative. 2.The revenue projections are based on the programs and services c are program changes (new or cancelled programs), print publicati the method of communicating to the target audiences, or assets n If, for example, community facilities are no longer available fo for a commemorative naming or there is no community and Council agreement, the ability to achieve the revenue targets from this 3.In the event that sponsorship or advertising revenues cease for budgets if the program is to continue. Centre of Excellence for Public Sector Marketing | 45 1 - 62 1 - 63 1 - 64 1 - 65 1 - 66 1 - 67 1 - 68 1 - 69 1 - 70 1 - 71 1 - 72 1 - 73 1 - 74 1 - 75