Non-Dues Revenue Is Alive and Well
Just don’t overdo it.
“Hank, for the last time, I need you and your team to dial back the ad sales this quarter. Otherwise there will be consequences.”
It’s not the way you want to start your annual review, but I really had this conversation with my boss when I ran the online media group for a large financial association. My boss wasn’t trying to squeeze the sales reps out of their commissions. The issue was that the group was generating a 7-figure annual ad revenue stream and each year, more of the advertising and sponsorships was coming from companies outside the financial arena for products and services outside the financial mainstream.
As some of you know, the tax on unrelated business income (UBIT) can be a killer for associations and other not-for-profit organizations—and it can seriously jeopardize their tax-exempt or tax-preferred status. What’s more, the sales reps wanted to max out their commissions, but our print magazine folks, our conference team and our webinar promoters felt the digital sales team was migrating dollars away from their channels. Channel conflicts not only occur between groups at many associations, but even within the same group.
As Joseph Ricci, CAE, president and CEO of the Textile Rental Services Association (TRSA) discusses shortly, when you’re introducing new supplements to your print magazine, make sure you’re not “cannibalizing” the primary advertiser base to support the supplement.
From ads to grants, affinity programs and strategic partnerships, always keep the 3Ws in mind.
Having more sponsors/partners isn’t necessarily the answer. Grow the relationships you already have.
Think outside the box. What is the rest of the world doing that associations can change and adopt?
Articulate the value of your members’ buying power, industry representation and name recognition.
But let’s not get too far ahead of ourselves. Non-dues revenue is increasingly important at many associations. As Patrick LeClerc, President & CEO of the Canadian Urban Transit Association (CUTA) explained, “it’s really important for associations to diversify. You can’t simply raise the membership fee. You need to reinvest in the organization and find innovative ways to generate non-dues revenue.”
Despite an up-and-down global economy, experts tell us that there are plenty of advertising and sponsorship dollars to be had, but you need to work hard for it—and keep working hard for it.
Angela Kisskeys, marketing & communications manager for the Midwest Society of Association Executives (MSAE), said advertisers want more data to support their investments and are “vamping up their ads” to get their messages to resonate with members. “Sponsors want face to face time, and they want creative and unique exposure. We work to keep our sponsor relationships strong and customize their sponsor packages to meet their needs. It’s all about being flexible, creative and willing to customize our benefits, exclusive offers and recognition for each sponsor,” Kisskeys said.
But, MSAE is still in the minority. As the results our annual benchmarking research study found, less than half of associations (48.2%) are offering any type at least some form of customization to their advertising and sponsorship, although that’s a slight improvement from 42.8 percent who said so in 2014.
Which of the following best describes the way your organization sells advertising and sponsorship proposals?
See Tara Ericson’s Association Adviser article for more tips about sponsor customization.
Ricci said TRSA’s electronic ad revenue is up from last year and that vendors and suppliers) have been willing to try new advertising and sponsorship opportunities. But, Greg Griffith, executive director of Georgia Soccer, said it is still challenging to bring in sponsors. “Sponsors seem to want only the super events like sponsoring the new Georgia Dome, rather than smaller activities,” he said.
Peggy McElgunn, executive vice president, Global Professional Services (GPS), said she’s finding that sponsors really want engagement. “It’s not enough to provide exposure. But many advertisers in healthcare continue to do it ‘the way they have always done it’ even though that gets them nowhere,” said McElgunn.
Does membership size affect sponsorship potential?
According to Tara Ericson, a group vice president at Naylor Association Solutions, national associations may have an easier time generating a higher volume of sponsorship/advertising revenue, but not in attracting the sponsors/advertisers. “The key to capturing this audience,” she said, “is to have very clear ‘sales bullets’ about your association membership.” Ericson said to focus on the unique value of your membership base such as their collective buying power, the percent of your industry that your members represent and unique attributes that distinguish your organization from peer associations (i.e. you’re the largest, the oldest, the most politically active).
“Can you name-drop your largest and most influential members?” Ericson asked.
NDR game changers
While NDR is not always easy to generate, there has been no shortage of ideas about how to deliver it. GPS’s McElgunn expects games and interactivity to be the next big thing on the NDR horizon. Naylor’s Ericson pointed to video sponsorship and sponsored article opportunities, while Georgia Soccer’s Griffith cited networking events. Ricci agreed, noting that TRSA recently replaced the tabletop option at its annual conference with an Executive Exchange event. “For a flat fee, associates sponsor the Exchange, which guarantees them twelve 15-minute one-on-one meetings with decision-makers. Operators (our members that purchase) choose to participate in exchange for a full rebate of their conference registration fees ($995).” TRSA developed an online application to help match buyers and sellers, allowing them to invite, schedule and reject meetings to ensure common interest. “After only two weeks, we’ve [already] sold one-third of the inventory and expect to sell out within the next few weeks (35 opportunities),” related Ricci.
Meanwhile, MSAE’s Kisskeys said she isn’t quite sure where the next NDR game changer is coming from, but you have to keep your eyes open think outside of the box. “What is the rest of the world doing that associations can change and adopt?” asked Kisskeys.
Sponsored content and native advertising
Advertiser supplied content enables sponsors to tell a more in-depth story than a display ad, banner ad or short video ad can. If done well, the content, which is often prepared by industry experts at the sponsoring company, can provide members with information that advances their knowledge about important industry trends, topics or solutions. Just make sure you and your participating sponsors are keeping everything above board and that you “tell before you sell.” As McElgunn said, “We focus on education, so our content must be educational in nature.”
Naylor’s Ericson concurred. Prior to the sale, “you must provide clear guidelines about what you are willing, and NOT willing, to accept. Send the advertiser good examples of past sponsored content that you have published,” advised Ericson.
As the Associated General Contractors‘ Christopher Monek explains, “AGC has a relationship with Enterprise Fleet Management. Over the years we’ve had a number of discussions with those executives and experts about the prevalence of technology in vehicles, and how technology can help fleet managers in construction firms.”
Ricci said TRSA launched market- and product-specific supplements several years ago that allowed its suppliers to purchase a full page print advertisement in the member magazine and also receive a two-page case study spread. Ricci said, just make sure you know your costs up front and that you have a breakeven point in mind.
“We are printing a slightly undersized insert into our monthly member magazine, Textile Services (8,500 distribution) for the supplement and have managed costs to ensure that if we sell three or more ad packages, it generates a positive return. Otherwise we don’t print,” he said. Ricci also said you need to remind your sales team not to cannibalize your primary advertising by allowing clients to move from your magazine to your supplement.
Monetizing mobile conference apps
Mobile apps can certainly enhance the attendee and exhibitor experience at your live events and provide an additional revenue stream. Just make sure the app has useful features and content (not gimmicks) and that it gives sponsors clear presence. Also, don’t just throw together an app to show that your organization is cool and cutting edge. “It’s essential to have a plan,” said Kisskeys. Naylor’s Ericson said that whenever possible, don’t let more than one or two companies sponsor the app and “bundle the [app] sponsorship with onsite signage so your sponsor has both virtual and onsite exposure to your attendees.” Ericson also recommended sending app sponsors the conference survey results and attendee list as a value added benefit.
Video sponsorship
Georgia Soccer’s Griffith said, “We are starting to stream and will have a sponsor for the stream. We will see how this goes.” According to Ricci, TRSA has a quarterly video news update and sells a primary sponsorship that appears during the lead and close, as well as on the page hosting the video. “We also are selling webinars sponsorships for our monthly series. We’ve had good, not great response, but expect it to increase when we have more data to justify viewership,” Ricci said.
Diversify
As my financial association colleagues used to say, you need a balanced portfolio of revenue streams. McElgunn agreed. If nothing else, “Diversify, diversify, diversify!” Sylvia Newell, executive director, Canadian Association of Railway Suppliers (CARS), said that if executed well, golf outings can be a powerful NDR generator. You can offer sponsorship of everything from goodie bags, to the post tournament dinner, to sponsorship of each hole or the entire course or event. Newell said golf events can be a great way to bring members and industry suppliers together in a relaxed setting.
See this month’s Corner Office profile for more insights from Newell.
You don’t get if you don’t ask
Our annual benchmarking study found that less than half of associations (47 percent) regularly ask their advertisers and sponsors if they feel they’re getting their money’s worth (down from 53 percent in 2014). However, among associations that do ask, three out of four (75 percent) are incorporating the feedback into their pricing considerations. “As an association, it’s your responsibility,” said Newell. “Your sponsors are dishing out a lot of money. You want to make sure they’re getting their money’s worth and they’re not just being treated like a cash fund.”
TRSA’s Ricci advised asking your vendor and suppliers for ideas. “They are working with many organizations and you can borrow from others. Also get involved in peer groups; we are active with Association Trends, CEO Update, NAM Council of Manufacturing Associations (CMA), ASAE, for example.” According to Newell, CARS sends out post-event surveys asking for feedback. “We read through surveys VERY thoroughly so we can see where we can improve on the next one. Most of our sponsors already have us in their budgets and will often ask, “can you save this for me?”
Strategic partnerships and the 3Ws
As AGC’s Monek explains in this month’s episode of Association Adviser TV, “Strategic partnerships take time to develop and must contain what Monek and other experts call ‘The 3Ws:’ Is it a win for the member, a win for the partner and a win for the association? For members, does the partnership offer a discount, product, service or program that they can’t get elsewhere? For the partner, does the relationship provide access to the association’s highly sought after members? For the association, does the partnership have a positive impact for the association itself?
Watch Christopher Monek talk about establishing relationships with a variety of vendors to serve association members. Members are the heart and soul of the association and are the reason they enter into these relationships.
Grants
As Kelly Clark explains, more associations are turning to grants to encourage seasoned professionals to continue their professional development or to help young people interested in their industry find internships. The most interesting twist is that grants are increasingly being funded by an association’s sponsors or strategic partners, not necessarily by wealthy members or benefactors. The Florida Society of Association Executives (FSAE) established a grant specifically for young/new association professionals that would help offset fees and travel expenses related to obtaining continuing education. Hyatt, Marriott and our parent company Naylor, LLC are examples of companies sponsoring FSAE grants.
Can NDR go too far?
According to Newell of CARS, “We have our two signature events every year—sponsors know they’re coming up. But, if you start asking for more money, then it’s not balanced. If you can maintain that balance and make sure people know what to expect without going overboard, then you can sustain your relationships without always having your hand out asking for more money.” AGC’s Monek agrees: “More vendors and more relationships aren’t necessarily the answer; it’s about the quality of the relationships that you already have,” he said, and growing them.
Early results of our unscientific read poll show that only two in five association leaders (40 percent) would ideally like to see NDR account for more than half of their operating budgets. Experts seem to agree that balance is the key. Naylor’s Ericson said that if you tie NDR generation to highly valued content, “you will not hear complaints from members. For example, if you want to conduct extensive survey work and compile industry data that is highly valuable to members, the members will gladly pay for this information or it will be so well read that supplier members will be ecstatic to sponsor the content.” Just don’t ask your suppliers to fund something that’s not valuable or relevant to members. “That’s what leads to frustration and feelings of being overextended,” advised Ericson.
Conclusion
As I learned from my financial association tenure, more is only better when it’s a Win-Win-Win all around. And you won’t get a slap on the wrist by following the 3Ws.
Hank Berkowitz is the moderator-in-chief of Association Adviser eNews.
