This is a guest post written by Tony Perez, co-founder and CEO of Sucuri. Sucuri is a website security platform that helps clean and protect websites. I would consider us a small mid-sized company. Our annual sponsorship budget is in the range of $300 – $400k per calendar year (CY).
One of the industry events we’ve been actively participating in since our inception has been WordCamps. Unlike 2015, in 2016 I decided to be more pragmatic in the way we invest in WordCamps. This new approach stemmed from two basic questions – What is the ROI of sponsoring a WordCamp and should a business sponsor a WordCamp?
One qualifier I want to add before getting started is that tracking success at events is very difficult. Even with the number of tools and approaches in the market, many organizations struggle getting their hands around the actual ROI of any event sponsorship. This means that many of the points in this post are not unique to the WordPress ecosystem, but the uniqueness and openness of the community makes it worth discussing.
The Reality of WordCamps and Sponsors
It’s been many years since I helped co-organize a WordCamp (San Diego back in 2011), and there is no denying that a lot has changed in the way they are put together. The one thing that hasn’t changed however, is the struggle organizers face when it comes to fundraising. Over the years we’ve seen a number of awesome initiatives by the WordPress Foundation to help assist in the process.
- 116 WordCamps around the world
- 36,000 attendees
- 2,056 speakers
- 1,036 sponsors
- 750 organizers
What makes it even more impressive is that these are events put on by volunteers. Matt Mullenweg also shared that these WordCamps are made possible by the generosity of the various sponsors which cover 85 – 95% of the costs associated with such events.
It’s because of these sponsors that the costs are kept so low for attendees; including the annual event (WCUS) which came in at a cost greater than $500 per person but sold for ~$20 / day (Total of $40 / person). This is truly a herculean feat, and I commend them on their success to date.
The Sponsor Canoe Is Leaking
With this in mind, I think it’s fair to say that at the rate things are going we might find ourselves with a problem of scale. While there have been 1k + sponsors in 2016, I would wager that a majority of the money is likely coming from a smaller subset of that group.
Taking this into consideration, unless you’re Automattic, I can’t help but imagine that as a business the ROI question continues to come up as it does for me. This is further compounded by the dramatic increase in the a) request for sponsorships (# of camps) and b) the economics of the sponsorship itself (the $$ amount).
This makes me think that it’s only a matter of time when the source of funds will be exhausted. Organizations have fiduciary responsibilities to their companies to spend their cash flow wisely, especially in today’s turbulent economic times.
The impacts of this, as highlighted above, are going to be felt (if not already) by those volunteers trying to put on these great WordCamps. This will become exceptionally difficult for new camps, especially those in remote cities and countries.
Why Do Businesses Sponsor WordCamps?
There is one common phrase every business that has invested in WordCamps has come to terms with – sponsorships are done in-kind; expect nothing. I’m not clear how this guidance came to be, whether it was explicitly outlined by the Foundation or guidance that came to be over time. What I do know is that a good number of sponsors are familiar with it.
Whether intended or not, allow me to be the first to publicly admit that while we are familiar with the phrase, no one really subscribes to it. The dirty little secret is that every business has some form of an expected ROI. It’s not always financially based, but there is some expectation. Companies sponsor events because there is some vested interest unless we’re talking about a child’s gymnastics or softball team.
ROI takes many different shapes. Allow me to share the ROI as I see it when I look across the spectrum of some of today’s top sponsors (know that these are all my opinions as a third-party observer):
They sponsor because they need to. When they came into the space two to three years ago, after the changing of the guard they identified the potential in WordPress. They had an image problem; one that couldn’t be fixed remotely. It had to be fixed with boots on the ground.
Building relationships. Sharing experiences. Engaging influencers (do not underestimate the power of influencers). Whatever you might think of the brand today is nothing compared to what it was a few years ago. WordCamps have been a critical piece of their strategy to make this work. Who doesn’t know Mendel Kurland?
When they started to make their big push into the market, they were at every camp giving away free accounts. For them, it wasn’t about the short-term gain as much as the long-term gain. They had everything going against them. They were from Bulgaria working to service the biggest economic market, the US. They were trying to penetrate what many would argue was an already saturated market.
I remember when they first appeared. No one knew them, and yet through their guerrilla marketing tactics, brand ambassadorship, stellar performance with customers, and word-of-mouth referrals, they are a powerhouse in the WP hosting space.
While they exploded through a number of initiatives, I believe that WordCamps and their strategy to engage with the community is what propelled them ahead of their competitors. Their focus wasn’t revenue generation early on. I recall their free accounts campaign. I think it ran for close to two years.
What better combination than to have a freemium-like model where all you have to do is focus on user adoption (oversimplification of course). Your product and support are spot on, you just need more people touching it, more people telling their friends about it. They grew organically and these events made that possible.
Honestly, they have no choice but to sponsor. They are the project sponsor by design. They are in many ways tied to the success and continued growth of the platform. They too have their free services that require adoption and user growth, things like Jetpack, Akismet, WooCommerce, and so many others.
Without growth, they are dead solutions. They have to show support for a product that they’ve gone all in on. If they don’t sponsor, why would anyone else? Their fates are intertwined.
And the observations go on. Granted, these are obvious gross oversimplifications, but I share them to highlight what ROI can look like. I also share them to show you what success looks like, and what the DNA of these organizations look like. Most of the scenarios above are built on the idea of “free” or “free-ish” services, with the exception being GoDaddy whose prices are so low you might as well consider them a freemium-like model.
Measuring the ROI of Events
What happens if you’re a premium service though? In this scenario, your ROI is no longer about adoption or user growth. Instead you’re now focused on growth in the form of revenue and sales. User adoption will never be as great as the freemium model.
As organizations, we’ve invested a lot of money. There has to be something we’re getting out of this. Only in the WordCamp community have I seen this idea that people will donate not only time, but money, under the assumption that there will be nothing at the end of the tunnel.
I wanted to better understand this myself, and what better place to look for ROI than our own data here at Sucuri.
The data below highlights the period between December 2015 – June 2016. I encourage other businesses to share their own data to add to the conversation. When speaking to ROI, I looked for measurable attributes first:
- How many marketing leads were captured?
- How many sales leads were captured?
- How many of those leads converted to sales?
- What kind of exposure did we get via social?
- What kind of exposure did we get via backlinks?
Perhaps the biggest immeasurable metric being:
- What kind of brand awareness are you really getting?
In the table below, sponsorship is exactly what you’d think, while financial investment implies ancillary costs of getting people there, lodging and eating. It does not include labor, collateral, shipping and other items.
This chart shows the ROI we got in terms of money (did we close deals?) As a for-profit business one of the many attributes we look at are the total net-new customers we can generate from any investment, including events.
To date, from all the events including WordCamp US (2015), we were able to track a total of 13 deals that closed from a direct engagement at the event. Putting the Customer Acquisition Cost (CAC) in the neighborhood of $12.4k per closed lead.
This means that my lifetime value (LTV), if they purchased a basic plan at $199.99 would have to be 45 years. If they purchased our $499.99 plan, we’d be looking at a 18 year LTV.
Focusing on exposure, it is one of the many things you get from sponsoring an event. You get linkbacks from the event, shout outs on the pages, posts highlighting your sponsorship. What does that really amount to? Can it be measured? The easiest way to answer these questions was to look at the main site links and social engagements.
We generated 190 sessions total, the most coming from WordCamp US (at the time of the event, not leading up to it, or after). We generate over 500k sessions a month across all our platforms. This makes 190 total sessions over a six month period negligible.
In my review, we looked at direct traffic from referrals and traced down the social “thank you” and “promotions” each event provided. It’s fair to note, that the lack of success in the measurable values above could be very closely be related to our ineffectiveness as an organization as well. We could just be really bad at working events; it’s an art in and of itself.
I intentionally did not include marketing leads. For me, my focus is looking at what actually converts so when we go to events, we place more emphasis on qualified sales leads (opportunities) than marketing leads; I am not very big on getting into the card collection and SPAM business.
What does this all mean?
Well, if I was a rational person this would mean that as a premium service provider, investing in WordCamps doesn’t make sense. Trust me, I love the community. We are involved in many ways, but this is really too difficult to digest and justify. I wonder what happens when more companies, even the ones that I shared above, start doing the same mathematics.
The WordCamp Sponsorship Conundrum
The WordPress platform promotes the idea of Free and targets a very curious niche of people – self-service/Do It Yourself (DIY) types. By this self-proclaimed profile, they are not buyers of premium services; they are the ones that will invest sweat equity to build or find an alternative to their problem – it just has to be free.
This ideology is fine, but it also means that it frankly may not be the right market for most premium businesses. I would be remiss however, if I did not highlight the fact that a number of the sponsors for WCUS 2016 were premium service providers. The only challenge I would make to this claim is that just because they are sponsoring, doesn’t mean they are getting a return.
I’d also challenge it and say some of them have a need to sponsor for some of the same reasons described above. Just because a premium service sponsors, it doesn’t mean their goal is defined purely around selling, in many instances it’s built around brand awareness and ambassadorship – especially unknown brands, or those with bad reputations. GoDaddy is a perfect example of this.
Does this mean that there is no hope? No, I don’t think so. I just think we have to ask ourselves some key questions, both as organizations and a community. To assist in the conversation, I’ve highlighted a few areas that I find challenging as a business and encourage others to introduce their own. If nothing else, this can help both the Foundation and organizers alike better work with sponsors.
The Audience Quality Factor
When we turn our attention to WordCamps, events designed to promote and bring together these ideals, you realize that the problem with WordCamps for businesses is the audience.
I’m by no way saying that their current design is bad for what WordCamps were designed for. On the contrary, I’d say they’ve done an exceptional job sticking to their predefined audience, at least in terms of cost bracket. They don’t, however, do a good job of differentiating between the various personas in attendance. They’re all rolled up into one big bucket. This creates a severe imbalance between the economic investment and audience potential.
This imbalance I think has to do with the quality of the audience. This is not meant to imply that the audience is not good in their own right, but from a company perspective not so much (i.e., as a potential customer). In a world where everything is expected to be free, and quickly commoditized, how do you bridge that divide?
This also has residual effects as well into the quality that can be expected at the event, in terms of organization, presentation and speakers. There are so many different ways this can go, does it mean WordCamp Pro like events? I’m not sure, but what I do know is that in it’s current incarnation something has to give.
Granted, this does not apply to everyone. I know a number of theme shops that bring and meet their customers at these events. Where closing one deal cannot only cover their costs, but set them up nicely for a couple of months. My points here are more tailored at product / premium shops that are operating at a very different scale and configuration.
Increasing Number of Events Globally
I assure you, these are the conversations that are occurring. There are so many, and it’s impossible to invest in them all (at least in a meaningful way). This will continue to put undue pressures on all the organizing teams looking to raise funds. I think you can see an example of this with this years WCUS 2016 sponsorships, a very different (stark) representation of today’s reality when it comes to sponsorships.
Yes, I’m very familiar with the new Global Sponsorship opportunities the Foundation has put together. They’re divided by geographic region, and don’t include the main geographic events like WordCamp US and WordCamp Europe. The prices are below:
It’s definitely a great idea, but providing a large sum of cash that gets distributed across events that you may or may not attend isn’t something I’m particularly fond of. I worry about the longevity of this program, and while I know there are always new sponsors, what will the churn look like in the program. Only time will tell.
Impacts of a Corporation Type
For those unfamiliar, the entity responsible for facilitating the growth and management of WordCamps around the world is now known as the “WordPress Community Support (WPCS) Public Benefit Corporation (PBC)”. This new entity is a subsidiary of the WordPress Foundation, which is still a non-profit, and established in 2016 (Yes, Matt said it’d take effect in 2017 but I’m pretty sure that was in error).
After March 31, sponsorship payments sent to WordPress Foundation accounts will be returned to sender. Please send revised payment instructions to any sponsors who have not yet paid.
This new entity is what is known as a benefit corporation, and should NOT be confused with a b-corp. Although it is used in many instances interchangeably, there are a number of differentiating factors, the biggest being that to obtain a b-corp classification an entity must be certified.
B Corps are for-profit companies certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency.
Establishing a PBC to handle the WordCamps I firmly believe was done with the best of intentions for the community, but it does present a few challenges for private businesses. A PBC is still a private for-profit company. The biggest difference, however, is that unlike other corporation types (e.g., C, S, etc..) a PBC allows an organization to be a charter (or mission focused) in addition to more traditional goals of generating profits for its shareholders.
This change is a bit more significant than might be implied when reading through the announcement. One of the driving forces for the change was to make the sponsorship process easier for both the organizers and sponsors alike:
One of the main advantages to the change from the WordPress Foundation (a non-profit) to the WPCS (a public benefit corporation) is that the rules around sponsoring official WordPress events are much simpler.
The people involved in overseeing the program have updated sponsor rules accordingly, to eliminate the barriers to value-adding stuff like direct links, discounts, and calls to action, while keeping the ones that helped us form such a trustworthy, community-focused sponsor program, like the rule about not using superlatives or unprovable claims.
As a prior WordCamp organizer, there is perhaps no greater challenge in my mind than asking people for money. While my experience was back in 2011, I can only imagine that the struggles are still the same and one of the things leveraged when pitching to companies are the benefits of a non-profit. The non-profit classification was not just about securing donations like venues (which is very important) but it’s critical for some in securing the dollars they require.
For a company, it also makes it harder to justify the costs. As the dollar investment continues to increase, the one thing that could always be counted on was the non-profit status. By changing it to a private organization (on paper) it’s donating money to another company (regardless of what the mission may or may not be). This might not be a big deal for some, but when we start talking significant investments, it becomes a serious problem.
When you read through the Sponsorship rules for 2016 the changes are not incentivizing enough for a business. The biggest change being the ability to print comparisons or introduce pricing on collateral, both of which are insignificant as you can account for most of your physical collateral to end up in the trash and difficult to track.
I believe there will be, or are changes in the works, to include pricing on virtual print as well which will definitely be a positive move, but I defer to the ROI measurements above as well.
While the idea of incentivizing a business might be repulsive, it’s a necessity. As a good friend of mine mentioned, it’s about exposure for businesses. If we’re investing significant dollars and being such pivotal players in the success of these events, then we’re going to ask for as much exposure as possible.
We’re also going to push the limits of our imaginations and require some flexibility, in return I think most companies would willingly be open to negotiation and flexibility. If ROI is going to be based on exposure and brand awareness, we need to be able to capitalize on that.
What might be interesting here is to perhaps do a survey of businesses, those that have been supporting the WordCamp communities for years, and take a poll. Maybe present some options and make them part of the process. Even if it’s a fixed list, maybe ask for a wishlist of things; things that can be discussed and openly taken into consideration.
Like I tell my teams –most reasonable people don’t need to always win, they just want to be heard and be part of the process. This applies to companies as well. When it comes down to it, it’s but a few people at each organization that will be your evangelists.
WordCamp Sponsorship Can Work
I am not saying that sponsoring WordCamps is not valuable. I’m also not saying that it’s a lost cause working with WordCamps. I am saying that it’s important to have a dialog if longevity is what we’re after in the community, sponsorships are the bloodline that keep these events going.
There is little that can be done about the growth of events or the new subsidiary (and I don’t think either is bad). They are today’s realities and as organizations we’ll have to work through them independently.
The two areas I think can be improved on is the audience and how businesses are incentivized.
- I’m not particularly hopeful of the audience, that’s a problem the community will need to solve and not necessarily something the Foundation should concern themselves with. If I were the Foundation, I would be doing exactly what they are doing – keep the price as low as possible to make it reachable to everyone (need a low barrier to entry). We’ve already seen a few events attempt this, and the best example in my opinion so far has been WooConf and WPCampus.
I share this post as a way to provide a perspective that I hope is unique and valuable. If it starts a discussion, and opens a better dialog between businesses, WordCamp organizers and the Foundation then I will consider it a success. Sponsors are a critical piece to the continued success and growth of these community events, and I’d like to ensure that continues.