Sponsorship may be an arrangement to exchange advertising for the responsibility of funding a popular event or entity. For example, a corporate entity may provide equipment for a famous athlete or sports team in exchange for brand recognition. The sponsor earns popularity this way while the sponsored can earn a lot of money. This type of sponsorship, known as cause-related, is prominent in the sports, arts, media and charity sectors.
Then commercial radio stations began broadcasting in the early 1920s, the programs were aired without advertising. Many radio stations were established by radio equipment manufacturers and retailers and programming was provided to sell radio transmitters and receivers. This led to a system where radio and television programs were financed by selling sponsorship rights to businesses. Eventually, the broadcasters began selling smaller blocks of advertising time to several businesses. Sponsorship is also becoming increasingly important in education.
Many companies want their logo on sponsored equipment in return. Formula One teams for many years relied heavily on the income from tobacco advertising, reflected in the sponsorship liveries of the teams. Other types of sponsorships revolve around companies paying for parts of television broadcasts and sporting events which bear their name. For example college bowl games now contain the name of their sponsor such as the Tostito's Fiesta Bowl.
Many times a company's motives for sponsorship are altruistic in order to create goodwill in the community which increases their good reputation. However, sponsorship is more commonly used to derive benefit from the associations created for a company's brand(s) or image as a result of the sponsorship.
People may sponsor an individual or group
of people to undertake a fundraising task, usually for a charity or other
cause requiring funding.