Even more cost-effective than TV advertising, sponsorship of cultural, athletic, and entertainment events has been a very popular marketing tool. In 1998, new legislation was passed that made sponsorship expenses deductible up to 10% of a firms’ taxable profit. Sponsorship, however, should not be viewed as a replacement of advertising. Under the TV law, sponsors presentations are limited to 10 seconds at the beginning, 30 seconds in the middle and 10 seconds at the end of the program. The charges are same as for advertising. The new regulations may also make firms more selective about TV sponsorship: public-relations expenditure is fully deductible whereas sponsorship is deductible only up to a certain percentage of gross profit.

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