By Paul Birdwell (paul@roaringforkagency.com)
There is some great sponsorship research being done these days and a subject that far too few companies that sponsor events pay attention to is the real world return on investment (ROI) that the company is getting for their investment sponsorship Dollars and no doubt about it sponsorship is no different than any other marketing function in today’s world in that it must perform and positively impact the bottom-line of the company.
The consulting firm McKinsey & Company churns out on a consistent basis some of the best business research in the world and a January 2014 posting to the McKinsey on Marketing & Sales blog caught our attention and it should yours too if you are investing sponsorship Dollars on behalf of your company:
What’s your sports sponsorship worth?, Dan Singer, McKinsey & Company
“How much is it worth to sponsor Tiger Woods or Lionel Messi or Rafael Nadal? What’s the payoff for being a sponsor of the Olympic Games or the World Cup? Considering the huge amounts being spent on sponsorships, companies have surprising difficulty answering these questions.
Corporate spending on sponsorships in the United States is expected to grow to $20 billion in 2013—equal to one-third of total US television advertising and one-half of digital advertising. Yet industry research reveals that about one-third to one-half of US companies don’t have a system in place to measure sponsorship ROI comprehensively. In our experience, executives who implement a comprehensive approach to gauge the impact of their sponsorships can increase returns by as much as 30 percent.
To manage sponsorship spending effectively, advertisers need to first articulate a clear sponsorship strategy―the overall objective of their portfolio, the target demographic, and which stages in the consumer decision journey (awareness, consideration, purchase, loyalty) sponsorships can support. Companies should then implement a complete Marketing ROI program based on five metrics to measure the performance of sponsorship spending:”
Dan Singer goes on to list five important metrics to measure how a company can access its return on investment (ROI) on sports sponsorship or any sponsorship for that matter:
1. Cost per reach
2. Unaided awareness per reach
3. Sales/margin per dollar spent
4. Long-term brand attributes
5. Indirect benefits
Dan Singer includes just how one would go about using the above five metrics in measuring what the sponsorship investments a company is making are actually worth which we would heartedly recommend to anyone that works in the world of sponsorship to read and take to heart because any marketing investment that is not performing in the marketplace is a just a failed marketing investment.
What’s your sports sponsorship worth?, Dan Singer, McKinsey & Company
Another great article related to sports sponsorships which also could be applied to any event sponsorship was penned by E. J. Schultz of Ad Age Magazine and Jim Andrews, IEG Senior-VP for Content:
How to Get the Most Out of Your Sports Sponsorship, E. J. Schultz, Ad Age
“Marketers are expected to spend $14.35 billion on sports sponsorship deals this year, a 4.9% increase from 2013 when spending grew 5.1%, according to a report from IEG. While the rate of increase is forecast to slow, sports still dominates the sponsorship business, accounting for 70% of all dollars, the WPP-owned sponsorship, research and consulting firm found. (Entertainment sponsorship comes in at 10%, causes at 9% and arts at 4%.)
But how should corporate sponsors make the most of that money? Ad Age recently caught up with IEG senior-VP for content Jim Andrews for some tips.
1. SEEK FAN DATA
Individual sports teams are collecting more data from season-ticket holders than ever, from personal information to concession-buying habits, with some of it collected through smartphone-enabled ticketing, Mr. Andrews said. Sponsors should ask for some of that data, which consumers are more willing to give to their favorite team than a corporate brand.
In one execution, for example, Verizon Precision Market Insights was able to tell the NBA's Phoenix Suns if fans went to a specific fast-food franchise after a game, thus testing the effectiveness of a sponsorship. "We're able to track the activity of the folks who are at the stadium on qualifying events, what they do the day afterward," Zaheer Benjamin, the Suns' VP-business planning and basketball analytics, told an audience at the 2013 MIT Sloan Sports Analytics Conference.”
Jim Andrews goes on to list three other important ways that companies can get the most out of their sponsorships which is very much worth your time to read if you work on the event or sponsoring company side of the sponsorship business:
How to Get the Most Out of Your Sports Sponsorship, E. J. Schultz, Ad Age
The Lessons Learned for us here at the Roaring Fork Agency from the above two sponsorship articles are:
1. That we as a sponsorship agency should spend plenty of time helping both our event and sponsoring company clients measure the return on investment (ROI) of sponsorship investments
2. The performance at the event itself by both the event personnel and the sponsoring company in how it activates its sponsorship can have a big impact on how successful a sponsorship performs in the marketplace and how much it impacts the bottom-line of the company.
If you have any questions about event sponsorship or venue naming rights contact the Roaring Fork Agency at:
paul@roaringforkagency.com
415 730 - 4854
Aspen, Colorado
Tiburon, California
Incline Village, Nevada
Santa Monica, California
Newport Beach, California
Twitter - @RoaringForkAgcy