Sponsorship ROI and the Language of Sponsorship Effectiveness

In discussing sponsorship ROI, or return on investment one of the most common questions relates to what the objectives are for particular sponsorships and how do these relate to what we call ROI. What is certain is that many sponsors themselves have different desired outcomes and ROI calculations will vary depending on the business.

Let’s take three examples, a soft-drinks sponsor, a mobile phone provider and an airline where the property for arguments’ sake is an european soccer team.  These three sponsors are distinctly different businesses that have quite distinct business models. When each sponsor discusses the ROI for their sponsorship investment they will consider it in terms of their own industry. A soft-drinks company will typically want to sell more cases of soft-drink whilst a mobile phone provider may want to see subscription growth and the airline may want to obtain more business class passengers or the opening of additional airline routes.

Whilst we a talking about ROI for all three, the actual numbers reported will vary depending on requirements. Any methodology that is used to report ROI needs to take into account the three different businesses themselves. If we are talking about soft-drink sales then we need to account for that in any ROI approach, the same goes for mobile phones or the airline business.

This is often forgotten and it is common to talk about ROI in terms of metrics that do not necessarily relate to the sponsor’s business. For example, the use of reports of logo exposure and media reach or arbitary rating systems that have their own series of metrics in the context of sponsorship ROI. This is useful information itself, but it is not a final ROI measurement that is sufficient to demonstrate how sponsorship benefits the business. This can be a serious mistake to make at board level where most senior executive are also seeking a financial perspective of the value of a sponsorship. A presentation that relies on estimates of media exposure is not going to be as effective as one that demonstrate sales lifts, brand equity improvements and a financial result in the language of the sponsor’s own metrics.

Dependence on pseudo ROI measures as central to sponsorship measurement often results in a sponsorship that is considered somewhat outside the regular marketing function. This may manifest itself in sponsorship research reporting that is considered in isolation from regular market reports or financial reporting. It is treating sponsorship as a ‘silo’ outside the regular business that does not integrate well with the rest of marketing simply because it chooses it’s own series of ROI metrics, a case of not comparing apples to apples.

For sponsorship ROI to work for a sponsor, it has to integrate into the language of the business. It needs to be evaluated as another part of the marketing budget and provide comparable marketing and financial metrics. Heads of Marketing and CEOs want to be able to see exactly how the sponsorship is contributing to their overall business.

This is a key consideration for the application of the SponsorMap approach. Measure all elements of the sponsorship based of how sponsorship works and then link these to existing business performance metrics. By doing so, we can identify sponsorship driven outcomes and put them into the context of the sponsor’s overall business performance.

Demonstrating how sponsorship is working on achieving business objectives by providing detailed information on sponsorship outcomes. Understanding how brand activation works for brands and identifying improvements.

For a soft-drink company we sponsor provide an estimate of soft-drink sales as well as brand specific information on brand equity improvements depending on the research brief. For a mobile phone company we can examine the sponsorship ROI in terms of key company issues such as subscription growth, total offers and churn. Airlines sponsorship ROI may involve 2 key areas, the first passengers and the second more related to corporate hospitality. The requirements for sponsorship ROI will need to be adjusted to reflect the nature of the business.

What we would be aiming for is to provide a series of ROI metrics including financial ones. A key consideration is that the ROI metrics we use need to be a currency that the sponsor understands. Talking simply about the number of media impressions or a high sponsor recall number is not enough. We should be able to talk about how the sponsorship has improved the brand, increased sales and put a dollar figure on returns made for the investment.

For properties, providing sponsor ROI is possible but is better with some customization of the measurement approach. In the example of the European Football team, providing key metrics in the language that the sponsors can easily take and report to their management teams is just smart relationship management.

This process of relating the sponsorship ROI to the sponsor’s actual business is a key reason why a considered approach to sponsorship ROI measurement will deliver a much better result that is understood and valued. It requires more effort but the results are much more meaningful and valuable to sponsors as a result of the process.

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