Making the right call: Accurately evaluating your sponsorship ROI

Thirty six percent (36%) of sports fans can name at least one advertiser associated with the top 20 sports leagues. Only 17% can name a sponsor. Which creates a better ROI – advertising or sponsorship? It depends on the your objectives.

Complementary media

While both advertising and sponsorship are channels to building a brand relationship, each communicates differently with the target market. One is not better than another, and, in fact, they complement each other.

Advertising is precise and controlled. It communicates an exact message via a media plan that ensures the advertising will appear at specific times and locations. But, advertising is non-interactive. The target market may hear and see the message, but the advertiser does not become part of the fan's experience.

Sponsorship delivers a slightly different message to each fan. Its strength is the interaction it creates between the sponsor and the fan. "It's a heart and mind connection," explains Tracy Schoenadel, the U.S. head of TNS Sport. "The sponsor becomes part of the event or league and fans form emotional ties with them." Sponsorships provide many opportunities for exposure during an event, including promotional materials for the event, signage at the event, JumboTrons™, on-site exhibit booths, cups and serving items, premiums/give-aways and verbal mentions by commentators.

"A sponsor has to understand the role event and sponsorship marketing plays relative to the company's entire marketing communications plan," Tracy says. "Sponsorship is different than advertising. Despite that, a sponsor should walk away from an event knowing the value it created. And, the value must be determined the same way as other marketing activities, like advertising, to create a comparable ROI."

Three elements of sponsorship

Given its fuzziness, there has been a long running debate about whether you can quantify the effectiveness of a sponsorship. In fact, you can. Not only does measuring ROI provide an assessment of what has happened, it can also provide a negotiation tool for brands considering future sponsorships. Evaluating a sponsorship's ROI has some similarities to advertising, but more differences. Measurement consists of three elements: media exposure, awareness and purchase, and commitment. Sponsorships take about three years to mature, so it is important to set realistic expectations for each year.

Media exposure is the most common method to measure ROI. It successfully benchmarks a dollar value on sponsorship, and includes television, news/promotional segments, print, on-site, radio and any international audience data. It is important to note that 15 seconds of logo exposure does not create the same dollar value as 15 seconds of advertising. Traditionally done by people looking and listening for brand names or company logos on signage at stadiums, JumboTrons, team marks, verbal mentions and event materials, media exposure's newest measurement method uses digital technology. The new system provides faster and more reliable information because it eliminates human error. It also provides a better range of coverage including logo position, size and exposure time to a hundredth of a second.

To calculate the value of potential sales generated by a sponsorship, the awareness level of the brand or sponsor is multiplied by fans' intent to purchase and/or actual purchase. Awareness and purchase information are captured through quantitative research among your target market. Actual sales data can also be incorporated as well.

Commitment is the final factor in the ROI equation. Stronger than satisfaction or loyalty, commitment is a measure that combines both attitudes and emotion and has the ability to predict future behavior. It determines the strength of the relationship between a consumer and a brand. Commitment measures enable a sponsor to answer questions like:

• Which sponsorship creates the strongest relationship with my target customers?
• Which sponsorship has the greatest potential for attracting new customers?
• Which league provides the greatest opportunity for us to attract new customers?

It is possible to determine the financial impact of sponsorship activities by examining fans' commitment to the brand or league. The more committed they are, the more a consumer will spend. A dollar value is created by determining the average product expenditure by each commitment segment.

A wide-angle view

Individually, measurement information about each of the factors that goes into an ROI is necessary to effectively manage the brand. Combining these three elements provides a wide-angle view of sponsorship that includes opportunity and attitudinal, emotional and behavioral measures. Marketers who want to capture the hearts and minds of consumers may want to augment their marketing efforts with sponsorship.

If you want to further explore advertising, sponsorship and measuring ROI, participate in our complimentary Webinar series.

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