Are corporate sponsorships really worth it?

This year, the Air Canada Centre was renamed Scotiabank Arena following an epic 20-year sponsorship deal with Maple Leaf Sports and Entertainment. And the $800 million price-tag for naming rights is now believed to be the biggest sports sponsorship in North American history.

The 665,000 square foot former ACC building (sorry, it’s going to take some time to get used to it…) now Scotiabank Arena, originally cost about $265 million which means the deal for naming rights alone is just over three times what the actual building cost.

But is it worth it?  And how do you quantify investments like this?

As marketers continue to demand more from their sponsorship dollars, these are the kind of the thorny questions around marketing effectiveness and corporate sponsorship value we’re now being asked by clients, CEOs and their boards as part of our Corporate Advisory offering.

Scotiabank’s hope is that their investment will enable them to corner the sponsorship market for Canada’s most prestigious sport – hockey. The bank presumably believes that their $800 million investment will generate increased revenue, better awareness and a positive halo for the Scotiabank brand overall.  And Scotiabank is by no means alone in believing corporate sponsorships will pay significant dividends.

In the United States, a dozen companies that include PepsiCo, Anheuser Busch, Coca-Cola, Nike, Adidas, AT&T, Ford, Toyota, and GM, all invested more than $100 million in sports sponsorships in recent years. And the ANA estimates corporate sponsorships will top $21 billion in the US alone.

 

Measuring Sponsorship

According to a recent ANA study, there is no universal tool for measuring sponsorship effectiveness . Those surveyed said they used the following metrics to help assess sponsorship effectiveness:

  • Sales activity – 61%
  • TV logo exposure – 55%
  • Lower customer acquisition cost – 49%
  • Lead generation – 48%

The survey then identified the most widely valued metrics:

  • Sales activity – 93%
  • Attitudes toward brand – 81%
  • Lead generation – 78%
  • Response to sponsorship / event-related promotions / ads – 76%

Despite being the second-most utilized metric, TV logo exposure ranked among the lowest at 52%.

So what can we learn from this?  And how can a corporation begin to evaluate how much their sponsorships are really worth?  Well, here are some thoughts:

1. Articulate an objective strategy

As obvious as it may sound, the first step is to develop a comprehensive sponsorship strategy based on your specific target audience profile – as opposed to preferences that may come from key influencers within your organization.  As brutal as that may sound, sponsorships can sometimes stem from emotional or (let’s be honest here) –  ego-driven decision making, which is something that needs to be expressly avoided given the sums of money that can be involved.

2. Define your measurement

Defining a measurement strategy that works for your organization doesn’t have to be (and probably won’t be) perfect, but you need to start somewhere.  Start with what you know – current awareness levels, engagement, sentiment towards your brand and specifically what you know about the segments of your audience you hope to influence with your sponsorship activities.

3. Get your social media house in order

The most immediate and effective ways to engage your audiences before, during and after your sponsored events is likely going to be through social media, so your own social media infrastructure needs to be robust – and well supported – to take advantage of the resulting lift in engagement. Ensure your social analytics capabilities are set-up to provide key insights so you can  maintain and adjust your activities over time.

4. Look beyond the sponsorship

Your sponsorship fees are essentially just the price of entry – support and follow through are extra. Marketing teams need to develop measurable support strategies for their sponsorships to ensure the resulting increase in awareness of brand and / or products / services actually result in increased goodwill, activation, sales or whatever else is expected from sponsorship activities.

5. Follow the money

While sales as a result of direct sponsorship will rarely be a straight line, you can measure pre and post sponsorship awareness, consideration sets and lead generation by channel.  You can also measure actual YOY sales and factor in anticipated economic growth you would otherwise have achieved without sponsorship. Ultimately, your increase in sales revenue should tell you if and how well your sponsorship is influencing your customers to open their wallets.

Measuring sponsorships isn’t an exact science but some of this may provide starting points from which to develop more sophisticated measurement over time.

Remember that like any potential marketing expenditure, sponsorships should be evaluated against the fit with your brand – whether it’s a natural extension for your audience, or whether it could be perceived as a force-fit that just doesn’t sit well with your business.

For most marketers, sponsorships are an opportunity for their organizations to present a different side of themselves to their customers and potential customers – whether that’s a supportive community role, or something more playful that makes companies and brands more approachable.  And irrespective of whether that’s in sports, arts or charity – sponsorship can have a much longer-term impact on the companies and the brands they support – providing you’re thinking beyond just seeing your logo on the telly.

STEPHAN ARGENT

Stephan Argent is Founder and Principal at Listenmore Inc offering confidential advisory to marketers looking for truly independent insight and advice they can’t find anywhere else. Read more like this on our blog Marketing Unscrewed / follow me @StephanArgent

Photo: Tony Armstrong
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