By BJ Roth
Senior Sponsorship Specialist
Sponsorship spending in the U.S. was more than $24 billion in 2018 per ESB Properties. And yet, according to an insightful July, 2018 study by the Association of National Advertisers (ANA) and Marketing Accountability Standards Board (MASB), 63% of marketers do not have a standardized process for measuring return on sponsorship initiatives.
Further, nearly half (43%) do not or are unsure whether they have a dedicated sponsorship measurement budget – and less than one third (30%) audit or verify the metrics agreed upon with the sponsorship supplier. The pool for the study (entitled “Improving Sponsorship Accountability Metrics”) was ANA members – which comprise many of the largest and most sophisticated marketers in the U.S.
Why have sponsorships been given a hall pass on measurement and ROI for so long, when they represent such a substantial investment? In part, there is the complexity – so many moving parts
and the challenges inherent in capturing and attributing each back to objectives (if indeed objectives were even identified). And there is the emotional component. Sponsorships are just … cool. But is that really enough? Whatever the reasons, it is time for Brands to develop processes to measure ROI on their sponsorship investments. Sponsorships are not a game, and neither is their ROI.
There are three imperative considerations for organizations with respect to sponsorship accountability:
- What is being measured, and why is it important?
- Who is doing the measuring, how are they capturing each element, and who’s interests do they represent?
- How will the measurement data be utilized to drive accountability for the organization’s sponsorship investment?
“In God we trust, all others must bring data.” – W. Edwards Deming
Ideally, organizations participate in sponsorships for the right reasons. Because they align with a brand and can increase awareness, consideration, or other key measures. Reach a target audience in some meaningful way. Provide a powerful opportunity for activation. Drive sales. In short, move the business forward in some measurable way.
Whatever those reasons, they should be painstakingly defined. Then, they should be quantified.
- What is the cost of the sponsorship and any ancillary activation?
- What is the true media value of the sponsorship, including all of its components?
- Finally, what is the value to the organization if the sponsorship achieves its business objectives (i.e. what is the value of a 1% increase in consideration, etc.)?
Hopefully the dollar value of these three items are each successively higher. The media or exposure value is higher than the actual sponsorship cost, and the true value of the initiative to the organization is higher still. If that’s the case, then you probably have a winner. But only if you can quantify it.
“Trust, but verify.” – Russian proverb (popularized by Ronald Reagan)
It is imperative that the performance expectations which are required for the sponsor to satisfy its business objectives be translated very specifically into the sponsorship agreement. If the
objective is awareness, how does each specific element contribute – and what are the delivery expectations required for the overall objective to be satisfied?
Equally important (and often overlooked): what constitutes non-compliance by the seller? What are the consequences for non-compliance? Are occurrences, audiences, elements, environments guaranteed? If so, these items should be carefully spelled out, along with provisions for any shortfall vs. contractual agreements. Sponsorship accountability works best when expectations have been clearly identified and implications for non-performance have been written into the agreement.
Finally, determine what will be the “source of truth” for each KPI and who will perform the overall measurement and performance assessment. Will it be the seller of the sponsorship? The sponsor’s media, PR or other agency? Consider the neutrality of each player in providing data that will inform the ROI of the organization’s marketing investment.
The absolute imperative measurement initiative should be basic media valuation. This is the low-hanging fruit. Basic media valuation includes:
- Assets received, duration, exposure (i.e. where did they run, what audience did they reach)
- All occurrences should be logged, counted and measured using industry-recognized and appropriate measurement research
- Performance should be reconciled with the contractual agreement
- What was the value of every single element and each exposure (based on audience, length, impact relative to some base cost such as a paid :30 ad)?
- How does this value compare to the price paid? How does it compare to the sponsor’s other paid media and sponsorship initiatives?
- Were Brand standards such as logo design, associations, etc. met as agreed?
- Was there an industry exclusivity or some other type of competitive rights agreement, and was it executed?
“If you cannot measure it, you cannot improve it.” – Lord Kelvin (William Thompson)
Feeling good about an association or a business relationship is not the same as demonstrating value or ROI. A careful, deliberate measurement plan for sponsorships assures that expectations were met (or that non-compliance will be remedied). Further, it validates that the sponsoring organization received satisfactory value for the initiative.
Importantly, it also helps inform future activity. Were the KPIs the right ones? Was the measurement methodology appropriate? Should the organization renew this sponsorship at the end of our commitment, or seek out others like it? What can we do differently or better next time? What should we attempt to change about our contract with this seller, if we decide to negotiate a renewal?
Ultimately, if you aren’t measuring value and ROI for your sponsorships, you’re just guessing. If you are allowing the seller to determine the KPIs and to report on them … (surprise!) the sponsorship is going to look like a great value every year. And maybe it was. Maybe.
Sponsorship relationships work best when all parties embrace transparency and can trust one another. A legitimate exchange of value should be the goal of both parties. Demanding meaningful information from reliable sources isn’t too much for the sponsoring organization to ask. Brand affiliation via sponsorship of sports, entertainment, events, causes, etc. can provide excellent opportunities to advance marketing initiatives. But it’s crucial that sponsors leverage data and sound methodology to support their investments and quantify results.
Sponsorship Accountability Checklist
- Summarize the reasons for participating in the sponsorship (2-3 sentences)
- Re-express #1 as specific KPIs that will quantify the degree to which the sponsorship is meeting objectives (3-5 KPIs)
- Assure that those KPIs are written in to the sponsorship agreement, including measurement methodology and provisions for non-performance
- Designate a party to conduct the measurement, understand who that party represents, and demand independently-sourced and reliable data
- Create a standardized process for reporting performance and ROI and for incorporating findings into future sponsorship initiatives and contract negotiations
The ANA / MASB study concludes, among other things, that “it is now time for the industry to take a stand on sponsorship accountability.” Sponsorships are often fun, and the associations they offer can be a source of great pride for companies that participate in them. But sponsorships are not a game. And their measurement should not be, either.
If you liked this post, you might also enjoy “A Disciplined Media Planning Process Will Never Go Out of Style”.
Images: © Walter Arce | Dreamstime.com; © Chatchai Somwat | Dreamstime.com; © Leigh Warner | Dreamstime.com