Guest Contributor: Jeff Katz is Director of Strategic Partnerships at FanAI Inc.

It is no secret that the sports sponsorship model is broken.  With many brands negatively impacted from Covid 19 and no live sport for a big part of 2020, brands now more than ever need to justify these investments relative to other marketing channels.  According to Two Circles, the global sports industry generated $129B ($65B from sponsorships) in 2019.

Today most sponsorships are measured against awareness and consideration metrics that are often survey based and informed by small sample sizes.  While top of funnel metrics are helpful brand indicators, they fail to answer the ultimate question on every CMO’s mind which is, “But how did the millions we spent on sponsorships this year impact sales?”

Furthermore, many brands are starting to commission neutral 3rd party sponsorship metrics rather than relying solely on metrics provided by sponsored properties (e.g. team, league).  This enables a greater level of accountability and transparency for a brand's sponsorship investments.

According to a joint report from the Marketing Accountability Standards Board and the Association of National Advertisers, “The sponsorship accountability journey (1) starts with media equivalency and (2) moves to return on objectives, and then (3) a few leading marketers actually apply methods of financial attribution”.

Back in 2018, Anheuser-Busch Inbev (ABI) became the first sponsor to make performance incentive clauses a standard part of its sponsorship contracts, offering as much as 30% bonus if specific team performance and marketing criteria are exceeded.  With the fluctuation of live attendance, team performance, and TV ratings, brands need some way to protect their downside while incentivizing teams/leagues to drive more value.

Team performance incentives represent the first step in the evolution of the way sponsorships are bought and managed.  As static signage has evolved to dynamic LED’s over the last decade, the number of sponsors per team have skyrocketed with many teams having over 100 sponsors at any given time.  This means that individual sponsors must fight for attention or get lost in the shuffle.  Just because a team makes the playoffs, for example, doesn’t mean that each of those 100+ sponsors will get a commensurate amount of value.

As experts in the field, we are seeing more brands wanting to understand the true value of sponsorships by proving their impact on sales.  Our clients want to prove the impact of existing sponsorships and estimate the potential impact of sponsorships that are being considered – on their bottom line.

With sales impact metrics, brands can start comparing revenue lift from fans across sponsored and unsponsored teams as well as ROAS for sponsored teams.

Image: Brand clients evaluate team sponsorship performance based metrics that are most important to achieving their objectives.  The above is sample data for illustrative purposes only

Brands can do this by working with a third party sponsorship measurement vendor to ingest audience data for TV viewers, ticket purchasers, team merchandise purchasers, and digital consumption.  These audiences can be onboarded, anonymized, de-duplicated and matched to transaction data providers following strict privacy guidelines to comply with regulations like CCPA.  Once audience data is matched to transaction data, a brand can then quantify the sales coming from fans who are exposed to a brand's sponsorship compared to sales coming from non-fans.

With exposed audiences across these four data sources matched to retail transaction data, brands can also start understanding which exposed audiences have the greatest incremental impact on retail sales (e.g. In-Stadium Vs. TV viewers).  Often, fans who are exposed to sports sponsorships via multiple channels are the ones that are exhibiting the greatest incremental sales relative to an unexposed group.

Image: Understanding which media channels are driving the most value helps brands better plan their activation strategies.  The above is sample data for illustrative purposes only

In sports sponsorships, brands often are limited to a certain local marketing area in terms of where they are able to leverage a team’s IP/marks.  In today’s digital world, we know that brands end up reaching a national and often global audience but often a sponsorship is priced based on it’s potential regional value.  This is why brands must consider both national and regional sales impact metrics for each team.

Image: An example of regional and national sponsorship impact for a specific team. The above is sample data for illustrative purposes only

Sports sponsorships can be an integral component of marketing and consumer outreach for many brands, but they must be approached with discipline and held accountable to expectations.  Employing sophisticated measurement standards and working with experienced, neutral third party experts to determine the true value of sports sponsorships can help brands elevate their game in this important area.

Photo Credit: © Michael Flippo | Dreamstime