Tuesday, October 14, 2008

Measuring Sponsorship's Return

My blog never received fantastic readership judging on the frequency of the posts and value of contents in it. Glad I finally received a response from Nicholas, someone who happened to drop in and left some helpful comments. And naturally I made a visit to his link and found another wonderful site targeted at Sponsorship Marketing issues.

This is a very niche and specialised job and not everyone really understands the gist of it. For the most of us, sponsorship is "you give me the money, I'll put your logo up big. The more money you give, the bigger your logo is." However, that does not actually answers the questions your potential sponsors have for you. Or basically it won't convince them to give you the dollars unless they have so much surplus they don't know where to spend. (Which still happens sometime).

Especially with the context of Singapore, as with most Asian countries. We may want to look at sponsorship in a wider worldview and understand with better depth what it can potentially achieve and play a larger role in the greater marketing environment in Asia.

Measuring Sponsorship’s Return (Original Article - Sponsormap.com)

As a sponsor, is it necessary to measure the impact of a commercial sponsorship investment? After all how many of us believe that sponsorship is sufficiently tangible enough to be measured at all?

These are fair questions for the sponsorship industry, as the slower we pursue measuring the value of sponsorship, the quicker we may hasten sponsorship’s demise. If we do not provide fair and objective estimates of the effects of sponsorship, there may be less money available for sponsorship activities as marketing dollars are allocated elsewhere, perhaps to those areas of marketing that can demonstrate effectiveness.

Most of us believe that we can at least partly measure the impact of a sponsorship investment. We are generally free of the dark old days of sponsorship, when accountability seemed less an issue. This was when sponsorships provided senior executives the chance, to side up to big name stars or to have one’s company associated with a major cause or event, irrespective of the value of that alignment to the company.

Over the years, as sponsorship has grown in popularity and became more expensive, sponsors have examined various ways to quantify the value of their investment. One of the first techniques offered involved tracking televised logo time. One person viewing a logo at one time is an impression. One hundred thousand people viewing the logo over a period of time would provide one hundred thousand impressions. The impressions would be ascribed an equivalent media value and often compared to paid up advertising. Hence, a $300,000 sponsorship investment may have an equivalent media value of $1.2 million, this being the basis for deciding the sponsorships return on investment.

Not surprisingly, many marketing professionals have questioned the value of tracking logo displays as the primary means of evaluating a sponsorship. Although flashing a company’s logo during an event might be cheaper than running advertising during the event, the two are not interchangeable in terms of communication effectiveness.

Sponsorship is the most emotional of all communication mediums, no other medium can compare against the strength of emotional attachment that consumers have with the events and properties they so dearly love. It would seem that to simply rely on an equivalent media value for evaluating sponsorship, completely misses the uniqueness of this relationship.

Measuring the value of sponsorship’s return on investment is certainly achievable. As with other communication tools, sponsorship should be evaluated against clearly defined objectives that can be agreed prior to the commencement of the program. It is against these objectives that the success or failure of a sponsorship program should be decided. Obviously, they need to be set in such a way that performance can be fairly measured. These objectives are invariably given as the principal rationale for the sponsorship of any event whether it be for sports, broadcast, community, cause, arts, business to business or entertainment. The underlying goal is for organizations to obtain a tangible return through the link that is established between the sponsorship property and the company or brand.

The marketing objectives of commercial sponsorship are often based on the properties’ ability to build brand loyalty, awareness and to change/reinforce brand imagery. After all, sponsorship is about changing consumer perceptions and behavior.

When it comes to using sales as the main means of evaluating sponsorship, this is less frequently used. Primarily, it is very difficult to isolate sponsorship’s role in the overall marketing mix from the effects of price, competitor activities and so on. This is not to say that sales should not be used as an objective for the sponsorship program, after all, not many Marketing Directors would be able to convince a Board of Directors or CEO of the merits of sponsorship, if this was not the case. It is better to look at increased sales as an objective alongside other more tangible measures such as sponsorship awareness, brand imagery, customer loyalty and purchase disposition.

Consumer research offers one of the best means of measuring perceptions and behavior in the sponsorship arena. Typically, with the right research methodology we can use sponsorship specific measures such as Sponsor Recall, Passion, and Gratitude to measure against key brand metrics. These metrics generally include brand image, loyalty and purchase intention for example. Such surveys will often pick-up strong indications on how the sponsorship is paying off. It is also common to track sponsorship over a period of time, as this medium is more of a longer-term investment, compared to more traditional media such as advertising.

Besides marketing objectives, other sponsorship objectives may involve building corporate image, hospitality and motivation of internal staff. These also can be measured, as long as we agree that we are measuring attitudes and perceptions be they those of the general public, business partners or employees.

Marketing Directors, Sponsorship Managers and even CEOs are being challenged to justify their forays into event marketing. Whilst most might have clearly defined objectives, if they cannot be measured, how can they quantify the value of the sponsorship investment?

Many companies spend little or nothing on measuring the effectiveness of this important communication tool. This contrasts markedly with advertising where high levels of pre- and post- testing and evaluation are widespread. It would seem that measuring the contribution of sponsorship warrants more attention that it has previously received given its value to a corporation especially in these days of media fragmentation.

Considering sponsorship’s prominent role in representing the core values of the brand or company, surely it is something that we should expect to measure its impact on our consumers, business partners, employees or the wider community. After all, sponsorship is not likely to continue to grow unless it can demonstrate its effectiveness and this means providing tangible measures of its return on investment.

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