Sports Sponsorship – How are you measuring it? Is your organization ready for it?

According to Statista, globally, around $63 billion is spent annually by big brands on sports sponsorship. FIFA World cup, European League, Tennis and Badminton circuit, NFL, MLB, IPL (cricket) and many regional sports leagues capture way over a four billion set of eyeballs across the world.

A combined 3.572 billion viewers – more than half of the global population aged four and over – tuned in to world football's ultimate competition, according to audience data for official broadcast coverage of the 2018 FIFA World Cup - Source: FIFA.com

Coca Cola, Hyundai, MacDonald, Visa, Adidas, Nike, Mastercard, Qatar Airways, Emirates are some of the top sponsors of global sports events like Olympics, World Cup, and various international sports.

Thanks to the massive endorsement deals, sports icons like Ion Tiriac, Vince MacMohan, Lionel Messe, Ronaldo, Michael Jordan, Michael Schumacher, Tiger Woods, Magic Johnson, and many others have made hundreds of millions of dollars.

Sports and human emotions are tightly correlated. Sometimes these emotions are aspirational. Sometimes inspirational. These sports icons are modern-day heroes. We love them, adore them. We even try to identify ourselves with them. No wonder we like to wear what they wear, try to buy (what we can afford) that they buy or recommend (aka advertising).

Sponsorships and its related advertising are one of the fastest ways to create brand awareness and establish emotional connect with a huge target audience.

But it is expensive, …very expensive. In 2019, Super Bowl commercials were the most expensive they've ever been. CBS, the host network for the big game this year, commanded a whopping $5.25 million for a single 30-second spot. (Source: CNBC)

How do we know if sponsoring a sporting event is worth the investment of time, money, and effort? How do we measure the ROI? What KPIs should we use?

It would be a good idea to look at a few steps:

Step 1: Determine the demographics and ensure if an event is the right fit.

First and foremost, the brands (the event and yours) should stand for similar things and should resonate with a common audience. American Football, for instance, is a male-dominated sport; actually, 47% of NFL viewers are women.

How do we validate?

Via primary survey, probe how relevant is the event to your audience? Is there an emotional connect? Ask pertinent questions to identify if there is true potential and opportunity to build affinity with the brand. Any secondary data or past market researches would also be useful.

Step 2: Confirm data on the reach and impact of the sponsorship

-     Determine impressions at the event/s reach and via TV/radio broadcast

-     Determine the number of social mentions

-     Frequency of ad serve

The above information will be available through the event organizers. You might want to check the methodology used for arriving the numbers. Review of historical data would also be useful.

Step 3: Ascertain and plan customer acquisition/activation initiatives

While the purpose of Step 2 is to quantify the extent of brand awareness… eyeballs you will hit, but ‘awareness’ alone doesn’t guarantee great ‘conversion.’

Equal emphasis should be placed on planning and executing a multi-media campaign to drive engagement and conversion. My understanding is the for every $1 spent on sponsorship, approximately $0.5 to $1.0 goes for activation. For example,

-   At the retail store level, Pepsico ensures placement of POP and thematic Temporary Modular Display (TMD) at large and small format stores. Agreement for additional floor space beyond the shelf space is secured via formal or informal agreement.

-   Companies, display sponsorship theme on product packaging

-    Thematic sales promotions using social and other digital channels

Step 4: Cost Estimation

-      Sponsorship cost

-      TV Commercial production and Media cost

-       Agency fee

Step 5: Incremental Sales Estimation

-    Incremental product units expected to sell (assuming the production, distribution, and placement is taken care of) following the campaign launch and leading up to date of the event.

-    Incremental units expected to sell during the event

-    Incremental units expected to sell up to 2-4 weeks following the conclusion of the event.

I think it is an important exercise to go through the estimation and forecast process before committing …just to confirm if we are not too off target on projections. Since the investment is quite high, it is a good idea to break down the estimation of returns. There are two types of estimations:

a.    Immediate ROI – the money we will make during the campaign/event.

b.     Mid to long term ROI – the money supposedly we’ll make in due course

Immediate ROI estimation:

We know the gross margin of products. What we need to estimate is margin from ‘incremental’ sales. This can be calculated as

-    "A"- Cost of Sponsorship and Acquisition/Activation Campaigns

-    "B"- Gross Margin from incremental sales from pre-event, during the event leading up to 2-4 weeks after the event.

-      A minus B above will give us the incremental sale from the sponsorship. If we breakeven at this stage, it is a HUGE plus, as the impact of the event and the brand affinity due to sponsorship will go a long way in securing more sale in the future.

Mid to Long Term ROI:

Any future sales might also be due to subsequent marketing campaigns and sales promotional effort. Hence, getting accurate data is always a challenge.

Use proxies when we can’t estimate with confidence.

Through an incentive-driven primary survey using online, email, SMS, and direct mail channels (sent 4-12 weeks) after the event, we can quantify the mid to long terms impact of sponsorships as proxies. Larger is the response pool; better will be the estimation.

A lot depends on asking the right questions. For example,

-   Did you recall our TV commercials played during the ‘event’?

-   Where did you notice our brand logo during the event

-    Did you buy or use our brand during the event?

-    If yes, how many units?

-   When did you most recently purchase our brand? How many units?

Questions can be tweaked based on product type and information you need.

 How do we determine if this initiative is going to be successful? Additional insights that might help if we are considering sponsoring an event for the first time:

Good question. We can do the following before committing:

-  See if any competitor is doing this. Determine how many and for how long they are doing it? The longer, the better.

-   Study how they plan entire marketing and sales initiative around sponsorship

-   Buy their product and click “YES” to receiving all promotional communication. Review them.

-   Engage the agency that has the intel on competitors beside a deep experience in campaign planning and execution.

How do we know if our organization is ready to capitalize on Sponsorship Marketing?

I recently learned about an organization in online gaming space, that invested a few million dollars in sports team sponsorship to at the time of launching a new casino. After 12 months of partnership, the sales remained flat. The company eventually pulled the plug.

1.  Right Skill Set/ Resource

Sponsorship Marketing is a serious undertaking. It is expensive. Hence, it is good to ensure that we engage an experienced Project Manager/Head who has strong commercial acumen and is thorough with due diligence. The person should ask the right questions to Event Organisers. Hire the right resources if you don’t have one. Just because Bet365 logos are displayed on the cricket and soccer fields for years doesn’t mean your brand will also have great success.

2.  Examine the channels for acquisition/activations

Remember, TV impressions and commercials will generate awareness…not brand engagement or conversion. If you do not have adequate channels to reach to your consumers (which was the case with the casino brand), chances are awareness and goodwill might not translate into sales.

3.  Product placement/User experience

If we are dealing with a physical product, spend time on planning and coordination with stakeholders to ensure that provisions, scheduling, and resources are in place to make the additional volume to meet the surge in demand. The distribution channel and retail shelves are fully stocked (preferably overstocked) during the period of the event.

If we are dealing with digital products, testing and re-testing the user experience would be helpful.

4.  Strategy - Embracing the event Persona

Sports sponsorship is a powerful strategy to build strong brand affinity and can stay beyond game day or duration of the event. Communicating just a “proud sponsor" won’t take you far. Your brand needs to truly embrace the spirit of the sport and leverage the enthusiasm and loyalty of those sports fans.

5.  Campaign Planning and Execution

Ideally, a small but dedicated marketing team should be tasked with the planning and execution. Engaging current resources involved in day-to-day execution won’t be able to do justice with this initiatives, as there are a lot of moving pieces and meticulous planning, execution, measurements, and ongoing tweaking is the key to campaign success.

A successful Sponsorship Marketing demands a sharp commercial acumen, clear vision and strategy, rigorous discipline, meticulous planning, and thorough execution. It is worth going through all the pains as this is a great opportunity to build a strong brand equity and sales within a short period.