The ROI of Sponsorship

Sponsorship is a form of marketing in which an individual or entity pays for some or all of the costs associated with a product, program or project in exchange for recognition. The form, and level, of recognition depends on the goals of the sponsor, but typical marketing objectives include building brand awareness and loyalty, increasing purchase intent and, of course, increasing sales.

Ultimately, sponsorship is about changing consumer perceptions and behaviour, so it may not always be possible to tie the success of sponsorship initiatives directly to sales. Any evaluation of sponsorship therefore requires both qualitative and quantitative analysis, in the form of return on objectives (ROO) and return on investment (ROI).

ROO is a qualitative metric, which measures whether a sponsorship campaign met its goals, not whether it made any money. ROO can help to reassure sponsors that they are moving in the right direction with regard to long-term goals, even if they are not seeing immediate results, in terms of increased sales.

Nevertheless, ROI remains the standard against which the success of marketing activities is measured and it is doubtful that many marketing directors could justify investment in sponsorship if increased sales were not among its merits. According to Nielsen, sponsorship is worth an estimated $50 billion per annum and growing at 4% per annum, so it is abundantly clear that sponsorship is often viewed as a sales tool.

ROI can be calculated simply by dividing the amount of revenue generated by a sponsorship campaign by the cost of that campaign. Knowing the ROI of a sponsorship campaign helps sponsors to identify which campaigns are most, and least, effective in generating income for their business. It is, however, difficult to tie specific revenues to sponsorship alone because of the effects of competitors, price and other market forces. Of course, ROI is fundamentally about dollars and cents, but marketers should not forget that sponsorship is about the target audience connecting with the sponsor in a positive, worthwhile way.

Some Examples

QBE, the business insurance specialists are title sponsor of the QBE Internationals and partner to England Rugby

– 51 pieces of media coverage
– 1 Billion people reached through coverage
– £519,318 – advertising value equivalent generated
– 29,000 competition entries

FRIENDS LIFE activating their sponsorship of the 2012 season, delivering a high impact, cost effective digital campaign

– 114% Increase in twitter followers
– #withfriends Used over 300 times by fans on finals day
– 29,000 REACH On facebook during finals day alone
– 5,000 Competition entries

EBAY PR & DIGITAL – DRIVING BRAND LOYALTY Integrated PR, digital and experiential campaign for eBay

  • 20,000 Hub Live visitors
    – 92 million People reached via the media
    – 180,000 Unique micro-site users
    – 31,000 YouTube views in 2013

*All examples taken from Generate.

A sales funnel is a useful tool for visualising the steps involved in selling products or services and should bring to light important information, such as the number of prospects, and the conversion rate, at each stage of the sales cycle. A sales funnel can also provide a frame of reference for evaluating sponsorship, highlighting emotional engagement, or how people feel about a product or service, purchase intent and other factors.

Indeed, sponsors already know their cost per acquisition (CPA), or cost per sale (CPS), so it is straightforward to adjust a sales funnel so that it reveals whether or not the total spend on a sponsorship campaign exceeds the total value of sales and, hence, the efficacy of the campaign.