It's no wonder. Valued at roughly $50B
globally, sports sponsorship is a large and growing communications
vehicle that many advertisers consider vital to their
communications mix. And with the rise of addressable TV and social
media putting a premium on live events, it's arguably to become
even more important.
In its 2008 Survey on the Business of
Sport, The Economist described three main reasons why companies
find sports sponsorship worth their while: to establish emotional
connection with their brand; to reach the "right" people (that is,
up-market men who actively avoid advertisements); and to own
something that their competitors don't that is scarce in
supply.
But this survey offers little in the
way of actual, measurable business impact for investors. Most
commentary focuses on the impact sponsorship has on the sponsored.
The NHL, for example, would stand to lose x amount if Air Canada
withdrew their support, or gain y dollars from a new Molson deal.
But rarely do observers share evidence that any of this actually
works for the sponsor's bottom line. If Molson is rumoured to be
working out a near-$400 million deal with the NHL, what return can
it expect from this massive investment?
Our industry's knee-jerk reaction is
to frame things in terms of media value gained from the investment.
But this has been problematic. For example, views of the
sponsorship property - say, the ice at the Air Canada Centre -
would be reasonably straightforward to estimate using a media
equivalence approach: TV/online viewership numbers multiplied by
number of camera shots showing a brand's logo on the ice, plus
attendance figures by game would give a roughly accurate estimate
of impressions. However, disputes would inevitably arise regarding
the value or engagement of such impressions. After all, are we
watching the hockey game or the Home Hardware logo on the ice?
In any case, focusing on media value
is meaningless in the face of shareholder scrutiny. Marketing
(March 28, 2011) revealed that Air Canada's NHL sponsorship of $4-5
million returns around $20 million worth of business from the 11
hockey teams it services. That tells a great ROI story to
shareholders. But it tells us nothing of Air Canada's consumer
response - broader sales or brand response attributed to the
activity - or the impact of the investment it makes in activating
its NHL sponsorship - additional media support often several times
the cost of the sponsorship itself.
So when helping clients to determine
whether sports sponsorships actually work, MediaCom Business
Science focuses on business metrics - namely, sales and ROI. The
results may surprise you.
Take the case of a (now) well-known UK
energy provider. They began their sponsorship of the Football
Association (FA) Cup in England as a relative unknown in the
country, and with strong activation against a high reach achieved
brand awareness targets. Once these were met, the client wanted to
know what additional business value this investment delivered. The
FA Cup's popularity allowed it to charge a fortune for rights, and
our client needed to understand if it was worth it. Using sales as
the dependent variable, our team ran a multi-linear regression
analysis against the previous five years' marketing activity data,
including spend, to determine the impact of the sponsorship on
sales. The results were disappointing - with an effective ROI of
0.25X, it was one of the least efficient drivers of sales; so for
every £4 spent, our client received £1 in return. With far more
efficient drivers of sales, would we drop our association with the
popular English football tournament?
Just because a channel doesn't perform
on short-term sales, doesn't mean it's not valuable; business value
comes in many forms. For a utility provider, customer losses - or
rather, their prevention - are just as important as customer wins.
Using customer turnover ratio as the dependent variable, we
performed a similar analysis, and the results were astonishing. The
sponsorship was attributed with more customers saved than any other
marketing activity, retaining 22,000 in the first year analysed,
with an additional 27,000 in the second year. With each retained
customer valued at £150 that was more than enough evidence to
justify the investment.
The case of a US hotel chain client, a
long-time NASCAR sponsor, is more puzzling. From 2007-2009, their
return on both the sponsorship and its activation were impressive.
For 9-10% of marketing spend, the sponsorship returned 22-23% of
all marketing-driven bookings. For 1% of total marketing spend, the
print activation of the sponsorship returned 10-14% of all
marketing-driven bookings.
However, in 2010, overall marketing
spend declined almost 40% from 2009, and despite a greater share of
the budget than ever before, the sponsorship's impact was deemed
statistically insignificant. The activation - still at 1% of total
marketing expenditure - returned a paltry 0.54% of all bookings.
One possible explanation for such a stark change is that the
brand's advertising had slipped below a broader breakthrough
threshold in the marketplace, leaving even the sponsorship
impotent.
Fully supporting your brand and
activating a sports sponsorship meaningfully, however, is no
guarantee that it will succeed. After years of supporting rugby-
hugely popular in the UK - and enjoying profitable returns on this
investment, a banking client with one of the bigger marketing
budgets in the country was startled recently at its sudden negative
returns. A deeper look at the data revealed that consistently
detrimental press surrounding bankers' bonuses in London negatively
impacted the benefits of sports sponsorships. Where association
with rugby had once bolstered the brand, it now seemed to merely
serve as a reminder of public anger at those deemed responsible for
financial meltdown and economic hard times.
What can advertisers learn from these
cases?
The three broad lessons from these
cases shouldn't be news to any of us: take a holistic view of
business value; invest to breakthrough (or risk wasting investments
altogether); and be conscious of broader social developments beyond
your control that could work against your brand activity.
But the only way to find out if sports
sponsorship really works for your brand is to prove it. Growing
sophistication in measurement and analytics techniques mean it's
possible to evaluate the business impact of this investment with
hard evidence and analysis, not hunch and anecdote. Your
shareholders will appreciate the rigor.
Kevin Keane is Director of
Business Science at MediaCom Canada. He can be found in the
Twitterverse @unhabit.
Read more about MediaCom Business Science or about our sponsorship
consultancy MediaCom ESP.