Download the PDF - Prophet

Warc Exclusive
April 2010
Escaping the Black Hole of Sponsorships
Chiaki Nishino and Fred Geyer
Prophet
Even in a struggling economy, sponsorships – particularly those involving sports – command a significant proportion of big businesses'
marketing mix.
After declining for the first time (by 0.6 percent to $16.51 billion) in 2009, sponsorship spending by North American companies is expected
to grow 3.4% to $17.08 billion this year, according to the IEG Sponsorship Report. European companies are expected to boost spending by
5 percent to $12.7 billion, while worldwide sponsorship is expected to grow 4.5 percent to $46 billion.
Difficult times only increase the pressure to manage marketing more effectively, with an eye toward enhanced accountability. But
sponsorships remain an important marketing investment that, on the whole, defies effective management.
Many struggle to manage multi-year commitments that were locked in when sales and marketing budgets were flush. And then, there are
the image issues, compounded by circumstances of the 2008-2009 economic meltdown. Bank of America ended discussions with the New
York Yankees for fear of consumer backlash. Royal Bank of Scotland raised eyebrows by extending its sponsorship of the Six Nations'
rugby tournament just before announcing $41 billion in losses. Switzerland's second-largest bank UBS cancelled its sponsorship of the Hong
Kong Open golf tournament after last November's event. The bank received a $59.2 billion bailout from the Swiss government following the
global financial crisis.
Here's how sponsorship black holes are created. A Performance Research and IEG study found that 43% of companies spend nothing on
primary customer research to evaluate the fit of their sponsorships. Further, they're more likely to ask what competitors are sponsoring
than to investigate the sponsorship's appeal to their own customers.
© 2010 IEG, LLC. Sponsorship report
www.warc.com
And that's on the front end. On the back is a lack of metrics to evaluate sponsorships' impact. The Performance Research/IEG study also
showed that 40 percent of sponsors spend less than 1 percent of their sponsorship fees on all of their sponsorship metrics; 36 percent
spend nothing at all.

© 2010 IEG, LLC. Sponsorship report
To an extent, that's understandable, given three major factors that characterise most sponsorships.
● Their confidential, deal-by-deal nature has made it difficult to assemble standard market metrics. Benchmarks such as reach,
frequency, audience composition and cost (CPM) that are standard for other paid media advertising cannot be obtained through
syndicated sources for sponsorships.
● Sponsorships can have very different objectives, ranging from driving awareness to creating customer loyalty to improving
corporate reputation. And companies often have multiple objectives.
● Many sponsorships utilise a wide variety of marketing vehicles and tactics that increase the complexity of measurement. For
example, Holiday Inn's sponsorship with Major League Baseball includes tickets for staying at a hotel, utilizing loyalty points for VIP
experiences at All Star games, a live attraction at the FanFest associated with the All Star game, and more traditional billboards and
television media.
It's also important to note that desired outcomes will change over time, and the measures used to evaluate success/impact should shift
accordingly. Before ending the relationship in 2009 due to his well-publicised marital infidelities, Accenture's sponsorship with the Tiger
Woods underwent just these kinds of changes. From 2003-2006, for example, the sponsorship was focused on shifting Accenture's brand
image from innovation to performance. Starting in 2006, however, it was more focused on using Tiger Woods to help convey high
performance, successfully having changed its image in the previous years.
With all these considerations that must be factored into their sponsorship arrangements, it's a small wonder that they've become a black
hole of marketing for many businesses. But marketers can escape it, and improve both the sponsorships themselves and their investments
in different parts of the portfolio of sponsorship properties. They start by tackling three sets of issues; Strategy, Selection, and Support.
Strategy: Establishing the sponsorship strategy and the optimal portfolio of sponsorship properties is a crucial first step that's often
overlooked. What objectives can be met through sponsorships? What role should sponsorships play in the overall marketing strategy?
Sponsorship strategy is all about getting the basics right such as identifying the targets to influence via a sponsorship, defining the attitudes
and behaviours sponsorships should change and thinking through whether and how sponsorships will link to other marketing and sales
programmes. Once the basics are in place the strategy has to identify the components in the portfolio of properties. Several questions
should be addressed:
● Is it best to focus on one or two properties or support a range?
● Do we need to cover a full year or spike in a key selling period?
● Are separate properties needed for different target segments?
● Should a central theme linked to the brand underlie our sponsorships?
● What are the no-go types of sponsorship, why are they off base?
Selection: Most would agree that identifying, evaluating, and selecting high-impact sponsorship opportunities is important. However, it's
surprising how many companies fixate on sponsorships promoted by influential internal champions and fail to examine the full range of
potential sponsorships. What opportunities are the most and least attractive? What are the roles individual sponsorships will play in a
portfolio of them?
The key to selecting the right sponsorship is to be very clear about how it fits with your objectives and plans for a brand instead of thinking
how the brand can fit to the sponsorship. Key criteria for evaluating sponsorship choices can be prioritised:
1. Brand fit – fits the target and fits the brand personality.
2. Impact – how well known, how well regarded, how unique?
3. Uniqueness – can you identify clear ways to associate your brand closely with the sponsorship without being lost in a crowd of other
sponsors?
4. Risk – what's the potential for the property to sour? How damaging could this be to your brand?
5. Return – is there a clear, measurable path to delivering the attitude and behavioural changes among consumers that must occur to
make money?

Support: Each sponsorship must be optimally structured to achieve the objectives defined during strategy and selection. What advertising,
promotional, and customer engagement programmes deliver the most exposure to and extract the most value from different sponsorships?
What are the best levels of investment for each property and programme?
The key to optimising investment is to categorise sponsorships in the portfolio based on their roles and objectives and use it as a guide for
investment levels. The pitfall that many sponsors succumb to is increasing investment in successful, but niche sponsorships over time. This
scope creep can turn a great event intended for the trade into a larger, but perhaps unsuitable, consumer event.
From there, a measurement process must be put into place. One way to go is a three-part process that measures sales response, brand
equity impact, and contribution to marketing efficiency.
● Sales response measurement typically involves combining purchase and investment data through marketing mix modelling or
historical analysis. Coca-Cola, for example, uses this to distinguish between the volume generated at the event itself, through local
market promotion and through national advertising and promotion.
● Assessing brand equity impact requires identifying the customer attitudes that drive value-creating behaviours. Measuring the extent
of changes before and after the sponsorship shows whether the programme is really enhancing brand equity. This type of analysis
can be extremely valuable whenever brand objectives are crucial to success, such as Citibank's commitment to the new Mets'
ballpark, Citifield.
● Contribution to marketing efficiency is also important. Take local marketing activities of individual bars and restaurants on behalf of
leading brewers for events such as the World Cup or the Super Bowl. Their micro-marketing clout obviously eliminates costs that
the brewer would have to shoulder. But brewers continuously partner with local bars and restaurants. The trick to efficiency analysis
is comparing the efficiency gains from using a particular sponsorship to other sponsorships and other local marketing programmes.
Where to start? Introduce a few simple metrics that can rapidly improve sponsorship investment decision-making. From there, the pace of
improvement can be accelerated over time by making processes more robust, expanding data collection, and enhancing analytical skills.
The ultimate goal is to be able to combine historical analysis of individual aspects of the sponsorship programme with test and learn
experiments that assess the aspects of the sponsorship programme that are hard to measure discretely using historical analysis.
The roiling economy has put pressure on businesses to ensure that their sponsorship commitments deliver, and it may actually be a
positive development. It's an incentive for them to face up to the fact that sponsorship marketing can and must be better measured and
managed. Sponsorships can be effective and powerful. But the question that those who invest in sponsorship marketing must face is
whether their strategies, property portfolio, and programmes are effective and generating strong returns in good times and in bad.
About the authors
Chiaki Nishino and Fred Geyer are partners of Prophet (www.prophet.com), a strategic brand and
marketing consultancy that helps clients win by delivering inspired and actionable ideas.
Contact them at cnishino@prophet.com and fgeyer@prophet.com.
© Copyright Warc 2010
Warc Ltd.
85 Newman Street, London, United Kingdom, W1T 3EX
Tel: +44 (0)20 7467 8100, Fax: +(0)20 7467 8101
All rights reserved including database rights. This electronic file is for the personal use of authorised users based at the subscribing
company's office location. It may not be reproduced, posted on intranets, extranets or the internet, e-mailed, archived or shared
electronically either within the purchaser’s organisation or externally without express written permission from Warc.
www.warc.com