With the continued growth of corporate spending on sports sponsorships, brands and their agencies are under increasing pressure to show that they are assessing and optimizing the return on those investments. Some brands do a remarkable job of market targeting, portfolio mix, asset activation and relationship analytics. Others build their portfolios with a broad brush, with little attention to the data and details that can make a huge difference in ROI. For those interested in best practices, here are some key steps.
Know the goals you want to achieve for your business and how you will measure them. Remarkably, this is where many brands fall short. Why are you investing in a sports sponsorship? Do you want to build brand affinity with a local team or national sport? Do you want to support your expansion into a new region? Do you need to entertain key customers? Do you want to build strength with a specific demographic? Do you need to show support for the CEO’s favorite team or sport? Whatever the goal, express it as precisely as possible, list the ways a sponsorship would help you achieve it and show how you would plan to measure that achievement.
Determine which platforms and properties will help you achieve each goal. For most goals, you’ll have a choice of platforms (e.g., leagues or sports) and properties or other rights holders (e.g., specific teams or athletes) you can sponsor. The key is to match the affordable choices to each goal. For example, if you are targeting a specific demographic, which league or team is the best fit? If you need suites for high-end entertainment, where can you get them and which events will most impress your customers? If geography matters, which teams should you choose? If activation opportunities and support are important, which properties are best?
Identify the asset categories that will deliver the best results for your goals. This is another area where many brands fall short. Given the opportunity, many properties will offer a sponsorship package crafted by the property to offer a range of benefits to the sponsor. The value of each asset in the package varies, both objectively and depending on the goals of the sponsor. But most properties do not offer cafeteria asset selection or separate asset pricing unless pressed to do so. As a result, less experienced brands end up with assets they do not want or need. To optimize the value of your investment, you must determine which assets will be most important in meeting each of your goals and focus your investment dollars on those assets. Do you need more social media engagement and less in-venue fixed signage, or vice versa? Do you need more talent appearances or none at all? The same approach applies to your mix of sponsorship dollars versus third-party media ad buys. Should you combine a smaller sponsorship investment with a larger budget for game day media advertising?
Create a portfolio mix and activation plan that meet your budget needs and return expectations. As you build your asset portfolio, consider the activation required for each asset and the cost of that activation. For many assets, activation costs can exceed the amount paid to the rights holder for the asset and inflation is likely to increase this ratio further in the months ahead. Compare the value of the returns you expect to achieve for each asset against the asset and activation costs to identify any outliers. Assess these ratios by platform and by property to compare the relative value of each relationship and use the results in your negotiations. Assess the asset and activation costs of your aggregate portfolio against your available budget and determine whether any portfolio mix or pricing adjustments need to be made as you move to specific contracts with the properties or other rights holders.
Assess the impact of market and social trends on contract length, opt-outs, performance incentives, escalators and other terms. Changes in technology and viewership preferences, in-venue attendance declines and the politicization of sports are increasing the risks associated with sports sponsorship investments, making it harder to pick the winners and losers over time and making decisions about contract length, performance incentives and other terms more difficult and more important. Longer term contracts that appear to be bargains can become disasters. Opt-outs and performance incentives can help off-set identifiable risks.
Confirm that you’re getting and using what you are paying for. Regardless of your goals, confirming that you are activating and using the assets you are paying for is important to optimizing your investment. Unused tickets, signage and talent appearances waste your investment. Track your ticket assignments and guest check-ins, manage creative guidelines and deadlines online and confirm signage and events with photos and videos.
Measure your results. Getting what you are paying for involves quality as well as quantity. Sub-par event experiences and poorly-executed social media can actually create negative returns. Measuring your results is essential. Where practical, use multi-factor analytics with a combination of objective and subjective assessment factors that best reflect your goals. Maintaining the same assessment factors and rating scales (e.g., 1-5) for multiple platforms, properties, assets and events facilitates single- and multi-year comparisons across leagues and teams and provides valuable data for contract negotiations and decisions about asset and partner mix. Data can include guest surveys, property attendance, demographic and fan engagement data, third-party viewership studies and subjective internal rankings.
Make adjustments. Data has little value unless it’s actually used to make decisions. Use rankings of platforms, properties, asset categories and events to identify top and bottom performers for portfolio mix, opt-out and renewal decisions and contract negotiations. Identify weaknesses and oversights where you, your agency or the rights holder can make on-the-fly adjustments or process improvements. Document the changes and set times for further testing and review. Press rights holders to provide value add assets at no cost to offset poorly-performing assets. Create hypothetical or “what if” contracts and assets to compare to your existing contracts to see the effects of potential changes in portfolio or partner mix.
Use the right tools to manage your investment. For over 30 years, brands have been using spreadsheets as the principal tool to manage their sports and entertainment sponsorships. This industry reliance on spreadsheets has made it increasingly difficult for many sponsors to access the comprehensive, integrated information they need to track, analyze and optimize their sponsorship investments. As a result, more and more sponsors are moving beyond spreadsheets to contemporary cloud-based sponsorship management tools such as Sponsor Locker. The benefits are clear: Increased management efficiency (particularly at the activation level) and reduced execution risk, among many others. But as with the evolution of other data management and analysis tools over the past three decades, the ultimate value is better, faster decisions at every level, from the C-suite executives managing strategy to the brand and agency teams activating assets and events.