The Challenge Of Not Measuring Company-Specific Sponsorship ROI
BY ADAM GROSSMAN
When looking at the quality of sponsorship activations, the Block Six Analytics (B6A) Corporate Asset Valuation model examines three factors:
Initiatives – What is a company trying to accomplish?
Demographics – Who is a company trying to target?
Channels – What is the best way to reach those demographics?
Using this framework is a good approach to analyzing a recent CNBC post with the headline, “Sponsorship spending to hit $66 billion worldwide, but most firms don't know if it really works.” This post focuses on research by agency MKTG and data from the World Advertising Research Center (WARC) which resulted in a central finding that “only 19 percent of sponsorship professionals say they can measure return on investment.”
What is CNBC trying to accomplish with this post? The answer is likely to bring awareness to the idea that companies can spend millions of dollars in sponsorship and not understand if it is driving tangible business results. It is difficult to think of another advertising or marketing channel with this level of spend that to date has not often required a detailed ROI analysis.
Whom is CNBC trying to target? CNBC’s target demographic is an “audience of business professionals and affluent investors.” This includes CEOs, CFOs, CMOs, and senior decision makers at companies that are traditionally large sports sponsorship spenders. This audience is used to using detailed quantitative analysis to determine the effectiveness of advertising and marketing spend.
What is the best way to reach these demographics? Business professionals and affluent investors often turn to companies like CNBC, Fox Business Network, and Bloomberg for news. In particular, these professionals and investors are looking for insights that can improve their job performance. Sports business content typically is not something that resonates with the audience as much as content focused on how sponsorship, advertising, and marketing impact a company’s performance.
CNBC could create this type of content because this post reaches its target demographics and contains insights that will attract them to its site. This article would not resonate with all audiences nor is CNBC’s goal to always reach a large audience. In fact, CNBC would have a difficult time competing with other news websites on audience size. CNBC can primarily monetize its website by offering advertisers the ability to reach an attractive target demographic through content.
Understanding a company’s business is not always a key component of sponsorship analysis. MKTG and WARC found that “37 percent of people have a standard way to measure the impact of sponsorship, with digital and social media analysis popular methods…[with] 73 percent of those surveyed by MKTG saying ‘brand awareness’ is the main point of sponsorship.”
Brand awareness and digital / social metrics scored so highly because they are relatively easy to track. In particular, standard metrics such as cost per thousand impressions (CPM), cost per click (CPC), and cost per engagement (CPE) will tell companies if they are reaching a large audience in an effective way. Reaching a large audience is often the most effective away to build brand awareness.
Is reaching a large audience actually important to a company in generating a positive ROI? The answer is not really for many of the companies that are the largest spenders for sports sponsorship. Many companies like McDonald’s and Anheuser-Busch have near ubiquitous brand awareness with their customers. Increasing that is less likely to drive sales growth or engage with their customer. This is the primary reason that both companies have changed their approach to sponsorship spend recently to be focused on driving revenue.
For some companies, increasing awareness is critical because many members of its target demographic did not previously know who the company is or what products it sells. Our analysis of FirstEnergy’s relationship with the Cleveland Browns in a previous blog post shows when this can be effective.
However, it is not effective for everyone. Senior business leaders are asking how a sponsorship is going to maximize a company’s ability to directly generate revenue growth and better engage with their target customers. Only nineteen percent of sponsorship professionals having an answer to this question is a fundamental issue for the $66 billion sponsorship industry.
B6A tools do directly address this issue. Our Partnership Scoreboard examines how specific companies generate ROI from specific activations with specific properties. It enables both buyers and sellers of sports sponsorship to see how ROI is generated in near real-time using our technology and analytics. Our approach enables sponsorship industry professionals to communicate directly with business leaders in ways that will clearly answer the ROI question.