Sponsorship Performance Analysis

Is Our Industry Speaking the Same Language?

January 9, 2018 4:44 pm Published by Leave your thoughts

As a sponsorship manager, it’s important to oversee several processes and practices that ensure maximum performance of your portfolio and of individual sponsorships. At T1 Consulting, we categorize these processes and practices into four main buckets:

  1. Pre-Sponsorship Analysis
  2. Sponsorship Acquisition
  3. Sponsorship Activation
  4. Sponsorship Evaluation

 

Pre-Sponsorship Analysis refers to exercises that help a brand to identify the right partners. Some (but not all) of the quantitative analysis within this process is very much related to Sponsorship Evaluation, since:

  • Pre-Sponsorship Analysis aims to project how a sponsorship will perform, and Sponsorship Evaluation assesses how it did perform
  • Pre-Sponsorship Analysis aims to determine how much should be paid for the sponsorship, and Sponsorship Evaluation assesses if the sponsorship’s performance justifies the cost that was paid

 

But for various reasons, Pre-Sponsorship Analysis and Sponsorship Evaluation exercises are not exactly alike. Take sponsorship valuation, for example. This is an important Pre-Sponsorship Analysis exercise for many brands, and it focuses on determining what rights fee amount a brand should pay for a given sponsorship. In order to serve this purpose, sponsorship valuation must ultimately provide us with a dollar-figure conclusion. Sponsorship Evaluation, on the other hand, can still be useful if it provides us with non-monetary KPI conclusions because the impact of a sponsorship can be articulated in ways that extend beyond dollars and cents.

 

Below are just a few examples of the types of conclusions that can be drawn from different types of Pre-Sponsorship Analysis and Sponsorship Evaluation exercises:

 

Examples of conclusions that can be drawn from pre-sponsorship analyzes and evaluation excercises

 

Most of us who have worked in the sponsorship industry for a few years are familiar with these different types of analysis. We’ve all seen them here and there, and some of us perform these exercises all the time.

 

But are we all on the same page around what they’re called?

 

When we speak at industry events, do we use terminology around these different types of analysis that our peers and counterparts understand?

 

Are we on the same page as our employees and agency partners when we make a request of them that includes terms like “Sponsorship Valuation”, “Sponsorship Evaluation”, “Sponsorship ROI”, “Sponsorship Return-On-Objectives”, and “Sponsorship Assessment”?

 

I don’t think we are.

 

On this topic, I reached out to some contacts who work on the brand-side of sponsorship, and asked them to complete a quick survey for me. 16 responses were received (15 of whom held titles of Marketing Director, Sponsorship Manager, or Director of Sponsorship). Not a large enough sample size to draw any firm conclusions, but not bad for a quick litmus test.

 

I asked them about three hypothetical sponsorship analysis requests being made to their team from their boss or a stakeholder, and asked them what kind of exercise they believed was most appropriate to answer the request and what they called this exercise. The three hypothetical requests were described vaguely and briefly, much like many of the conversations we receive in our industry – they were described as follows:

  1. “Provide a conclusion around the value of a sponsorship which your company is considered investing in.”
  2. “Provide an assessment of the value of a sponsorship which your company already has and activates.”
  3. “Provide what a given sponsorship, which your company already has and activates, is worth.”

 

As you can see, there are very subtle differences between the three requests. For the sake of conversation, let’s call request #1 “Value of Prospective Sponsorship”, request #2 “Value of Current Sponsorship”, and request #3 “Worth of Current Sponsorship”.

Interestingly, not all respondents felt that each request warranted the same type of analysis, nor did they use the same terms to describe various analysis exercises. Here are some key takeaways from the survey results:

 

 

Our industry might be in a few different camps with regards to the type of sponsorship analysis exercise that is most appropriate for a given situation:

 

  • When it comes to the “Value of Prospective Sponsorship” request, the majority of respondents felt that the appropriate exercise is one that determines “how the sponsorship might benefit the company across KPIs that are connected to sponsorship marketing”, and nearly all of these respondents labeled this exercise as “Sponsorship ROI”.
  • A minority of respondents felt that the appropriate exercise for the “Value of Prospective Sponsorship” request was to “determine the cost of equivalent media platforms that deliver the same brand reach and awareness as the sponsorship”. The respondents who felt this way were in unanimous agreement that the exercise should be labeled as “Sponsorship Valuation”.
    • Of this minority group of respondents who felt a media equivalency Sponsorship Valuation exercise was suitable for the “Value of Prospective Sponsorship” request, most of them felt that the “Value of Current Sponsorship” request should be answered with an exercise that “determines how the sponsorship has benefitted the company across important marketing/sponsorship KPIs”.

 

This takeaway is interesting, but not necessarily an issue for us to be concerned about. There is not an absolute right or wrong way to perform Pre-Sponsorship Analysis and Sponsorship Evaluation. Different industries, marketing strategies, and ideologies might mean that one type of exercise is deemed to be appropriate for one brand in a given situation, while another type of exercise might be preferred by another brand.

 

 

And we’re using terms interchangeably to describe sponsorship analysis exercises that are quite different in nature:

 

  • 11 of 16 respondents felt that the same term (“Sponsorship ROI”) should be used to describe the exercise required to address the “Value of Current Sponsorship” request and also the “Worth of Current Sponsorship” request. Perhaps indicating that the terms worth and value are essentially interchangeable. What is quite interesting though, is that these 11 people were on the same page around terminology, but not on the associated exercise. For example, one respondent said that measuring the “Value of Current Sponsorship” should be done by “determining how the sponsorship has benefitted the company across important marketing/sponsorship KPIs”, but then said that measuring the “Worth of Current Sponsorship” should be done by “looking to determine the present value of net positive cash flows/profit that are directly attributed to the sponsorship.”, labeling both exercises as “Sponsorship ROI”.

 

While I don’t want to overreact to an unrepresentative sample size, I find this particular finding to be a concerning reality across the sponsorship industry.

 

I believe that this is something we can all strive to improve. We should all pay a bit more attention to both our internal and industry-wide conversations to ensure we’re speaking the same language and aligned on the meaning of different terms. Perhaps an official Sponsorship Marketing Council of Canada (SMCC) glossary of terms is in order?

 

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This post was written by Mitch Thompson, Consultant

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