A Simple and Transparent Approach to Sponsorship ROI Remains Paramount

Recently an article was published on Forbes.com by Stephen Diorio on “Providing the Financial Contribution of Sponsorships to the Business.” The article was interesting and should be required reading for every sponsorship team. I wanted to take a few moments to share my thoughts about the article and address the challenges brands face in measuring and therefore justifying sponsorship spends.

It’s critical that sponsorship property rights owners understand the challenges brand partners face internally. Whether it’s a Superbowl sponsorship, or a local music festival, the challenge is the same – the sponsorship leaders at brands feel as passionate about sponsorship as the properties, however, while you are trying to sell the deal, they are selling internally. So, I would pose this question to sponsor properties: How are you helping your brand partners communicate the value of the opportunity you are presenting?

The marketing industry does lack agreed upon measurement, but that should not create a roadblock for brands and properties to agree upon KPI’s and a methodology to determine the fair market value. The article states, “According to MASB and ANA research, 60% of major marketers report they do not have a standardized sponsorship measurement process. 40% don’t even try to measure [it].” There is no reason for this. I admit it’s a laborious process, but there are many good valuation companies and tools that are available. The problem is that the methodology is not transparent, so it’s impossible to duplicate and even harder to explain. Understanding the pricing methodology of sponsorship programs is the first step to determining the ROI.

In addressing the underlying issue, it is noted that “the ultimate problem is CEOs and Chief Financial Officers complain the marketing industry lacks agreed upon measurements and financial standards for evaluating sponsorship ROI…”. At the Sponsorship Mastery Summit last year, we pulled back the curtain and shared the simple pricing methodology we have developed. Our goal is to demystify sponsorship pricing by provide a clear framework that can be customized and built upon. It is my firm belief as an industry of sponsorship leaders, we should collectively enhance, share and agree upon transparent methodologies to establish value and pricing. By doing this we will change the landscape of sponsorship… a rising tide lifts all boats!

We evaluated available information and multiple models to create a simple 6 step process.

    1. Create an asset inventory
    2. Calculate the value of tangible benefits
    3. Determine a packaging strategy
    4. Complete intangible benefits valuation template
    5. Access the cost of sale
    6. Consider market price adjusters

 

If you’re interested in learning more, attend this year’s Sponsorship Mastery Summit where we will dig deeper into the model and explore together the art and science of sponsorship ROI. Sponsorship Mastery Summit will take place September 23-24 in Seattle, WA and early bird registration is available through April 30th. If you are looking for more immediate information, send an email to crew@caravelmarketing.com and we will share our model with you.

About Caravel Marketing

Caravel Marketing provides sponsorship and revenue development services to entertainment and sports properties, nonprofits, associations, corporations and government agencies. Caravel develops and implements strategic plans to increase sponsor value, accelerate performance, and connect companies and properties to create meaningful partnerships. For more information, visit CaravelMarketing.com.