05.06.2015

PART 2: A SALES FOCUSED SPONSORSHIP EVALUATION AND VALUATION APPROACH

Rupert Pratt, Managing Partner and Co–Founder of Sport, Sponsorship & Entertainment Agency Generate, recently presented at the Sports Marketing Days, International Sport and Business Event hosted by Sport Win. Generate have create a series of blogs based on the content presented, focusing on the evolution of sponsorship evaluation, key trends, challenges and opportunities and the need for a more sales and loyalty focused approach to benchmarking sponsorships impact and value.

Focusing on the end goal – did I sell anymore product?

The sales funnel (see figure 1), provides a sponsorship specific evaluation framework that focuses on the fundamental areas that can help to determine not only emotive engagement but also propensity to purchase. By concentrating on who is aware of the sponsorship, it is possible to systematically monitor the brand impact the sponsorship has and therefore determine not only brand consideration but sales conversion rates as well. This is how most brands would evaluate their media spend; it is unlikely for example, that P&G would ascertain the ROI of an advertising campaign based on a formula of ‘we spent £1m on media and actually got media worth £3m back’. They are more likely to work backwards based on how many products they think they have sold, and how much it cost them to attain those sales figures.

Figure 1:

Figure 1.jpg

If sponsorship is predominantly viewed as a sales and loyalty tool, part of the evaluation process should focus on whether successfully boosts sales (Figure 2). Every brand/business will be (or should be!) aware of their Cost Per Acquisition (CPA), i.e. typically how much they pay to obtain an acquisition (or sale), meaning it could be the ultimate benchmark of evaluation effectiveness.

Focus on Impact (and output)

A practical adjustment to the sales funnel therefore should be considered to determine whether the money spent on PR and marketing, activation and event branding for example is greater than, equal to, or less than the total value of customer sales (see Figure 2).

Figure 2:

Figure 2.jpg

Is the sponsorship industry and its stakeholders capable and/or scared of the results?

CPA is currently being used in the digital setting and it is proving to be prosperous as it is accountable, track-able, targeted and you get exactly what you pay for. Sounds ideal…however the success of such a methodology would be largely dependent on the capabilities of the businesses CRM system; the more highly developed and sophisticated the more accurate the evaluation.

An opportunity, challenge or threat?

The sponsorship industry has been fixated by ‘big numbers’ e.g.  Billions of TV viewers, millions spent, tens of millions returned value, however if a more focused sales orientated approach was taken the risk is the actual output could look in effective and the impact i.e. the number of products sold could seem relatively small.

This is however, an issue that any other marketing channel faces and one that sponsorship needs to consider in the digital era in particular which is highly targeted and accountable and where the cost of acquisition is relatively (very) low.

We are not however, arguing for a sole focus on the ‘sales funnel’ just that it is part of the many standardised approaches currently being used.

The opportunity: genuine ‘win win’ partnerships?

If the sponsorship association is being more heavily scrutinised, (as a result of larger investments being made) it is important to examine the sponsorship objectives more closely, one of which is what association the brand/rights holder want to project. Recently, partnerships have become the new word for sponsorships, however all successful sponsorships are based on mutual benefits for both parties (rights holder and sponsor) and therefore it can be argued that they are one and the same.

What is the real value of sponsorship…the opportunity to engage passionate fans to deliver unrivalled loyalty?

In order to generate a truly successful sponsorship, both parties will need to understand, engage, manage, reward, retain and grow their fan bases. If carried out successfully (by using a combination of data and CRM) a targeted and emotive campaign can be created. Sponsorship will then be truly capable of driving commercial success and product sales via a Fan Engagement Platform (CRM).

This creates and reinforces a ‘Win Win’ partnership

Figure 3.jpg

So back to evaluating sponsorship…

Whichever evaluation strategy you chose, there is no denying the true power of data and how capable sponsorship could be as a data harvesting tool, and therefore as a tangible method of driving sales.

We believe the evolution of the media landscape and sponsorship industry offers significant opportunities for 2nd and 3rd tier rights holders with low ‘tangible assets’. There is also the possibility for major rights holders to benefit from substantial gains, if they are prepared to invest in their fan base.

Excited by the opportunity, scared of the results, or just too complicated?

A simpler solution

In our first paper we examine the current sponsorship evaluation tools, their complexity, the variables involved and demonstrate whilst they have a place within the overall evaluation mix, the sales funnel is much simpler, cost efficient and effective evaluation tool.

To receive the full report or to find out more about the work our sponsorship consultancy team are doing to cost effectively demonstrate sales impact and the ‘real value’ of sponsorship please contact Rupert Pratt (@RupertPratt), Managing Partner on rupert.pratt@mongooseagency.com

Part 3 of the blog can be found here 

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