HomeSponsorship & Marketing

Why the financial crisis was the making of the modern sponsorship industry

Mark Cornish, founder of roosponsorship.com, explains how sponsorship was forced to take stock and get better at evaluation.

Mark Cornish

In September 2018, the World Advertising Research Center Ad Trend report said ‘that brand spend – inclusive of rights but excluding activation – is expected to rise 4.9 per cent to reach $65.8bn (€60.2bn) worldwide this year. When compared to paid media, sponsorship is the second-fastest growing advertising channel behind internet formats, the report notes.

WARC is not alone to suggest sponsorship is growing. Further reports in 2019 by Two Circles on global sports sponsorship, and IEG on cause-related sponsorship concur.

Industry reports also like to ask questions about measurement, the outcomes of which tend to show we do not invest enough in research. I am of the view that we do invest plenty of money in research and that the real question is are we getting better at evaluating sponsorship?

Quick trip down memory lane

In 1988, I stepped out of advertising and into sponsorship. I will be ever grateful to the research department who taught me how to build a business case using data. Reach, coverage, frequency, demographic profiles and cost per thousand were the tools of the trade and, with this knowledge I chose to specialise in sponsorship evaluation. With the arrival of sports-specific media – Sky Sports launched in 1990 among many others – it was inevitable that the first attempts at measuring sponsorship was going to be heavily skewed towards media.

So, when we look back at the history of sponsorship evaluation, what we really mean is the monitoring and evaluation of media. Also factor in that during the 90’s sponsorships were flying off the shelves, a sellers-market with little or no pre-evaluation, benchmarking or decision-making process. I would say over 70 per cent of sponsorship evaluations at this time were commissioned after the event took place.

Hello, global financial crisis

I am sure that the financial crisis wasn’t welcomed, nonetheless, I do believe it was the making of the sponsorship industry we have today. The fact is that pre-2007 the industry still felt a bit like a runaway train, so something had to put the brakes on.

I remember a top executive from a large research company telling me that the measurement business does rather well in tough financial times. “Why”, I asked naively, and the answer came back “justification”. I suppose that when things are going so well it is easy to take your foot off the justification pedal. Multi-year agreements may well have bought sponsorship some time, but it was clear things were never going to be the same.

Robust and on the front foot

Today sponsors begin their evaluation processes well in advance. More governance around decision making has made sure of that. Based upon weighted criteria sponsors set KPI’s and scorecards which then determine what research or data is required.

Sponsors have taken more ownership of the evaluation process, and are more robust and on the front foot, rather than depending upon the research firms to lead them. They are implementing frameworks and processes that allow internal and external stakeholders to plug in results and feedback.

Even sponsorship proposals are evaluated more efficiently using online questionnaires, and there is a more open policy on sharing objectives with the property marketplace.

We no longer just measure media we track multiple criteria, be they brand impact, sales data, volunteering hours or community engagement and so on. Insights and data analysts can also be found in many sponsorship departments all working towards understanding the broader picture, improving decision making and performance.

The method: ROO or ROI

The evaluation process has greatly improved, but you still need a method. ROO (Return on Objectives) and ROI (Return on Investment) are the two most popular acronyms that we use to talk around this subject. From my experience ROO means recognition and best practise to evaluate all your sponsorship objectives, of which ROI is one part.

Historically sponsorship has been undersold at board level because the full picture has not been presented. Leaving top management with a perception that sponsorship is a media buy, sales promotion or a combination of the two.

If you look at the trends in sponsors’ objectives you cannot ignore that social purpose, customer experiences, rewards, employee benefits and community engagement represent an increasing proportion of weighted criteria.

For me ROI suggests that everything must be tracked back to a financial outcome but the reality is that this is very hard to accomplish as well as being expensive. Setting yourself up to fail perhaps.

ROO on the other hand is a philosophy and method that allows you to apply a scientific approach by applying three key principals and formulating these on a customised grid or graph. The principals are Score (based upon your weighted criteria), Cost efficiency (based upon spend) and a Comparable (against other sponsorship files). ROO is easy to explain and for people to understand. The approach then allows you to identify where you need to drill down to improve performance. In case you had not noticed I am advocate of ROO!

So, are we getting better at evaluating sponsorship? The answer is without doubt a yes. We are applying rigor from the outset, implementing more process and consensus with internal and external stakeholders, an open approach to sharing information, and an evaluation method that considers all the benefits sponsorships deliver.

Most recent

With the world's first transatlantic sports team, the Toronto Wolfpack, set to play in the English Super League from the start of the new season, Bob Williams looks into how the unique arrangement is benefiting both the club and the sport of rugby league.

休斯顿火箭队总经理莫雷针对香港问题的一条推特,引发一系列连锁反应。不少人认为,NBA在中国市场恐将遭受巨大损失。然而,有多位业内人士向记者表示,由于合同条款限制,不少中国公司也损失惨重,这次风波是一个“双输”局面。

The world’s most isolated major city has broken down geographical barriers to punch above its weight consistently in the sports events sector. Bradley Rial finds out how.

Thai FA president Somyot Poompanmoung is striving to make Thailand the leading football nation in Southeast Asia Former police chief is pushing the organisation toward greater commercial sophistication