Proving the value of sponsorships is vital to the health of advertising

Natasha Pelly
By Natasha Pelly | 27 August 2020
Natasha Pelly

Natasha Pelly is senior investment analyst, Zenith

The world of sponsorship evaluation is undoubtedly challenging, but a standard approach to assessment is essential for the health of the advertising industry.

So how should advertisers approach the subject?

The answer is measurement. Though perhaps not in the way you might expect.

Sponsorship evaluation – more important than ever?
Media fragmentation, dwindling levels of consumer attention, the growth of ad-blocking technology, and the increasing popularity of ad-free environments mean the value of sponsorships and brand integration is also on the rise.

In the context of a global recession though, the requirement to demonstrate value has also become vital.

Indeed, a recent piece of research found that 78% of brands have experienced increased pressure to demonstrate the financial results of sponsorship initiatives in the past two years.

Value studies exist but aren’t accessible
If you type “sponsorship impact on brands” into Google Scholar, you get 58,300 results. There are 3,330 results in 2020 alone.

A quick review uncovers many academic studies proving the impact of sponsorships on brand metrics like awareness, perception of success, and buying intention.

The problem is that often these studies are inaccessible – hidden behind paywalls – and offer little practical advice on how to convince a CEO or CFO of a sponsorship’s value. Not without reason.

Traditional metrics can fall short
Sponsorship evaluation is difficult to pin down in the traditional financial sense, using metrics like ROI. This is in part because it’s inherently difficult to separate the impact of sponsorships from the impact of all other brand activity.

Moreover, as ROI is often measured over the short term, the long-term positive impact of sponsorships often go undervalued.

On the other hand, media equivalency (how many impressions were generated) also misses a lot of nuance: it can’t measure the financial value of non-media impacts, like brand equity or engagement with employees.

So what should advertisers do?

Metrics that matter
In their research, the Marketing Accountability Standards Board (MASB) and the Association of National Advertisers (ANA) found 60% of marketers didn’t have a standardised sponsorship measurement process, with 40% not attempting to measure their value.

1. The first step is therefore to devise a measurement process and budget for that process within the overall sponsorship business case.

2. As well as budgeting for measurement over time, deciding which metrics to measure is of vital importance. Remember that “not everything that can be counted counts”.

The MSBA provides an extremely useful sponsorship measurement maturity hierarchy and guide for moving up the maturity scale. Media equivalency sits at the bottom of this hierarchy, followed by return on objectives (ROO) measures and ROI.

3. The essential next step for advertisers is to link ROO to ROI in order to quantify the financial impact of achieving brand objectives.

There’s currently no standardised approach to this linkage, so brands must seek to establish their own criteria for success.

But it’s a project that deserves more attention, particularly under current conditions.

Closing with the words of the MASB: “Accountability should be embraced, not feared. A more thoughtful assessment is more likely to aid in the demonstration of what value was achieved.”

 

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