Evaluating the Effectiveness of Sports Sponsorships

In the previous article, we have already seen how multinational companies spend large sums of money in order to buy the rights to be associated with a large sporting event.

Companies are willing to provide these resources since they feel that they will be able to meet their corporate objectives.

Sports sponsorships are purely commercial deals and have very less to do with charity or corporate social responsibility-related objectives of any company.

We know for a fact that most corporations are publicly listed companies. Hence, they are answerable to their public shareholders about why they spent money on any type of expenses including sponsorships.

Also, since sponsorships entail giving away large sums of money, these expenses tend to be thoroughly scrutinized in order to gauge the effectiveness of the spending. The larger the expense, the more detailed the scrutiny.

Large corporations always want to know whether they are getting a better deal by associating with a particular event or whether their money can be spent elsewhere in order to meet their objectives.

Hence, as far as sponsorships are concerned, almost every sponsorship activity ends with an evaluation with the corporate sponsor regarding whether or not they were able to meet their objectives. In this article, we will have a closer look at how companies evaluate their sponsorship expenditure as well as the issues that they face while doing so.

Methods of Evaluating Sponsorship

There are various methods of evaluating the effectiveness of a sponsorship. However, the use of these methods primarily depends upon the objective of the sponsorship. Let’s look at some of the popular methods mentioned below:

  1. Brand Recall: If the objective of a company is to increase its brand recall and brand image, then the effectiveness of the sponsorship can be gauged by checking the brand recall within the target audience. This is generally done by specialized market research agencies who conduct a test before the sponsorship as well as after the sponsorship and measure the difference.

    These tests related to brand recall have a wide variety of questions that check whether the prospective users are able to recall a brand by associating it with a product category.

    These tests also check whether the prospective users are able to recall and identify the brand after being prompted by the researcher. This approach is based on a fundamental assumption that any increase in the brand recall that happened during that period must be attributed to the sponsorship campaign.

    Also, in many cases, corporations also survey the effect of brand recall on competing brands. If all brands have experienced a higher recall, then the effectiveness of the sponsorship comes into question. The objective of the sponsorship is to gain a higher brand recall vis-a-vis the competition.

  2. Advertising Value Equivalence: If the objective of the sponsorship was to increase the general awareness amongst the users, then a method called advertising value equivalence may be used.

    In order to do so, the first step is to once again take a survey. This survey will also have details about the pre and post-levels of brand awareness. This will help zero down on the delta awareness which was created by the sponsorship.

    The next step is to assign a monetary value to how much advertising would cost to generate the same level of awareness. The end result would be that the company would have two monetary values viz. one which was paid to the sponsors as well as one hypothetical advertisement value. Hence, the values can be compared to check whether or not, sponsorship was a more cost-effective option.

  3. Measuring Impressions: Another commonly used method involves keeping track of the number of times the brand impressions have been exposed to the public. This means keeping track of all types of marketing events as well as the broadcast of the league in order to find an estimated number of impressions. The time for which the impression was present as well as the prominence of the impression are also taken into account.

    In the end, a monetary value is assigned to all the impressions that the brand has been able to achieve. This helps corporations put a monetary value to the benefits they derive. However, it needs to be understood that since the management of the sporting league cannot exert complete control over the broadcast, they cannot make promises regarding how many impressions the brand might be able to achieve.

  4. Increasing Sales: Lastly, if the objective of the sponsorship was to increase sales, then the results are relatively easier to measure. The sales figures of the company prior to the event are compared with the sales figures of the company during and after the event.

    The delta increase in sales is attributed to the sponsorship. It is also common for companies to measure this increase in sales relative to the investment that they made. This figure is often expressed in the form of a return on investment.

Hence, the bottom line is that there are a wide variety of ways that can be used to measure the effectiveness of sponsorship. Some of these methods are quite complex and difficult to implement. However, there are third-party companies that do provide specialized services in this field.

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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.

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