Study: Sponsorships don't get enough respect

'Advertising
is often done on a shorter-term basis. It’s easier to adjust advertising than it is sponsorship.
From that point of view, you might want to think about cutting advertising rather than sponsorships.'

Study: Sponsorships
don't get enough respect

Smarter play when marketing $s become scarce

By Gabriel Spitzer

     In a world of withering marketing budgets, corporate sponsorships ought to make more and more sense. Or so the thinking goes.
     Still, most companies are not maximizing the value of their sponsorship dollars, concludes a study published this week by IEG Sponsorship Report.
     The study, commissioned by IEG and conducted by Performance Research, surveyed nearly 200 sponsorship decision-makers.
     Researchers found that 46 percent of companies maintain or increase the portion of their marketing budgets devoted to sponsorships in a declining economy.
     Marketing experts suggest that in a contracting economy, companies might do well to tilt the sponsorship/media balance even more toward sponsorships.
     The proportion of marketing dollars spent on sponsorships has increased significantly over the past two years, up from 9 percent to 12 percent.
     "Advertising is often done on a shorter-term basis. It’s easier to adjust advertising than it is sponsorship.
     "From that point of view, you might want to think about cutting advertising rather than sponsorships," says Lynn Kahle, professor of marketing at the University of Oregon.
     "And I think also your sponsorship goals are possibly more long-term than your advertising goals. If you cut back on your sponsorships dramatically, it’s a reflection that you’re shifting your whole strategy. Sponsorship has to do with long-term equity, so it’s a lot harder to turn off and on the implications of a sponsorship."
     There are also collateral benefits to sponsorship that could prove useful when there are fewer marketing dollars to go around.
     "I think the message sponsorships send out is very well suited for economic times that are not so good. With a sponsorship, you can make the argument that this is an expenditure that’s benefiting people other than just the marketer. You can’t make that argument with a new television ad campaign," says Jim Andrews, editorial director of IEG Sponsorship Report.
     "You still need to do your advertising to announce specific products, but if you’re looking at adjusting the mix, you may want to increase sponsorships."
     Unfortunately, many of those benefits often go unrealized because sponsors fail to spend the extra few dollars to build on whatever basic benefits might be conferred by rights fees.
     Conventional wisdom, according to IEG, holds that sponsors ought to spend at least three dollars leveraging a sponsorship for every dollar spent on rights fees. But IEG’s study found that 71 percent of sponsors spend at a one-to-one ratio or less. Just 15 percent actually spend at a ratio of at least three-to-one.
     Too many companies seem to be content with taking whatever comes with the rights fees, without spending a little extra to maximize the sponsorship’s value.
     "It’s very simple to get all the benefits of exposure and signage and let it go at that. Perhaps companies should be saying: We’ve paid for this, let’s use it now as a platform to say, what else can we do with it? Can we use it as a basis for sales promotion? Can we get people to give us their information for our database?" says Andrews.
     Some say that even the three-to-one ratio is a tad light.
     "I’d say three-to-one is pretty skimpy; it’s at the bottom end. You have to let people know what you’re doing. Being a sponsor is viewed as a good deed; if you want to get your marketing bang out of doing good things, you have to let people know that you’re doing them," says Kahle.
     Many sponsorships are worth little absent the effort to leverage the rights.
     "A lot of times what you get is just the right to brag. Sometimes you get signage and stuff that is of some value. But if you’re a worldwide sponsor of the Olympics, pretty much all you get is the right to leverage, so it’s everything else you do that gives it its value," says Kahle.
     Another point that IEG’s study brings into focus is how reliant sponsors are on the properties themselves for information about reach, demographics and performance.
     About 77 percent of companies surveyed spend less than $5,000 on research to evaluate a sponsorship before signing a deal. A full third spend nothing at all.
     Perhaps more troubling is how little research sponsors do after a sponsorship to measure its effectiveness.
     On a scale of one to 10, 10 being "completely dependent on properties" for post-sponsorship research, the sponsors’ responses averaged a 5.1. At the same time, 61 percent of sponsors feel that the properties do an inadequate job of measuring and researching this data.
     "Being practical, I was not surprised that most companies don’t spend a lot of extra money researching before a deal. That’s natural. The one surprising thing to us is that on the back end, when it comes to measuring how successful a sponsorship was, they weren’t devoting the resources to assessing the response from consumers," says Andrews.
     "That’s the kind of information you’re only going to be able to generate by doing some of your own research. The upfront part I don’t think is surprising or troubling. But on the back end, in order to measure your response, you’ve really got to make an investment into research."

Which properties do you believe are the best and worst in the following areas?
	Best:	Worst:
Helping sponsors effectively leverage their promotional opportunities	NFL, NASCAR	NBA, Other Motor Sports
Limiting sponsor clutter	Arts, Golf	NASCAR, Other Motor Sports
Delivering on contracted promises	Golf, Motor Sports	Arts, NBA, NFL
Cooperating with sponsors as partners	Motor Sports, Golf	Cricket, Baseball
Maximizing exposure for sponsors	NFL, NASCAR, Golf	Concerts, Other Motor Sports
Providing research measurements of return on investment	Motor Sports	Cultural Events
Source: IEG Sponsorship Report, based on data from Performance Research

How valuable are the following benefits to you?
Benefit:	Percentage:*
Category exclusivity	68
On-site signage	53
Title of proprietary area	40
ID in property’s media buy	39
Broadcast ad opportunities	37
Right to provide co-branded product/service	35
Right to property marks/logo	32
Presence on property web site	32
Access to property mailing list/database	32
Tickets/hospitality	30
Nonprofit cause overlay	19
Source: IEG Sponsorship Report, based on data from Performance Research * Percentage of respondents who ranked the factor a nine or 10 on a 10-point scale, where 10 is extremely important

How important are the following objectives when evaluating which properties to sponsor?
Objective:	Percentage:*
Increase brand loyalty	68
Create awareness/visibility	65
Change/reinforce image	59
Drive retail/dealer traffic	45
Showcase community/social responsibility	43
Stimulate sales/trial/usage	35
Sample/display/showcase products/services	35
Entertain clients/prospects	31
Source: IEG Sponsorship Report, based on data from Performance Research * Percentage of respondents who ranked the factor a nine or 10 on a 10-point scale, where 10 is extremely important

When deciding to change or renew sponsorships, which type of analysis do you complete?
Type:	Percentage:*
Internal feedback	94
Sales/promotional bounce back	64
Print media analysis	53
Primary consumer research	47
Dealer/trade response	46
TV exposure analysis	39
Syndicated consumer research studies	20
Source: IEG Sponsorship Report, based on data from Performance Research * Percentage of respondents who ranked the factor a nine or 10 on a 10-point scale, where 10 is extremely important

-Gabriel Spitzer is a staff writer for Media Life.

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