“That was fantastic. Let’s do it again -- but bigger!” says the marketer in an after-action review or post-buy meeting. I cringe when I hear those words, since those are two
decisions made right there. Apparently we are going to do “it” again, and doing “it” bigger will beat the results from the previous time we did “it.”
Why is
there no consideration for “Let’s do it again, but smaller” or “Let’s not do it again” in the discussion? Even if “it” was deemed a success,
“again” should never be the default.
It’s s time to make a serious effort to calculate the value of sponsorship packages.
First, let’s agree that
“sponsorship” extends well beyond the parameters of sports. There are sponsorships of TV shows, celebrities (sports or otherwise), online pages and content, newspaper sections, etc. I have
applied the following model successfully in my previous two marketing roles for a variety of markets, helping to justify or evaluate the “real” value of a sponsorship package.
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There
are three categories of sponsorship value (expand as you see fit):
On-premise value: Any signage or other product promotion included in the cost at the event/venue/page/etc. Think of
stadium boards, menu boards, neons or other branded fixtures. Or if reviewing a page/content property: product placement, brand name inclusion, etc. In principle, any commercial inclusion that is not
media. Include here on-premise sales as well, if part of the deal.
Off-premise value: Any marketing rights that are a result of the sponsorship agreement (logo usage, content usage,
national, regional or local promotion rights, celebrity usage, etc.).
Intrinsic values: All elements of the deal that carry a verifiable value, such as tickets, sky boxes, media space
including digital media, etc.
It isn’t always easy to place a numerical value on all these elements because there isn’t always a rate card. You will have to work with your
specialists (internal or external) to come up with an acceptable number. I recommend a group approach to assigning values to these elements, as crowd wisdom will beat individual wisdom, no matter how
experienced you are.
You will need to be equally diligent with how you calculate the real sponsorship cost to you. That means calculating beyond the negotiated asking price. If you are doing a
deal for three years, you will need to calculate a best estimate of the marketing development cost for those three years. And be precise, so include not only cost for advertising, but also cost for
developing art work in a variety of other touch points such as point of sale/consumption, internal materials, promotional materials, etc.
Don’t forget media cost either. There is an
unwritten rule that says you need to invest an equal amount of money in media relative to sponsorship costs to ensure consumers are actually aware of and included in your efforts. Personally, I think
this rule is a little too generous to media (it was probably invented by media owners.). But you must absolutely communicate the sponsorship story to your consumers in order to generate effect, and
here you have plenty of opportunity to use the Zero Paid Media principles!
So: above the line you place the total cost of on-premise value, off-premise value and intrinsic value; below the
line your acquisition, marketing and media cost. And voila: now you have a true measure of (anticipated) ROI, and you can answer the question: “Should we do that again, but bigger?”