• by John Nardone , Op-Ed Contributor, January 3, 2006

Given the amount of discussion in the trade press and at conferences, it would seem that the whole marketing world has bought into the idea of accountability for measurable return on investment. But surprisingly, the sponsorship and events segment remains one area of marketing that hasn't embraced the cause.

I recently participated in a meeting of the Association of National Advertisers Sponsorship and Events committee. The session was attended by nearly 40 marketers responsible for managing their companies' sponsorship strategy. The discussion illustrated to me that the sponsorship and events segment hasn't yet accepted the challenge of bottom-line accountability that faces marketing as a whole. Members of this group represent major companies that collectively spend hundreds of millions, if not billions of dollars on sponsorships. And yet not one person in attendance was prepared to say that he or she could quantify the bottom-line impact of their sponsorship investments.

That even market leaders can't quantify the return on investment for sponsorships is not a surprise. Sponsorships and events have many moving parts and have developed a reputation for being notoriously difficult to measure. When I told the committee that one could indeed measure a sponsorship's impact on sales and suggested it would generally be a good idea to do so, my comments were met with a combination of curiosity, suspicion, and a bit of disbelief.

The group raised three major points of view:

>> Everyone knows sponsorship works, which is why so much money is flowing into it. So there's no real need to measure it.

>> You don't have to evaluate sponsorships in terms of bottom-line impact, because they're meant to drive brand equity.

>> It would be nice to understand the impact on the bottom line, but it's too much work and expense.

Given the investments being made in sponsorship, measuring the impact is necessary. Ultimately, companies will demand that sponsorships be held to the same standards of financial return as any other corporate investment. Right now, money is flowing to sponsorship without accountability, not because everyone knows it works, but because there are doubts that TV works as well as it used to. Marketers are searching for alternatives. But without validation of effectiveness, it's likely that the current sponsorship bubble will burst in three years.

While brand equity is indeed important, it is only equity (and not simply awareness) if it translates to corresponding changes in revenue and profit. Brand equity itself can't be the goal, but rather a means to an end. In fact, if sales and profit aren't the ultimate goal, then the activity can't be called marketing.

I wholeheartedly agree that good measurement takes effort and requires some investment. After all, I do get paid to do this sort of work. As for my recommendations to the sponsorship committee, I suggested that marketers pursue a complete measurement framework for sponsorship/event marketing with three components: measurement of direct ROI, impact on brand equity (relating to long-term ROI), and evaluation of "activation" activities. The measurement system should be set up at the programming planning stage so that the necessary data collection can be negotiated into the deal with all parties. Ideally, a measurement expert would be involved in the planning. About 2 to 3 percent of the total budget should be set aside for measurement activities.

Individual program components should be tracked separately by market and by week. For instance, a sports sponsorship might include stadium signage, in-venue promotions, and a link to in-market advertising and promotions. Marketers should track attendance and TV ratings for each game and ad delivery of the non-sponsorship and sponsorship-themed ads separately. Participation in promotions and conversions also needs to be tracked carefully.

The data can be used for econometric modeling to understand the direct impact on sales and ROI. Also, surveys can be used to track attitudinal changes against a brand equity model that ties changes in equity to impact on sales and profit. Finally, specific customer activation goals should be set so you can track against them.

John Nardone is executive vice president, product development and marketing, for Marketing Management Analytics. (john.nardone@mma.com)