Why sports sponsorship is much more than a game

Catch a glimpse of any sporting event at any time of the day from any part of the world and there will be one common denominator – the ever-present accompaniment of sponsorship.

But are the sponsors who put their money into sport getting bang for their buck? Well, that’s the million-dollar question. Or, if you want to be more precise, a $62.8 billion question globally each year, and one worth an estimated $750 million in Australia alone.

Mostly evidence on this subject has been patchy: at the top end of the game, there’s a clear trade-off between getting your logo in front of millions — albeit paying millions in return — and the flow-on corporate benefits, such as tickets, press conferences with key players or getting to hand over a cup to the winning team.

For sub-elite teams the equation for business can be different. Exposure is less important than being seen to support a part of the community. Teams are selected more for geography and demography — where they are, who they are and the fans they attract — than league success.

In one incredible example, the decidedly low-profile Bartlesville Indians of the amateur American Legion Baseball competition have been sponsored by the same local Ford dealership since 1941.

But there still needs to be a strong business case for sponsorship, or instead of running alongside a team on the ground, companies might choose to walk away instead.

So how can a business assess the value of its sports investment?

There are different approaches that have been used, with varying success.

Management consultants McKinsey recommend a multi-step method, including looking at the cost per reach: specifically, the number of people exposed to the sponsorship through all channels divided by the total cost of the sponsorship (including advertising, marketing and promotion).

This number also needs to be considered in terms of whether the audience is valuable to the sponsor.

Does the reach meet your target demographic?

Does the sponsorship target reflect your brand, or is it misaligned?

Does your engagement with the team build your brand strength over time?

Sometimes there are obvious connections between brands and products and sports or teams; other times the link is more “outside the box” but no less successful. For more than a decade, Werner has had the obscure-sounding title in the US of “official ladder of the NCAA college basketball tournament”– a link that suddenly seems far more natural when you consider the celebratory tradition of winning teams climbing up a ladder to the hoops to cut down nets.

One question to consider when analysing any sponsorship is whether you can tie it back to impact on sales – simple enough, perhaps, if you are selling a KFC cricket-branded bucket of chicken but much harder if your products or services are untethered to a campaign.

Businesses should also endeavour to quantify indirect benefits, like being able to host clients at marquee events or having access to other high-level sponsors at networking events.

Again, the measurement of such metrics is difficult but even ranking them on a scale of one to five can assist in identifying sponsorships that are performing and those that are not.

While the McKinsey analysis concentrates on how the world’s biggest sports sponsors perform, it also holds important insights for smaller operators.

It found many sponsors under-leverage their sponsorship by not investing enough in the activation and promotion of their sponsorship deal — leading to what is known as ‘unaided awareness’.

Ploughing money into naming rights or advertising but not adequately connecting your support of the team back to the community you are seeking to impress is money wasted.

Your marketing budget should amplify your sponsorship budget, leveraging its value specifically among the demographic you want to reach.

This is a symbiotic relationship: you want to tell your customers that you are sponsoring a team or sport they love, and you want the team or sport to tell its fans that you are helping them out.

Increasing your activation of the sponsorship means working across channels, looking for ways to tie your relationship together and elevate the partnership wherever possible.

Most companies do the basics – a press release and a photo op — but the next step of having the team and players really help you connect with your customers is a greater challenge.

Maybe it’s finding how your company has helped solve the same problem for a player that your customers may have faced. Maybe it’s about adding value for your community by bringing elite athletes out to the local level. Maybe it’s about both your company and the sport/team you are sponsoring showing a human side or sense of humour (OPSM sponsoring AFL umpires is a standout example).

Whatever the case, if you’re still hoping a logo on a shirt will do the heavy lifting, you’ve missed a trick.

And lastly, measure the value of your sponsorship. Data analysis is becoming a staple for making business decisions across most industries, but the annual round-up of sponsor activities from Sponsorship.com had some grim news in 2018: 31 per cent of all sponsors make no effort at all to measure return on investment.

Of those that did make an effort, 47 per cent spent less than one per cent of the total value of the sponsorship making sure it was working.

Watching sport on weekends might be recreation for a lot of us but for those involved it’s been a hard-nosed business for decades now. Sports sponsorships need to be treated like investments, rather than hobbies.

Simon White is Purple’s Content Editor and a long-time sports journalist (and tragic). If there’s a sport you can think of, he’s probably covered it, played it (badly) and memorised an obscure statistic from it. Email Simon.

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