Put yourself in the shoes of a CMO anxiously awaiting a meeting with the CFO, who wants to understand what the business is getting for their multimillion dollar sponsorship investment and whether it’s helping to grow the business or not.

The first part should be straightforward; dig out those entitlements and highlight the tickets to the corporate box. The second part is likely to create some anxiety.

The worry is warranted. In this high cost of living environment, there is increased scrutiny on marketing spend and a greater need for accountability. It’s also well reported that the breadth of the CMO role continues to grow, and sponsorship is a relatively small corner of their remit…  I think it’s fair to say that the CFO’s investigation into the specifics of sponsorship ROI would trouble even the most capable CMO.

In my previous role at Nine, I was tasked with demonstrating the value of sponsorships. This spanned sport and entertainment, think Australian Open tennis, NRL, MAFS, The Block, etc.

Sponsorships are often a big investment and even the best contextual fit can feel like a gamble. Sometimes they don’t pay back and it’s an expensive mistake.

Take, for example, the cautionary tale of an FMCG brand whose packaging overhaul left consumers scratching their heads in confusion. By covering their packaging in IP, they strayed too far from their recognizable branding and became lost amidst the competition. Some shoppers were likely mistaking their products for new entrants on the shelf.

Marketers, short on time and at risk of information overload, are looking for one ROI number to compare with other media investments. The difficulty lies in quantifying some of the intangible benefits that come with Sponsorships.

The best way to do this is to gather intel from two key sources:

1. Marketing mix modelling (MMM) - what was the impact on sales?
2. Brand impact study - what was the impact on brand health?

Understandably, clients were reluctant to share the data required for MMM with a media owner, so we ran brand impact studies to gauge the long-term impact on brand health metrics.

After five years and several hundred brand studies, we had some common themes amongst the successful sponsorships; longevity of sponsorships, timing with seasonal demand, and contextual fit, among others.

However, a regular frustration was that we didn’t have visibility of that important piece of the puzzle – the MMM results. CFOs, rightly, in my opinion, don’t care much for ‘fluffy’ brand health metrics and make decisions, by and large, based on the $ sales impact.

Now at Mutinex, we have all the data required to measure the full impact of sponsorships for a number of major Australian brands and they vary dramatically, from the most efficient delivering over $8 of revenue for every $1 invested, to the least efficient recovering just half ($0.50!) of the annual investment in revenue.

But while you might be using MMM, it still doesn’t guarantee that you’re measuring the full impact of your sponsorship.

Brands need four pieces of the puzzle to capture the full impact of sponsorships on their sales:
 

1. Short to medium-term (0 to 6 months) impact of sponsorship exposure on sales.
   MMM can quantify this incremental impact.
    
2. Synergy with other sales drivers e.g. other media channels.
   Again, MMM can quantify this.
    
3. Long term impact (0 to 18 months) on brand metrics and how this translates to base sales.
   This requires the fusion of brand tracking and MMM. Linking changes in brand metrics to base sales allows us to unpick this slow-moving, long-term sales impact.
    
4. All halo effects from using IP elsewhere across the business. If you use IP for on-pack promotions or within owned media, such as social, any incremental benefit, above and beyond what it was delivering without the IP should be attributed to the sponsorship too.

Most MMM vendors will measure 1) and 2) in a pragmatic attempt to compare sponsorship ROI with other media channels. But not counting revenue from 3) the long-term growth in base sales and 4) the benefit from leveraging IP in other areas, can make a huge difference to the ROI.

Ignoring puzzle pieces 3) and 4) can often result in an ROI that convinces brands to halt their sponsorship, one that is actually steadily and profitably growing the business.

To further muddy those waters, the missing revenue that should’ve been attributed to the Sponsorship will likely be misattributed to a different sales driver, which could lead to another poorly informed ‘data-driven’ decision.

As you can see, accurate measurement is clearly crucial, but there is one elephant-sized caveat – we need good quality weekly data. Sharing that you invested $4m on an NRL sponsorship is not going to cut it. In this modern age, we should be able to establish equivalent exposure at a weekly level for e.g. signage and digital inventory from the NRL and equivalent ratings from the media owner.

Lastly, the performance of Sponsorships is likely to change over time. It might improve, as viewers become more receptive to it. But it might also decline, maybe as it becomes less recognisable due to a re-brand or the creative direction changes significantly.

This informs long-term strategic planning. Sponsorships can’t always be dialled up or down within a year, but finding out if it’s driving business growth should enable you to go from shrinking with anxiety to high-fiving the CFO with excitement.

So if you’re about to embark on a major sponsorship, ensure you have access to good quality weekly data and work with an MMM vendor who captures the full impact of your investment.

Maximise sponsorship ROI at mutinex.co.