Performance Research/IEG Study Highlights What Sponsors Want

From IEG Sponsorship Report

A survey of nearly 200 leading sponsorship decision-makers provides crucial insight into not only why companies sponsor, but how they research opportunities and how they budget.

Among findings: While companies are spending an increasing amount on rights fees-sponsorship accounts for 12 percent of respondents' marketing budgets-they devote surprisingly little to activating their deals and even less to measuring ROI.

For example, 70 percent of respondents said they spend $1 or less on activation for every rights fee dollar, despite conventional wisdom that dictates a ratio of at least $3-to-$1 to maximize value. Only 14 percent spend $2-to-$1, while 15 percent spend $3-to-$1 or more on activation.

The study, which IEG commissioned, and Performance Research conducted in March, includes responses from executives responsible for sponsorship sign-off at a range of companies, from international to local, who manage properties of all types and sizes.

A full 78 percent said their companies do not have an ongoing budget dedicated to sponsorship research. Specifically, 72 percent reported they allocate either nothing or no more than 1 percent of their sponsorship budget to concurrent or post-event research, even though tracking ROI is the industry's war cry. And, pre-event research fares no better: More than three-quarters spend $5,000 or less per deal on external research prior to making sponsorship decisions-33 percent spend nothing and 44 percent spend less than $5,000.

One result of these small or nonexistent research budgets is that companies tend to rely on data from properties-more so than third-party studies or even their own research-when evaluating opportunities. Sponsors indicated they typically consider information from all three resources, but lean most heavily on sponsees for demographics, psychographics, attendance figures and property growth trends.

What Properties Should Provide

Sponsors also are surprisingly reliant on properties for ROI measurement. On a scale where 10 is "completely dependent on properties," companies rated themselves a 5.1. However, 61 percent of sponsors said properties "do not meet expectations in that area."

Sponsors also graded properties on how well they deliver post-event reporting. For providing ROI measurement, motorsports properties were labeled most often as the best; cultural events were cited most often for not providing such data.

Sponsees also cannot shirk responsibility for documenting other deliverables. By a wide margin, respondents deemed post-event reports and fulfillment audits the most valuable service properties provide; 51 percent rated that task a 9 or 10.

Less important to sponsors among property-provided services are research on sponsor recall-rated a 9 or 10 by only 37 percent-and leveraging ideas-which received a 9 or 10 from 29 percent. Those results echo discussion from IEG's Core Sponsorship event marketing conference (IEG SR, April 2, 2001), where sponsors said they mainly rely on properties to provide a platform to work from and the tools to sell deals internally. Corporate execs said devising promotional plans and leveraging tactics, however, are best left to sponsors.

Ensuring Category Protection

Beyond the service they seek from sponsees, what are the most valuable sponsorship benefits to companies?

Respondents cited a mix of tangible and intangible benefits, led by category exclusivity, rated as a 9 or 10 by 68 percent.Other important benefits were on-site signage (rated a 9 or 10 by 53 percent), title of a proprietary area (40 percent), ID in the property's media buy (39 percent) and broadcast advertisement opportunities (37 percent).

Rights deemed less valuable were program book ads (28 percent) and access to the property's mailing list (32 percent).

Consumer Loyalty Is Top Goal

Highlighting one of sponsorship's key strengths among marketing media, sponsors said the number one objective for their sponsorships is increasing brand loyalty.

Given a list of 15 possible goals and asked to rank the importance of each on a scale of 1 to 10, 68 percent of respondents said increasing brand loyalty was a 9 or 10. The only other objectives rated a 9 or 10 by more than half of respondents were creating awareness/visibility (65 percent) and changing/reinforcing image (59 percent).

Although sponsorship incorporating employee benefits has become more widespread in recent years, it was of comparatively little import among sponsors surveyed, perhaps a casualty of tightening budgets. Exciting employees and incenting sales forces were two goals least-often mentioned as highly important, scoring 9s and 10s with only 13 percent and 14 percent of respondents, respectively.

Other objectives of least importance: gaining on-site sales rights, highly rated by just 13 percent, and networking with cosponsors, garnering high points with only 14 percent.

The statistics also revealed a startling disconnect between sponsors' objectives and how they evaluate success. Notably, although brand loyalty is purportedly companies' top objective, less than half, 47 percent, employ primary consumer research as a component of their analysis when deciding to change or renew deals. And, although their key targets are outside corporate offices, nearly all executives seem to rely on gathering opinions from their own colleagues-94 percent said they incorporate internal feedback into their decisions.

At renewal time, internal feedback also far outstripped factors such as sales/promotional bounceback, employed by 64 percent, and media analysis, used by 53 percent. (Respondents were allowed multiple responses.)

How Sponsors Choose Properties

Predictably, fan/attendee demographics and attendance estimates were the criteria sponsors consider most often when selecting new properties, cited by 91 percent and 82 percent, respectively. But, with a nod to another of sponsorship's strengths, 61 percent said fan passion is a crucial metric.

That, combined with another statistic from the survey, indicates that at least some companies are eschewing CPMs and other numbers-only measures when choosing ties. Just 42 percent said they consider TV ratings as a selection factor.

Respondents' companies sponsor sports (73 percent), entertainment (52 percent), education/causes (43 percent) and arts (34 percent). In addition, 38 percent sponsor Web sites.

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