Maximizing return on investment from Sports Sponsorships


As we reported recently at LeapRate, more and more marketing dollars from Forex brokers (and other advertisers targeting a young male demographic) are heading toward sports sponsorships.

But how can we measure return on those sponsorships?

How can we maximize those returns?

We are please to present a special guest post on the subject by Stephen Pearson, CEO of Sports Media Gaming Ltd (SMG). SMG is a leading international sports marketing agency, and has been involved in brokering a number of the recent sports sponsorships by leading Retail Forex and Binary Options brokers. Stephen has held Board roles at UEFA Champions League and English Premier League.

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Maximizing return on investment from Sports Sponsorships

Stephen Pearson, Sports Media Gaming
Stephen Pearson, Sports Media Gaming

With an estimated $300 million going into sports sponsorship from the online trading sector over the last 6 years (source SMG), and signs that investment is continuing to grow, brands are looking for best practices to maximize a return on what can be a sizable marketing investment.

Strategy, Negotiation, Activation & Measurement all play a vital role.

Strategy

Where such high potential cost is concerned, the decision to use sports sponsorship needs to form part of the company’s overall marketing strategy.

Country managers should be included in strategic planning to create a coherent cross border campaign from the get-go.  Brands should plan how to best utilize the sponsorship assets as effectively as possible to promote the association in its direct response campaigns and other forms of marketing, be it print or above-the-line.

With the extensive global media exposure of many sports, a one stop sports sponsorship acquisition can be effectively dovetailed into national marketing campaigns. Tactical planning of branded assets can be utilized to create market specific language messages. This can circumvent the evolving regulatory environment which may prohibit advertising locally on the ground and permit a brand to launch more quickly than normal into emerging markets.

Finding the right sponsorship platform – whilst football remains the popular option for retail brokers, there is a growing trend for brand ambassador partnerships and more bespoke investment strategies, such as entering into “geo- regional” partnerships with a rights holder where cost can be lower and wastage minimized.

Liquidity and platform providers who don’t require the same consumer audiences as generated from football sponsorships have also to identify the most suitable sponsorship opportunities to assist in generating new business.  These have to date been led through partnerships in Formula1, sailing and golf.

With ever increasing activity in the sector, creating standout is essential. Whilst SMG’s recent survey shows that there have been over 70 sponsorship deals in the sector in the last six years, brands need to find ways of creating a point of difference to peers, taking time to examine what competitors have done, finding gaps and looking at case studies of other similar deals to help create point of difference when the strategy is being developed.

Negotiation

A sports sponsorship often requires a long term commitment. Three to five years can be the norm. Negotiation of the contractual rights and terms will play a major role in maximizing the potential return on investment.

Brands that are new to sponsorship and looking to enter into direct talks with rights holders may be led to accept the “standard menu” whereas a more successful outcome can be achieved by negotiating an “a la carte” solution. Negotiating the inclusion of unique features and out of the box thinking will go far in enhancing ROI.

Category exclusivity is of course paramount, and surprisingly often overlooked, securing the sector exclusivity can significantly increase ROI by preventing access from competitors.

Rights holders are savvy to the fact that the trading sector is now heavily invested into sport sponsorship, which itself has forced competition between rights holders for this investment. Brands need to capitalize on this competition to drive the value of the deal and what is included in their package of rights.

Brands can often negotiate the inclusion of break clauses in long term contracts, this will focus the minds of the rights holders on delivering value in order to maintain the length of the contract and potential renewals.

Activation

Brands need to be investing both time and money into activating a sports sponsorship.

An activation plan needs to be implemented before the sponsorship is even announced and need to constantly evolve throughout the sponsorship. Significant value is derived from the PR announcement alone.

The rule of thumb generally considered for activation investment is a like for like to the sponsorship investment but this need not be the case if brands are creatively efficient and it can certainly vary depending on whether it’s a retail or B2B sponsorship.

Retail brands should consider that outside of the granted rights package there are many opportunities. If a rights holder is only providing access to fans who have opted in to club content, then consider how to target the wider fan bases who haven’t. Consider how to adapt your website to appeal to the sports fans to show that you are invested in their team as much as they are. Microsites, white labels, affiliation to fan clubs, co-branded merchandise, appointment of club legends as ambassadors and CSR initiatives are all opportunities.

Integrating assets of the sports sponsorship into other forms of marketing is a must. Being able to offer money can’t buy incentives (meet and greets, behind the scenes tours, signed merchandise) are all assets that can be included in direct response campaigns. Brands should always utilize all of the assets granted, rights holders normally don’t “carry over” unused rights.

For B2B orientated brands, where access to hospitality, money can’t buy experiences and client participation in the sport may be more important than brand awareness, then sponsors need to construct an activation plan that maximizes the use of assets and agree access to these rights well in advance with the rights holder.

Whereas a football sponsorship affords a sponsor the opportunity to invite clients to multiple events over the year, a golf or sailing event may take place over just a few days so it’s key to produce an activation plan that can extend the opportunities afforded via the sponsorship over a longer period.

For example, sponsors of major golf events may augment sponsorship of the event with individual player sponsorships, who can in turn be used for money can’t buy experiences for client throughout the year. With golf sponsorship often offering participation for amateur players then brands can host regional qualifying events for their clients to win a place in the main company sponsored event.

Extending the association allows the brand to build valuable continuous content and careful planning of activation can achieve maximum results.

Measurement of ROI

Setting benchmarks in advance of undertaking sports sponsorship will more readily help a brand understand its return on investment which will of course be different for a retail broker targeting a consumer audience or for a brand that seeks to target a more B2B audience. There can also be tangibles and intangibles in this process.

For retail brokers, (where 58% have to date invested in football sponsorship) the tangible ROI can include a measurement of the media value generated from its branded assets (rights holders will provide such research as part of the sponsorship), the number of leads and new client signs ups generated from specific promotions, the inclusion of tracking codes in the digital advertising on the club websites can assist in constantly adapting campaigns for enhanced return.

Brands will also see value from intangibles – association to world leading rights holder brand values, endorsement of its brand by globally recognized players, consistent sporting success and unique settings in which to conduct business and seminars.

For brands targeting a B2B audience then a different benchmark can be set. “Were you able to invite all of your biggest clients to a golf event that you are sponsoring, were your clients able to actively participate in the sport? Did deals come out of that?”

For all brands in the sector, return on investment can also be driven by staff motivation- sales staff can be incentivized with money can’t buy opportunities (attending matches, meet and greets) whilst provided with unique tools in which to enhance their chances of doing business.

Of course brands will certainly be well served to set benchmarks and create bespoke research that is relevant to the brand and its objectives from the sponsorship. Qualitative research will also better understand reception to a brand which can be undertaken pre, during and post sponsorship (what are people saying about my brand?)  It is these types of research studies that can best assist a brand in continually shaping its sponsorship over the term to have an impact on ROI.

Briefing the Rights Holder

Many sports rights holders now have a sales division which negotiates the sponsorship and a separate partnership division that acts as the day to day management of the sponsorship.

It is imperative that a detailed briefing is provided to the partnership team, they need to be fully au fait with the product sector, and company targets to fully immerse themselves in being able to deliver a meaningful return on investment.

It’s in the interests of rights holders to renew the sponsorship at the end of the initial term and it’s in the interests of the brand to ensure that the people working on its business know what they are doing. Briefing is critical.

Using an External Agency

The online trading sector is relatively young, despite the fact that over 70 sports sponsorships have been undertaken in the last six years. For the vast majority of these companies it will be their first ever significant investment into marketing and certainly the first ever investment into sports sponsorship.

Brands can find the use of an experienced agency very beneficial to providing the global strategy, assist in negotiating the best commercial terms as well as advising on sponsorship activation.

Agencies are generally only remunerated from the rights holder side, so there are normally no costs to the sponsor in having strategy and negotiation undertaken by an external agent. It can be a win-win.

Brands can then elect to work with an agency on activation which is normally retainer based but this can also be a cost effective way to maximize ROI without the need to immediately invest in expanding the internal marketing department.

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Maximizing return on investment from Sports Sponsorships

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