Question

Topic: Research/Metrics

Quantitative Approach To Evaluating Sponsorships?

Posted by Anonymous on 7/6/2009 at 11:51 AM ET 125 Points
I work for a small, up-and-coming liquor company. We frequently get requests to sponsor events - usually corporate (store openings, mixers, annual meetings) where we are asked to serve drinks to 50-300 guests in exchange for some media coverage, logo placement, and printed and verbal acknowledgment as event sponsor).

I'm developing a set of guidelines for my team to use to evaluate these requests. I know sampling is a great way to get customers to experience our products, but we really can't say yes to every single event...

I came up with a qualitative, objective-based guide but I'd really like to add some kind of quantitative way of sizing up the requests... Problem is that's not really my strength. How do you assign a monetary value to an event's potential to build your brand image, create some buzz, and put you in front of your customers, media, and sometimes even sales leads?

Or should I just stick to the qualitative form?

Would really appreciate your help!
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RESPONSES

  • Posted by koen.h.pauwels on 7/6/2009 at 1:30 PM Accepted
    Important question for many companies!

    My answer from personal experience: you need to establish exactly what your immediate goal is with the sponsorship: do you want to raise awareness, increase liking for your company/brand in the local community, increase adoption of a new product, ...? That is the 'qualitative' part. Next determine how you can measure whether you have reached your goal (e.g. increase unaided awareness in a specific city by 10%, as measured in a telephone survey). Finally, establish how this immediate goal translates into ultimate sales/profits for your company. For instance, the 10% increase in unaided awareness yields 5% more product information requests, which yields 2% higher sales. We can determine this either by a quantitative study with your past data, or we can use estimates in your industry to 'guess' the conversion rates and then adjust with the actual results of your campaign.

    I went with 'increasing awareness' given that you are a small liquor company, but do let us know what your objectives would be

    Cheers

  • Posted by koen.h.pauwels on 7/6/2009 at 1:32 PM Member
    If you'd like a more general answer and concrete example: companies often use several techniques to attach value to sponsorships. For instance, the value of Gilette's sponsorhip of Nascar was appromixated by:

    a) asking the salesforce how much it increases their ability to sell the product
    b) asking a branding expert how much financial value it added to the brand
    c) asking an ad agency to compute the 'advertising-equivalent' of Nascar-related publicity; i.e. how much it would have cost the company to get the same air tim in ads
    d) quantitatively measuring how much sales increase for Nascar fans versus non-Nascar fans, matched on other demographics.

    Given that you are promised media coverage, logo placement, etc. for your sponsorship, calculating the advertising equivalent should be straightforward. However, this tends to over-esimate the actual value of the coverage, based on my experience

  • Posted by BizConsult on 7/6/2009 at 9:51 PM Accepted
    Create a list of the individual costs and benefits of the events to generate an approximate ROI. For example:

    Costs: How many people do you need to staff it? How far away is it? Is there a limit on the number of drinks per person (or can you create it?)

    Return: How valuable is the event? How well does it fit your target demographic? What is the on-site and off-site exposure? What's the value of each? What's the competitive situation in each market? For example:

    Can you hand out promotional literature, coupons, etc.? Can you tie in or leverage with local retailers? (If you have limited distribution, it may not be worthwhile to raise awareness if you can't direct people to specific retailers...).

    Overall - create a checklist/template and assign values to the benefits and costs and create a list of the questions you need answered and a worksheet you can use to evaluate each opportunity!

    Cheers!
    -Steve
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