Despite sponsorship making up 11% of multinational marketing budgets, only 5% of brands are “very confident” that their sponsorship investments are addressing the right audience, with the right assets and for the right spend.
This is according to a new study, Evolution of Sponsorship, by the World Federation of Advertisers (WFA) in partnership with sponsorship consultancy Lumency, which also found this level of spend was second only to media for many brands.
One in five brands spend ‘nothing’ on measuring sponsorship ROI
Ian Malcolm, Lumency president and CEO commented on this finding: “Despite this uncertainty around the return on investment (ROI) of sponsorship spend, the research also shows that for many brands, sponsorship activity remains relatively unmanaged and unmeasured.”
The majority of brands in the study put measuring ROI in the top three of their most significant challenges for sponsorship activity, but brands are spending an average of 1% or less on this measurement. More than 20% of brands surveyed spent nothing on ROI measurement of sponsorships.
Most brands measured outputs rather than outcomes, like the number of attendees at an event or entrants to a sweepstake, rather than effects on commercial and brand objectives like awareness.
On this Malcolm warned: “Outputs lead to outcomes, but if a brand stops the measuring with outputs, they’ll fail to understand the real impact of a sponsorship on their brand and the business.”
A slightly higher proportion of brands (38%) are working on developing a framework to “determine the commercial value of rights and entitlements” from sponsorships, while nearly a third are already using such a framework (31%) and others have no plans to develop one (also 31%).
‘A missed opportunity’
The report also covered activation which relates to spending on campaigns, events, experiences, and initiatives linked to a sponsorship deal.
Nearly half of brands (43%) surveyed said the “do not know what they are spending” on activation of sponsorships, and more than a third (39%) said they were spending less on activation than on rights fees.
More than four in ten brands surveyed (42%) are not yet using their sponsorships “to advance and demonstrate their sustainability and/or social equity agendas”, and a further 9% said they did not know “what if any use” is being made of sponsorship to drive values.
Both of these were called “missed opportunities” by the report for brands to connect with consumers and on the social impact side, to “establish an emotional connection” with harder-to-reach audiences like Generations Z and Alpha.
Global sponsorship spend by brands was valued at $97.4bn in 2022, and is forecast to grow to $189.5bn by 2030 according to the Global Sports Sponsorship Market, Research and Markets, April 2023.
The study covered 34 multinational companies with total global adspend of $51.3bn.
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