Sponsorship And Investor Relations - 1

Sponsorship Valuation | Brand Value | Alternative Channels | Investment ROI | Activation | Media Equivalency | Brand Equity | Asset Pricing | Valuation Matrix

Making yourself heard in a crowd when everyone is hollering at the top of their voice is well-nigh impossible. In today’s crowded world, companies are increasingly having to spend more to shout louder, with little end in sight to the rise and ROI getting more and more challenging to justify.

One area that many companies in Asia aren’t exploring enough, is in the area of sponsorship as an outreach of investor relations. Whether it be in entertainment, sports, arts, or naming rights to venues and events, this is one way to stand out from competitors, engage with stakeholders and reap tangible returns, if effectively executed.

Investment in sports, entertainment, and arts sponsorships is growing because they deliver unique value and reach in a world where media is fragmented, customer attention scarce, and differentiation is hard to come by. High-profile sponsorship properties like Wimbledon, the Olympics, Formula One, the World Cup offer brands the ability to connect with their customers and partners. The sports sponsorship market size is expected to increase by USD 5.33 billion from 2019 to 2024, at an accelerated CAGR of 2%. 34% of the market's growth will originate from APAC during the forecast period . The total investments are in fact, much larger because those estimates do not reflect the cost of the associated loyalty programs, promotions, channel integration, and activation programs that form the full scope of activities needed to unlock the full financial value from the sponsorships.

Many companies fall into the trap of sponsoring an event or activity and are happy with some static onsite banner presence or logo displays on the website when in fact, there is so much more value that could potentially be extracted from the investment.

While it is sometimes difficult to measure the direct financial benefit or value of sponsorship investments, the data-driven CEOs and CMOs now require more precise data points and KPIs to quantify and indeed, justify their investments. There is, more often than not, both an art and science to this. What is undeniable however, is that a well-executed sponsorship deal can contribute to the overall “feel-good” factor of a company/brand.

Here are 3 pitfalls to watch out for as when contemplating a potential sponsorship deal:

  • Attempting to measure media equivalency without due consideration of intangible benefits, such as the strategic intent, creative outcomes and knock-on effects of a particular sponsorship that can be delivered, relative to a traditional media buy;
  • Not according due weight to the non-media factors like brand value, costs of acquisition, engagement with stakeholders, employees partners, distributors and employees that create significant financial value;
  • Treating sponsorships as outgoing expenses instead of assets. The correct positioning focuses everyone’s mind to the long-term financial value that can be reaped over time.

To summarise, it falls on the CMO to work together with the CFO to quantify, communicate and ultimately justify, the value of these sponsorships in terms of the financial value created, beyond their equivalent media value. The total value of a sponsorship has to be measured both in financial and non-financial terms that include, building brand equity, improving customer loyalty, reducing customer acquisition costs and exciting your shareholders.