Understanding the ROI of sports sponsorships
In the realm of marketing, sports sponsorship stands as a titan, captivating audiences worldwide with its blend of competition, engagement, and passion. Yet, measuring the return on investment (ROI) of such sponsorships often presents a challenge.
In this article, we explore how businesses can quantify the impact of branding positioned on jerseys, stadiums and televised broadcasts. We delve into the strategies, metrics, and real-world insights behind measuring the ROI of sports sponsorship.
David Rothenhaeuser
Published on September 4th, 2024
In this Insight:
Understanding the Landscape
Sports sponsorships encompass a vast spectrum, ranging from individual athletes to global events. Each avenue offers unique opportunities for brands to connect with audiences. For instance, associating with a popular athlete can enhance brand perception, while sponsoring a major sporting event can bolster brand visibility on a global scale.
Below, we look at how brands determine their return on investment within their sport sponsorships, decipher the various metrics and how different brands measure the success of their sponsorship agreements.
ROI metrics: an overview
Brand Exposure
Impressions: Tracking the number of times a brand logo or message is seen by viewers, whether on jerseys, signage, or digital platforms.
Reach: Evaluating the potential audience size exposed to sponsored content, considering factors like TV viewership, social media engagement, and event attendance.
Media Value: Calculating the estimated cost of achieving similar exposure through traditional advertising channels.
Brand Engagement
Social Media Metrics: Analysing likes, shares, comments, and mentions related to sponsored content across various platforms.
Website Traffic: Monitoring spikes in website visits during or after sponsorship activations, indicating heightened interest or engagement.
Surveys and Feedback: Gathering direct feedback from consumers to gauge brand recall, sentiment, and purchase intent.
Financial Impact
Direct Sales: Tracking any increase in product sales directly attributed to sports sponsorship activities.
Indirect Revenue: Assessing the long-term impact on brand loyalty, customer retention, and market share, which may translate into sustained revenue growth.
Brand Exposure
Brand Exposure consists of a number of factors, including:
Impressions: Tracking the number of times a brand logo or message is seen by viewers, whether on jerseys, signage, or digital platforms.
Reach: Evaluating the potential audience size exposed to sponsored content, considering factors like TV viewership, social media engagement, and event attendance.
Media Value: Calculating the estimated cost of achieving similar exposure through traditional advertising channels.
Mastercard's sponsorship of the UEFA Champions League exemplifies leveraging a global platform to enhance brand exposure and consumer engagement. Through integrated marketing campaigns and exclusive fan experiences, Mastercard deepens its connection with football enthusiasts worldwide.
Mastercard brings fans closer to the action through its sponsorship of the UEFA Champions League. Its cardholders across the globe are connected to exclusive, priceless experiences, including the once-in-a-lifetime chance to see their children walk out onto the pitch with some of the greatest teams in Europe as a player mascot.
There is a subconscious element here as well, by seeing Mastercard branding in Champions League games (and highlights) over a 30-year period, it may make consumers opt for Mastercard in future without even realising.
Brand Engagement
Engagement goes one step beyond exposure, consisting of:
Social Media Metrics: Analysing likes, shares, comments, and mentions related to sponsored content across various platforms.
Website Traffic: Monitoring spikes in website visits during or after sponsorship activations, indicating heightened interest or engagement.
Surveys and Feedback: Gathering direct feedback from consumers to gauge brand recall, sentiment, and purchase intent.
Red Bull's strategic focus on extreme sports sponsorship epitomises its "gives you wings" ethos, aligning with adrenaline-fuelled activities like Formula 1 racing, cliff diving, and snowboarding.
A lot of people engage with Red Bull’s brand without ever having the desire to purchase the energy drink. Through extreme sports, the brand encourages consumers to push their boundaries and seek excitement. Red Bull becomes more than a product, it becomes a lifestyle choice for those who crave adventure.
Red Bull's investment in extreme sports extends beyond those simple engagement metrics, fostering a brand identity synonymous with adventure, energy, and innovation. This intangible value fuels a buzz online and at its events.
Red Bull has expanded its catalogue of sports and events into padel and America’s Cup sailing, and it has got to a point where being endorsed by Red Bull is more powerful for the event than the other way around.
Financial impact
Then the final step, when you can see some of that investment coming back:
Direct Sales: Tracking any increase in product sales directly attributed to sports sponsorship activities.
Indirect Revenue: Assessing the long-term impact on brand loyalty, customer retention, and market share, which may translate into sustained revenue growth.
Nike's partnership with Michael Jordan transcended mere endorsement, spawning the iconic Air Jordan brand. Despite retiring from basketball in 2003, Jordan's cultural influence continues to drive sales, with the Air Jordan line generating billions annually.
In 1984, the Air Jordan shoe was the first collaboration between Nike and rising star, Michael Jordan. Through multiple product innovations, expansions, as well as continued collaborations, the Jordan team has turned Air Jordan into a global brand in its own right.
Beyond immediate sales figures, Nike's enduring association with Jordan reflects in brand loyalty, market dominance, and cultural relevance, showcasing the long-term ROI of athlete endorsements.
Looking at how Nike and Jordan have dominated the market in basketball, no other brand comes close. Not settling there, Nike and Jordan identified that football has a similar viewership base, and in certain places, culture, to basketball. Nike partner club Paris Saint-Germain was the perfect fit, and released a whole PSG-Jordan range, including two Jordan branded European kits for the 2018-19 season.
The Path Forward
The above mentioned metrics are just a few of the many key elements needed for brands to understand the impact of their sponsorship agreements.
Measuring the ROI of sports sponsorship requires a multifaceted approach that goes beyond traditional metrics. By embracing data analytics, consumer insights, and strategic partnerships, brands can unlock the full potential of their sponsorship investments.
Going beyond measuring and fully understanding ROI entails a blend of quantitative analysis, assessment, and strategic foresight. While tangible metrics provide a glimpse into immediate impact, the true measure of success lies in the longer term resonance and value generated for brands and consumers alike. Brands such as Mastercard, Red Bull and Air Jordan have built affinity, engagement and loyalty through sponsorship over a sustained period, and it’s precisely this long-term commitment that has rewarded them with meaningful resonance with consumers.
As the importance of sports sponsorship continues to grow, more businesses will look to learn from the decisions these brands have taken in sponsorship. Here, key lessons surrounding adaptability, innovation, and creativity will remain paramount in driving meaningful ROI and lasting brand impact, especially in the more volatile digital age.
Sport sponsorship FAQs
Sponsors get the opportunity to showcase their brand and products to a greater audience of varying demographics. The global nature of sport today means that athletes feature within competitions that attract millions, sometimes billions of viewers worldwide. By placing their brand within this sphere, organisations can catch the attention of people around the world.
In modern times, the value of social media cannot be underestimated. Even traditional forms of sponsorship are likely to appear on social media, opening the brand up to an even wider audience - even appearing in new territories.
Through placements on jerseys and advertising boards, sponsors get a high visual presence and become part of the action. If visibility is the core objective, then it's a surefire way to succeed, whether that’s inside the stadium, TV or online.
It is the emotional engagement which sets sponsorships in sport apart from almost all other forms of advertising and sponsoring initiatives. Traditional advertising platforms such as TV can attain similar reach figures to sport, but can’t compete with sports fans’ engagement.
The return on investment (ROI) of sports marketing and sports sponsorship is a measurement of the financial gains or losses relative to the costs incurred in these marketing activities.
Calculating ROI involves comparing the net profit generated by the marketing efforts against the total expenditure.
The formula for ROI is: ROI= (Net Profit ÷ Total Cost) x 100
Here's a breakdown of key components:
Net Profit is the revenue generated from sports marketing activities minus the associated costs. It includes direct sales, increased customer lifetime value, or any other financial gains attributed to the marketing efforts.
Total cost encompasses all expenses related to sports marketing and sponsorship, such as sponsorship fees, advertising costs, event promotions, and any additional expenditures.
The ROI formula is applied to determine the percentage return on the investment. A positive ROI indicates profitability, while a negative ROI suggests a loss.
Measuring the return on investment (ROI) in sports sponsorship involves evaluating the financial gains relative to the costs incurred.
Define Objectives: Clearly articulate the goals and objectives of the sports sponsorship. Whether it's brand awareness, lead generation, or sales, having clear objectives will guide your measurement efforts.
Establish Key Performance Indicators (KPIs): Identify the specific metrics that align with your objectives. These may include brand exposure, social media engagement, website traffic, lead generation, and sales.
Quantify Sponsorship Costs: Calculate the total costs associated with the sponsorship, including sponsorship fees, activation costs, marketing materials, and any other related expenses.
Measure Brand Exposure: Evaluate the visibility of your brand during sponsored events. Track logo placements, mentions, and any promotional materials to quantify brand exposure.
Social Media Analytics: Monitor social media metrics related to the sponsorship, such as likes, shares, comments, and follower growth. Assess the impact of sponsored content on social media platforms.
Website Analytics: Analyse website traffic during and after the sponsorship period. Look for increases in visits, page views, and user engagement attributed to the sponsorship.
Lead Generation and Conversion Rates: Track leads generated through the sponsorship and assess the conversion rates. Connect leads to specific sponsorship activities to understand their origin.
Sales Attribution: Attribute sales to the sports sponsorship by tracking customer purchases during or after the sponsorship period. Use unique identifiers like promo codes or dedicated landing pages.
Customer Lifetime Value (CLV): Assess the impact of the sponsorship on customer retention and CLV. Determine if the sponsorship contributes to long-term customer loyalty.
Calculate ROI: Use the formula ROI = (Net Profit ÷ Total Cost) x 100. Net Profit includes revenue generated directly from the sponsorship, such as increased sales or customer value.
Consider Intangible Benefits: While ROI is often associated with financial metrics, consider intangible benefits such as improved brand perception, strengthened partnerships, and long-term relationship building.
Benchmark and Compare: Compare the calculated ROI against industry benchmarks or previous sponsorship initiatives to provide context and evaluate the success of the current sponsorship.
By systematically assessing these factors, businesses can gain a comprehensive understanding of the ROI of their sports sponsorship and make informed decisions for future sponsorships and marketing strategies.
Several trends are shaping the landscape of sports marketing, reflecting the evolving preferences of fans, advancements in technology, and a growing emphasis on sustainability and social responsibility. Here are some current trends in sports marketing:
Digital Engagement and NFTs
The rise of digital engagement through social media, mobile apps, and interactive content. Non-fungible tokens (NFTs) are gaining popularity for unique digital collectibles, allowing fans to own exclusive items tied to sports events.
Augmented and Virtual Reality
Integration of augmented reality (AR) and virtual reality (VR) technologies to enhance fan experiences. Virtual stadium tours, immersive AR experiences, and VR content are becoming prevalent.
E-commerce and Direct-to-Consumer Sales
Sports entities are increasingly focusing on e-commerce, enabling direct-to-consumer sales of merchandise and tickets. This trend enhances fan engagement and allows for personalised interactions.
Personalised Fan Experiences
Customization of fan experiences through data analytics. Personalised content, offers, and interactions tailored to individual preferences contribute to a more engaging and relevant fan experience.
Sustainability Initiatives
Growing emphasis on sustainability and eco-friendly practices in sports marketing. Sports organisations are adopting green initiatives, promoting sustainable events, and engaging in environmental conservation efforts.
Social Responsibility and Inclusivity
A commitment to social responsibility and inclusivity. Sports entities are leveraging their platforms to address social issues, promote diversity and inclusion, and engage in community outreach programs.
Esports Integration
The integration of esports into traditional sports marketing strategies. Esports partnerships, sponsorships, and events are on the rise, attracting a younger and tech-savvy demographic.
Athlete Empowerment and Personal Branding
Athletes are increasingly empowered to build and promote their personal brands through social media, content creation, and endorsements. Authenticity and storytelling play a crucial role in athlete marketing.
Live Streaming and OTT Platforms
The growing importance of live streaming and over-the-top (OTT) platforms for sports content consumption. Sports organisations are exploring direct-to-consumer streaming services to reach global audiences.
Blockchain and Fan Tokenization
The use of blockchain technology for fan tokenization. Sports teams and leagues are launching fan tokens, providing fans with exclusive benefits, voting rights, and a stake in the team's decision-making process.
Health and Wellness Partnerships
Collaborations with health and wellness brands. Sports entities are aligning with brands focused on fitness, nutrition, and overall well-being to promote a healthy lifestyle.
Interactive Content and Gamification
Interactive content and gamification strategies to engage fans. From interactive polls to gamified experiences, sports marketing is leveraging elements of play and competition.
Dynamic Ticket Pricing
Implementation of dynamic ticket pricing models, adjusting ticket prices based on factors such as demand, team performance, and event significance.
Innovative Sponsorship Activations
Creative and innovative sponsorship activations. Brands are exploring unique ways to activate sponsorships, including virtual activations, interactive campaigns, and experiential marketing.
Staying abreast of these trends allows sports marketers to adapt their strategies, engage with their target audience effectively, and create memorable and impactful experiences in the ever-evolving landscape of sports marketing.
The future of sports marketing is expected to be shaped by a combination of technological advancements, shifting consumer behaviours, and a continued focus on sustainability and social responsibility. Here are some potential directions for the future of sports marketing:
Immersive Technologies
Continued integration of immersive technologies such as augmented reality (AR), virtual reality (VR), and extended reality (XR) to create more engaging and interactive fan experiences. Virtual stadium tours, AR-enhanced game broadcasts, and VR fan zones may become commonplace.
Fan Tokenization and Blockchain
Greater adoption of blockchain technology for fan tokenization, enabling fans to have ownership stakes, voting rights, and access to exclusive content. Blockchain can enhance transparency in ticketing, merchandise authentication, and secure transactions.
Personalization and Data Analytics
Further emphasis on personalised fan experiences through advanced data analytics. Sports marketers will leverage data to tailor content, offers, and interactions, fostering deeper connections with individual fans.
Sustainable Practices
Increased commitment to sustainability in sports marketing, with sports organisations implementing eco-friendly initiatives, promoting green events, and incorporating sustainable practices into their operations.
Social Responsibility and Inclusivity
Continued focus on social responsibility and inclusivity. Sports entities will use their platforms to advocate for social causes, promote diversity and inclusion, and engage in community-driven initiatives.
Direct-to-Consumer Strategies
Greater reliance on direct-to-consumer strategies, with sports organisations leveraging e-commerce, streaming services, and personalised digital platforms to connect directly with fans, reducing dependence on traditional distribution channels.
Artificial Intelligence (AI) Integration
Integration of artificial intelligence (AI) for more efficient fan engagement, customer service, and data analysis. AI-driven chatbots, predictive analytics, and automated marketing campaigns will enhance overall efficiency.
Health and Wellness Partnerships
Increased collaborations with health and wellness brands as sports organisations align with companies promoting fitness, nutrition, mental well-being, and overall healthy lifestyles.
Global Expansion and Emerging Markets
A focus on global expansion and tapping into emerging markets, reaching diverse audiences worldwide through strategic partnerships, international events, and region-specific marketing strategies.
Esports Growth
Continued growth of esports and its integration into traditional sports marketing strategies. Esports sponsorships, events, and collaborations will become more prevalent, appealing to a younger and digitally connected audience.
Smart Stadiums and Fan Engagement
Smart stadium initiatives to enhance the in-person fan experience, incorporating technology for personalised services, seamless connectivity, and interactive features that complement live events.
Dynamic Content and Storytelling
Dynamic content creation and storytelling strategies that capture the attention of diverse audiences. Brands will focus on creating compelling narratives and shareable content to resonate with fans emotionally.
Partnerships with Influencers and Creators
Increased partnerships with influencers, content creators, and social media personalities to amplify sports marketing messages and reach broader demographics.
Continuous Innovation
A culture of continuous innovation, with sports marketers embracing emerging technologies, experimenting with new formats, and staying agile to adapt to changing consumer preferences.
The future of sports marketing is dynamic, with technology playing a central role in enhancing fan experiences and engagement. Sports marketers who embrace innovation, prioritise fan relationships, and align with societal values are likely to thrive in this evolving landscape.
