The Sponsor has published its annual fair market valuation of every Premier League club’s front-of-shirt and sleeve sponsorship assets. The results highlight that some brands are getting a great deal from their sponsorship while others are overpaying.

Fair market valuation in sponsorship refers to the income a team or event can reasonably expect to receive for its sponsorship on the open market without any existing associated party connections. Premier League fair market value (FMV) and Associated Party Transactions (APT) rules are in place to maintain the league's competitiveness by preventing clubs from inflating sponsorship deals with companies associated with their owners.

Manchester City launches unprecedented legal action over FMV rules

An unexpected development has rocked the Premier League as Manchester City announced unprecedented legal action against the league's FMV rules.

Today's FMV sponsorship figures published by The Sponsor highlight that Manchester City’s current deal with Etihad Airways is £2.6m more than its fair market value. If the value of the deal were to increase further, Manchester City would be in danger of breaking the Premier League rules.

“Manchester City’s sponsorship value is driven by its reputation for quality and cultural relevance, together with its huge brand reach. However, these traits are not exclusive to City. Both Manchester United and Liverpool score higher than City across many key aspects driving sponsorship strength, such as history, social reach, fan engagement, and community development.” - Sean Connell, Editor, The Sponsor

Manchester City’s current front-of-shirt sponsorship reported to be worth £67.5m is currently with one such associated party in Etihad Airways. However, the club also has a significant sleeve sponsorship arrangement with an non-associated partner in crypto exchange platform OKX highlighting the club's commercial power to command top prices above market rate.

Liverpool’s front-of-shirt is the most valuable sponsorship asset of any Premier League club with a valuation of £65.8m

Despite missing out on the Premier League title, Liverpool’s qualification for next season’s Champions League competition ensures the club and its sponsors, Standard Chartered, gain significant brand exposure next season.

“Liverpool’s value as a sponsorship asset is not limited to their on-field success and media exposure. Our research shows brands that partner with Liverpool benefit significantly from association with one of football’s most successful clubs. Furthermore, Liverpool is a culturally relevant football brand in terms of fan engagement, star power, and action towards social causes, something that sponsors place considerable value on.”

Gambling firm Betano overpays by £13.6m to secure sponsorship with Aston Villa before the ban

The 2024/25 season marks the last for front-of-shirt gambling partnerships in the Premiership. Despite the reputational damage associated with such arrangements, many clubs, including Villa and Forest, are choosing to take advantage of the increased income now. Gambling sponsors pay a premium for the extensive exposure provided by Premiership sponsorships. However, these clubs may face a significant financial gap during the 2025/26 season, as non-gambling brands are unlikely to match these high sponsorship payments.

Aston Villa's £40m sponsorship deal with Betano represents a £13.6m increase over the club’s fair market value of £26.4m. Similarly, Nottingham Forest’s £14m sponsorship deal with Kayun Sports is more than double the club’s fair market sponsorship value of £5.2m.

Sleeve Sponsorship

Sleeve sponsorship remains a grey area for both clubs and sponsors, with deals fluctuating considerably. The fair market value of sleeve sponsorships across the Premier League ranges from just shy of a million pounds per season to Liverpool, at the top end of the scale, with an annual value of £25m.

Manchester City’s sleeve sponsorship deal with crypto exchange OKX is the most lucrative in the Premier League, reported to be a staggering £55m, more than double its fair market value of £23m. The Premier League Champions represent the third-strongest sponsorship offering in the league. Unsurprisingly, they lead the pack when it comes to quality, but the club and its associated partners are also the most culturally relevant team underpinned by strong support for the women’s game. In fact, no club posts and promotes their women’s team more than Manchester City.

Manchester United lose £17.5m per year from Team Viewer deal

Manchester United is the biggest loser in terms of lost sponsorship value. The current deal with TeamViewer, reportedly worth £47m per year, is the most undervalued sponsorship in the league. Manchester United boasts the largest social reach of any club, with 173 million social followers and the highest levels of fan engagement across the Premier League, which are key considerations for sponsors. The fair market value of United’s sponsorship is just over £64m, indicating that the club is missing out on £17.5m of potential sponsorship revenue each year—a significant financial loss.

Leicester City back with a bang

Despite a brief spell in the Championship last season, Leicester City remains a strong sponsorship opportunity due to the club’s history and strong fan engagement scores. Typically, the sponsorship of newly promoted teams would be at the lower end of the spectrum, but Leicester has come straight back with a strong valuation of £11.2m, greater than that of Fulham, Crystal Palace, Brighton, Wolves, Brentford, Nottingham Forest, and Bournemouth.

Newcastle United’s sponsorship value falls after missing out on Europe

Manchester United’s unexpected FA Cup final victory has significantly impacted the value of Newcastle United’s sponsorship. The Magpies and their associated sponsors will receive considerably less brand exposure as the club will not feature in any European football next season.

Methodology

The Sponsor surveyed an audience of brand marketing executives from leading sponsors to ascertain the key qualities they look for when evaluating a sponsorship asset. The qualities are categorised into Reputation (history, quality, cultural relevance, infrastructure), Audience (reach, frequency, demographics, engagement) and Contribution (sustainability, community, development, fans). The categories are compiled into a weighted scorecard recognising the additional importance all sponsors place on brand reach.

Using this scorecard, our team measured the strength of every Premier League club’s sponsorship by drawing on wide range of data points. Metrics included but were not limited to: on-pitch performance, honours, star power, social following, digital presence, TV viewing, audience demographic, fan engagement, ticket pricing, ticket pricing changes, charitable donations, support of the women’s and grassroots game and more.

Our team used each club’s sponsorship score together with real-world sponsorship deals reported in the media to conduct a polynomial regression analysis to determine the true and fair value of each club’s sponsorship.

The research methodology takes a point-in-time valuation as of 23:59 on 27th May 2024 and does not seek to forecast or predict the future performance of teams as it relates to European qualification or relegation. Consequently, sponsors and clubs may place a higher or lower value on the sponsorship due to their own predictions of future performance. Unlike sponsors and clubs, The Sponsor is an independent valuer with no vested or commercial interest in the outcomes of this research.

The post Revealed: Premier League Fair Market Sponsorship Valuations 2024 appeared first on The Sponsor.

Show me the money! The pressure on Marketing Directors to justify sponsorship investments is unrelenting. Summoned to the boardroom, clinging to the familiar crutch of media value equivalency (MVE) calculations, hoping to prove the worth of multimillion-dollar endeavours. Yet, beneath the surface of these seemingly concrete figures lies a gaping chasm of inadequacy.

MVE, the go-to metric for measuring sponsorship, offers a simplistic view of success: Did we get a good price? But the truth is far more complex. MVE fails to capture the intangible yet invaluable shifts in brand perception and consumer behaviour that truly drive revenue growth. As Marketing Directors are forced to defend their sponsorship decisions, they must continue to grapple with the fundamental question posed by Finance Directors that MVE fails to answer: How does this sponsorship actually generate revenue for the company?

In this article, we delve deep into the shortcomings of MVE in sponsorship measurement, uncovering why it falls short of providing a holistic understanding of sponsorship impact. From overlooking changes in brand perception to neglecting the CFO's demand for tangible revenue generation, we explore the inherent limitations of MVE and propose alternative approaches to accurately evaluate sponsorship ROI.

MVE is, without doubt, a helpful benchmark for assessing sponsorship strength. It is particularly useful for brands whose sponsorship campaigns place visibility as the first, second and third priority. However, as Solo Stove’s viral Snoop Dogg ‘Giving Up Smoke’ partnership showed, increased brand visibility does not automatically equal increased sales. Remarking on the partnership Solo Stove Chief Financial Officer Andrea Tarbox said:

“while our unique marketing campaign raised brand awareness of Solo Stove to an expanded and new audience of consumers, it did not lead to the sales lift that we had planned, which, combined with the increased marketing investments, negatively impacted our EBITDA.”

While, of course, this could simply be a case of over-forecasting, the point remains that increased awareness only tells half a story. The true value of sponsorship is the ability to alter and enhance stakeholder behaviour both in the short and long term.

What are the values that drive demand in the banking sector? Trust? Integrity? Security? All are true, and consumers' perceptions of such attributes can all be enhanced through sponsorship. Yet MVE overlooks increases in perception of these key brand values brought about by sponsorship. Consequently, when conducted in isolation, an MVE calculation serves to undermine and undervalue an effective sponsorship campaign's true worth.

In contrast to the limited scope of MVE, a more comprehensive and accurate measure of a sponsorship's worth lies in the market approach. This method considers a wide range of data points, including but certainly not limited to a comprehensive MVE calculation, to ascertain the strength of a sponsorship opportunity. The approach considers broader factors concerning the reputation, history, fan demographics, reach and social behaviour of a team or event. By applying these factors to the commercial realities of sponsorship deals agreed upon within the industry, the market approach offers a more holistic understanding of sponsorship's true value. This is also the approach used by The Sponsor in the annual study of Premier League Fair Market Value calculation which you can view here.

Unfortunately, this is all before we consider the fact that both MVE and the market approach fail to address the burning question raised by CFOs: How does this sponsorship generate revenue for the company?

For this, a more complex and rigorous valuation model is required: The income approach. The income approach is a methodology commonly used by tax authorities when valuing intangible asset transfers or CFOs when undergoing merger and acquisition transactions. Firstly, it assesses the fundamental role of the brand in generating revenue for the company within its respective industry. This involves analysing historical royalty rate agreements to determine the typical value of a brand's contribution to revenue generation. Secondly, the approach evaluates how changes in brand strength, facilitated by sponsorship investments, can enhance this revenue-generating capacity over time. By quantifying the impact of sponsorship on brand sentiment and consumer behaviour, the income approach establishes a direct link between sponsorship activities and their potential to boost revenue. Furthermore, unlike MVE, it speaks in a language familiar to the boardroom, which marketing proponents find particularly helpful when negotiating next year’s budget!

Each of these sponsorship measurement and valuation approaches has its own strengths and applicability depending on the specific needs and objectives of your sponsorship initiatives. For personalised guidance tailored to your unique requirements, we invite you to connect with The Sponsor's dedicated consulting team here. Schedule a complimentary consultation today to explore how we can assist you in accurately quantifying returns and justifying your sponsorship investment.

The post Justifying sponsorship returns: How media equivalency undervalues your sponsorship and exploring alternative measurement approaches appeared first on The Sponsor.

In the high-octane world of Formula One, sponsorships aren't just about branding; they're intricate partnerships that demand careful navigation, strategic acumen, and adaptability. Cognizant, the multinational business technology firm, has successfully sponsored the Aston Martin F1 team, achieving its primary objective of putting the Cognizant brand on the map, but once a partnership has achieved its goal, many brands are faced with the difficult decision of what to do next. The recent announcement that Cognizant will step back from its title sponsorship with the Aston Martin F1 team from 2024, stands as a testament to the art of orchestrating a successful sponsorship exit strategy.

A Gradual Shift: Redefining Sponsorship Dynamics

Unlike abrupt sponsor exits seen in the past, Cognizant's approach involves a gradual reduction of their involvement, a strategy that speaks volumes about their foresight and commitment to extracting long-term value from their partnership. Instead of completely severing ties, Cognizant is strategically downsizing its role. By relinquishing the high-cost title sponsorship position, Cognizant is still reaping the benefits of sponsorship, albeit at a reduced financial commitment.

Strategic Downsizing: Maximizing Benefits, Minimizing Costs

This gradual exit strategy allows Cognizant to retain a presence in Aston Martin's extensive sponsor portfolio, ensuring continued exposure and brand visibility as well as licensing and hospitality benefits. While relinquishing the naming rights, Cognizant remains an essential part of the team's ecosystem, tapping into the residual benefits of their association. This approach enables them to continue their brand promotion efforts without the burden of substantial fees typically associated with title sponsorships, showcasing a shrewd financial decision.

Strategic Collaboration: Beyond Branding to Value-Driven Partnerships

Cognizant's phased withdrawal emphasizes a shift in the sponsorship landscape, moving away from mere branding exercises towards value-driven, collaborative partnerships. By focusing on becoming the team’s global technology services partner, Cognizant is applying its digital transformation expertise to enhance Aston Martin's operational efficiency, both on and off the racetrack. This strategic collaboration showcases a deeper, more meaningful partnership that transcends traditional sponsorship boundaries.

A Win-Win Scenario: Navigating Sponsor-Team Dynamics

This methodical approach to exiting sponsorship is not only advantageous for Cognizant but also for Aston Martin. The team benefits from Cognizant's continued expertise and support while accommodating new partnerships and affording greater exposure to its remaining title partner, Aramco, creating a harmonious balance between tradition and innovation. Such collaborations ensure the team's sustained growth and competitive edge, underscoring the importance of strategic sponsorship management in the fiercely competitive Formula One landscape.

The Industry's New Paradigm: Lessons for Future Sponsorships

Cognizant and Aston Martin's strategic pivot offers a valuable lesson to the entire sponsorship industry. It illuminates a new paradigm where sponsors can gracefully transition, optimizing their investments and impact. This nuanced approach allows brands to adapt to changing business needs, explore innovative partnerships, and maintain their presence in the sports arena without incurring exorbitant costs.

Conclusion: Embracing Change with Strategic Foresight

Cognizant's gradual exit strategy from the title sponsorship position with the Aston Martin Formula One team paints a vivid picture of adaptability and strategic foresight. In an industry where change is constant, this approach exemplifies how sponsors can evolve their roles, ensuring long-term relevance and value. As the sponsorship landscape continues to transform, brands and teams alike can draw inspiration from this thoughtful transition, learning that strategic exits can be as impactful as grand entrances, shaping the future of sports partnerships with strategic finesse.

The post Shifting Gears: How Cognizant’s F1 exit strategy maximises returns while minimising costs appeared first on The Sponsor.

The football business world is currently abuzz with news of Chelsea Football Club's purported sponsorship deal with Infinite Athlete, a recently formed company arising from the merger of Tempus Ex Machina and Biocore. The proposed partnership, set to exceed £40 million, has sparked significant interest due to its notable connection to Chelsea's owners, Clearlake Capital and Todd Boehly. While this move seems promising at first glance, it beckons a comprehensive analysis from a business standpoint to ascertain its compliance with the Premier League's Fair Market Value (FMV) regulations.

The timing and particulars of this sponsorship agreement warrant meticulous scrutiny. Chelsea's pursuit of a new front-of-shirt sponsor hit an impasse until the emergence of Infinite Athlete – a company closely aligned with the club's ownership – offering a deal that nearly doubles the £25m valuation set by Chelsea for this season's shirt sponsorship. Such a substantial leap naturally invites scrutiny, particularly concerning the FMV guidelines in place.

An integral concern pertains to the financial viability of this collaboration. Infinite Athlete has an estimated annual turnover of approximately £12 million, considerably below the staggering £40 million sponsorship they have reportedly offered. With the cost of this sponsorship nearing four times the company's yearly revenue, it prompts a crucial inquiry into the origin of these funds. Clarity regarding the funding source is imperative to ensure full compliance with financial norms and to mitigate any potential irregularities.

A discordance emerges when contrasting this sponsorship's value with The Sponsor’s independent research of the Fair Market Valuation of Premier League club sponsorships. Chelsea's proposed £40 million deal starkly contrasts with The Sponsor’s FMV evaluation placing the club's front-of-shirt sponsorship as the eighth most valuable within the league, evaluated at £16.9 million. A salient factor influencing this evaluation is Chelsea's exclusion from European football tournaments last season, which resulted in diminished visibility for their partners and, consequently, a reduced sponsorship value.

Notwithstanding these visibility-related factors, Chelsea's brand equity remains a formidable asset. The club's enduring reputation, audience demographics, and positive societal contributions strengthen its sponsorship value. This duality in valuation underscores the complexity of the situation and begs closer examination to determine the true alignment of the proposed £40 million agreement with FMV standards.

Comparative analysis adds another dimension of inquiry. When juxtaposed with a similar sponsorship deal involving Newcastle United – a team whose commercial partners will gain visibility on the Champions League stage – the disparity becomes pronounced. The Newcastle deal underwent rigorous FMV assessment, culminating in a notably lower sum. Chelsea's ambitious agreement with Infinite Athlete, a relatively nascent entity with limited revenue streams, demands careful assessment to ensure compliance with established business norms.

As the football business community keenly observes these unfolding developments, the spotlight extends beyond the singular deal to encompass broader questions about the Premier League's resilience and integrity. The outcome of this situation could potentially ripple through future sponsorship agreements, redefining industry standards and expectations. The manner in which Chelsea navigates this critical juncture not only shapes its own reputation but also carries implications for the league's overall strength and transparency. With such large investment sums circulating in the football world at present, the actions and decisions of the Premier League could serve as a touchstone, influencing the dynamics of future deals and the enduring stature of the league on the global stage.

The post Why Chelsea’s New Sponsorship Deal Raises Fair Market Value Concerns for the Premier League appeared first on The Sponsor.

An annual survey published by the European Sponsorship Association (ESA) has reported sustainability and ESG as the top trend among its members.

The topic has become a priority for almost every brand, regardless of industry, with sponsorship offering a powerful platform for brands to highlight their green credentials. The subject of sustainability, however, is difficult for sponsors to navigate, with audiences responding fiercely to brands that appear to pay lip service to the issue.

The Sponsor's Leaders Club, a network of Sponsorship, Marketing and Communications Directors, will meet again in June  to discuss creating authenticity and impact through sustainable partnerships. Register your email to apply.

Authenticity and impact remain vital to driving a successful sustainability sponsorship. Those brands that tackle the issue head-on appear to have the greatest success as opposed to those that attempt to gloss over their role in contributing to climate change. For example, Ford recently announced a new partnership with the Ride London cycle event. The sponsorship is part of Ford's Park the Car campaign, encouraging people to walk or cycle short journeys instead of driving their cars. And when they need to drive, Ford’s sponsorship enables them to do so in one of their electric vehicles. You can read more about this partnership here.

The second key concern amongst sponsorship managers was the cost of living crisis, a new entry in the ESA's ranking. You can take a look at the full results below.

1. Sustainability

ESG/Sustainability/Purpose is in the top position by a significant margin. It has maintained this position since 2022 and has gained the term ‘purpose’ in the responses. ‘ESG & Sustainability’ came comfortably back into the first position in January 2022 and has shown its importance by increasing its dominance as the top trend for 2023.

2. Cost of Living

Global Economy / Recession / Cost of Living replaces COVID-related trends as the key environmental factor to impact the recovery of the sponsorship industry.

3. Measurement

Pre-covid measurement occupied 3rd place in the rankings, but once the pandemic hit, it dropped out of the top 10. As the industry returns to normal, measurement has once again become a vital issue.

4. Digital

Digital was pushed off the top spot last year when Sustainability rose to the No.1 position. It had been a firm fixture as the top trend since the start of the pandemic, although the meaning changed slightly through that time

5. Women's Sport

The year 2023 will be another strong one for women’s sports, with many big tournaments in the calendar. It is also seen as a pivotal year for the opportunity to invest in and support women’s sports, to be part of the change and the success. See our recently published article Three reasons why now is the perfect time to invest in women's sport here.

6. Live Events

The return of live events following the pandemic was critical to the survival of many areas of the industry. The backlog of postponed events overlapping with regular calendars has seen a much-needed bumper year.

7. Fan Engagement

Fan engagement has been another mainstay of the research returning to the top 10 after a drop-off during the pandemic.

8. AR/VR and Web3

AR/VR/Metaverse/Web3 demonstrates an evolution of broader concepts after the introduction of terms such as ‘Blockchain’, ‘Crypto’ and ‘NFTs’ in January 2022. In a recent article published by The Sponsor, failed crypto sponsors were responsible for over £830m in lost sponsorship value. You can read the piece here.

9. Esports

Esports is a re-entry this year, having shot up to 3rd place in April 2020. It then fell rapidly to 9th in October 2020 and 8th in January 2021 before dropping off in January 2022.

10. Innovation

Innovation in this trend referred to the creation of rights and activation. It didn’t specifically include technological innovation, a trend in its own right that did not make the top ten.

You can view the full report by visiting the ESA website.

The post Sustainability voted the top priority amongst sponsors appeared first on The Sponsor.

Scuderia Ferrari this week joined a long list of teams and events forced to cancel lucrative sponsorship deals with struggling crypto firms. Over forty different crypto sponsorship deals collapsed in the last year alone, resulting in £830 million in lost sponsorship value. So, what do these now collapsed deals mean for other sponsors in the industry?

Putting aside complex sponsorship valuation formulas and methodologies, the single greatest measurement of sponsorship value is a market approach. How much have other companies paid for similar deals. Unfortunately, over the last three years, crypto firms have been guilty of artificially inflating the perceived value of sponsorship by agreeing record-breaking deals they can not afford.

Take Chelsea’s shirt sleeve sponsorship deal with Whalefin, for example. In May 2022, Amber Group’s Whalefin agreed a record-breaking £20 million per year shirt sleeve deal with the West London club. This partnership set the marker for all other shirt sleeve deals. Consequently, when the IT services company DXC Technology entered negotiations on a shirt sleeve deal with Manchester United two months later, the price, they were told, was £20 million.

This scenario has played out in many different markets, from basketball in the US to football in Europe and cricket in India. All over the globe, crypto sponsors have been artificially pushing up the price of sponsorship. Teams and events are forced to raise their prices as they desperately try to keep up with their competitors who have secured lucrative crypto-backed deals.

Perhaps nowhere is this more true than in European football, where, as the table below shows, last year alone, twelve different crypto-backed sponsorship deals collapsed. The largest of these was Inter Milan’s deal with Digital Bits worth an estimated £82 million. Sponsors of Esports may also have been met with higher sponsorship fee demands over the last 12, thanks partly to the mega deals FTX agreed with TSM and Riot Games for almost £250 million.

Terminated Crypto Sponsorship Deals

* Estimates based on comparable market data.

There are many other teams and events that are likely to feature on this list in the near future. Atletico Madrid, for example, will be nervously looking at the solvency of their crypto sponsor. The Spanish football team has a deal worth £145 million with Whalefin, who last month had to pull out of a smaller £20 million sponsorship deal with Chelsea.

Elsewhere there are concerns over Crypto.com’s various blockbuster sponsorship deals with F1 and others after the exchange pulled out of a $495 million deal with the UEFA Champions League. An article by Asa Hiken in Ad Age quoted a Crypto.com employee who said the exchange has quietly scaled down all its sponsorships and even tried to pull out of the FIFA World Cup because of the downturn in the value of digital assets.

Could the price we pay for sponsorships be about to fall?

Crypto-backed sponsorship deals have been pushing up the price teams and events charge sponsors. Outside the fanciful world of crypto, traditional sponsors face a challenging economic environment resulting in greater scrutiny of marketing spend and recognising stale sponsorship. Consequently, the volume and budget of remaining sponsors in the market is decreased. Active sponsors, particularly those at the top end of the market, would do well to recognise the spending power they currently have when negotiating and renewing deals. If proposed legislation prohibiting gambling sponsorship goes ahead next year that spending power will only increase.

The post Formula 1 crypto sponsors crash out with £830 million in unpaid bills appeared first on The Sponsor.

The FIFA World Cup Qatar 2022 is almost upon us, but for World Cup sponsors, the tournament has proved to be a morality minefield riddled with controversy and risk. For some, however, the risk of harming their brand is more significant than others; here’s why.

As a sponsor, imagine for a moment the individual you have chosen to partner your brand with begins regularly tweeting homophobic statements. What do you suppose your response might be? I would suggest it might go something like this: ‘Our company does not tolerate homophobia and any other sort of hate speech. The recent comments and actions made by the individual we sponsored have been unacceptable, hateful and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect and fairness.’

The above is not hypothetical but, instead, a recent statement from Adidas, except the words antisemitic have been swapped for homophobic, and the sponsored individual was Kanye West. According to Forbes, this decision cost the company $650m. The Adidas Corporate Execs, however, calculated the sum was negligible when compared to the long-term costs of harming their brand reputation through continued association with Kanye. For World Cup sponsors, the same numbers have been crunched, but a very different conclusion has been reached.

Few events can match the FIFA World Cup in terms of brand awareness. The opportunity to reach approximately 5 billion people worldwide with a single marketing investment comes only once every four years. However, the Qatar World Cup comes with baggage. The build-up to the tournament has been dominated by negative headlines regarding the country’s human rights record and stance on homosexuality.

All of FIFA’s World Cup sponsors have decided to take a hit to their brand reputation to benefit from increased awareness. However, the hit is going to hurt some more than others.

Take World Cup Sponsor Hisense, for example. The brand strives for a more diverse and inclusive corporate culture. There is no attempt by the marketing and communications team at Hisense to sell more fridge freezers by appealing to a minority group. The same is true of Crypto.com, VIVO and other World Cup sponsors.

However, this is not the case when it comes to Budweiser, McDonald’s and Coca-Cola. All these brands have sought to sell more beer, more hamburgers and more fizzy drinks by positioning themselves as a supporter of the LGBTQ community. For members of that community, their sponsorship of this tournament feels like a slap in the face and a punch in the gut.

Budweiser

In the case of Budweiser, the company as recently as May of this year announced a partnership with the National LGBT Chamber of Commerce. Budweiser also sought to appeal to the LGBTQ community by releasing a series of specially designed flags and merchandise to celebrate Pride in London.

Excited to reveal we are now proud sponsors of Pride in London! We are working closely with them and our charity partners to celebrate the diversity within the LGBT+ community and Fly the Flag for everyone at the #PrideJubilee

A taste of what's to come... pic.twitter.com/g1FYlXqJJk

— Budweiser UK (@BudweiserUK) May 31, 2019

McDonald's

McDonald’s has gone one step further. The brand created an entire campaign called ‘Livin’ My Truth’ to appeal to the LGBTQ community. In support of this, McDonald’s pays to sponsor multiple events targeting the community, including House of Pride, Out100 and Queerties.

We're committed to supporting and championing the LGBTQ+- community during Pride and beyond. I’m lovinit #livinmypride

— McDonald's (@McDonalds) February 3, 2022

Coca-Cola

For Coca-Cola, the situation is even worse. The company has a long history of supporting the gay community and has invested in multiple campaigns over decades. Of course, the irony is that these brands perhaps do more than most to further the goals of the gay community. Unfortunately, that only makes their abandonment of their morals and beliefs in pursuit of higher profits more evident to see. Brands that used the LGBTQ movement to sell more products now find themselves far more exposed to reputational damage resulting from their sponsorship of Qatar 2022. It's a classic case of you can't have your cake and eat it too but with millions of dollars at stake.

I don’t envy the marketing leaders of these World Cup Sponsors. There are many complex factors to consider, from business performance to reputational damage. Most will be watching nervously, praying that no unforeseen incidents occur during the tournament that might cause further reputational damage. One should hope that the comms teams of these sponsors have their hard lines well and truly drawn and their PR crisis response folder ready. Read our article What to do When Your Sponsorship Backfires.

While brands like Hummel and BrewDog have tried to take advantage of the negative sentiment held by many towards this World Cup, we can’t help but be left with a sense of disappointment for what could have been. What would have happened if one of these sponsors decided instead to double down on their commitment and withdraw their sponsorship? Would the resulting extensive coverage of such a statement have had a greater impact on the brand’s reputation and long-term value potential? In the words of McDonald’s diversity and inclusion commitment, be bold.

Read our complete report on FIFA World Cup 2022 sponsors.

The post Why World Cup Sponsors Budweiser, McDonald’s and Coca-Cola stand to lose more than most in Qatar appeared first on The Sponsor.

Should we renew this agreement for another four years? Which of our partnerships is generating the greatest return? Where should we allocate our remaining budget? Reliable and valid sponsorship ROI calculation is the golden goose of successful campaign management.

Many agencies offer measurement and sponsorship ROI calculations as part of their service. However, with such a vested interest in the outcome, can any agency truly mark its own homework effectively?

In this article, we review the two leading approaches to holistic sponsorship ROI measurement offered by brand research experts Nielsen Sports and Brand Finance, to assess which to use for your campaign.

Nielsen Sports

The Nielsen approach focuses on three key areas: reach, brand equity and behaviour change. The methodology considers multiple data points in each area to arrive at a concise and comparable ROI.

The first step is to collate all and any monetary returns associated with the partnership. The measures here broadly centre around hard sales data, where applicable, and various forms of media equivalency. To gain a complete picture of associated media value Nielsen asses the multiple touchpoints of the campaign, including TV, social media, marketing, OTT and in stadia.

Next, Nielsen evaluates the strategic performance of the campaign through a weighted scorecard of measures. By conducting market research across key brand equity metrics like awareness, image, and consideration, we can understand how well the campaign has reached and resonated with the target market.

The final step in Nielsen’s ROI methodology is to apply the strategic performance weighted scorecard to the monetary returns. The resulting figure is divided by the rights fee and activation cost to arrive at the final score. If the resulting score is more than 1, your partnership delivered a greater return than your investment and vice versa.

The verdict...

The Nielsen process effectively considers a wide range of campaign touchpoints incorporating both the hard and soft measures determining sponsorship success.

Finance-minded colleagues, of course, pay greater attention to the monetary return aspect. Unfortunately, as hard measures of financial performance go, media value equivalency is relatively weak due to the complex and subjective nature of its calculation. However, the methodology does consider hard direct return financial figures where they exist.

This approach's real strength is its consistency, with which it can be applied across many different sponsorships regardless of size and scope. As a result, Nielsen’s ROI calculation is an effective solution for brands managing a portfolio of partners.

Brand Finance

The Brand Finance methodology is more complex but comes with greater financial rigour. It involves placing a monetary value on a company’s brand and measuring changes to that brand’s value resulting from sponsorship activity.

The Brand Finance process involves a weighted scorecard of measures assessing, amongst other things, awareness, consideration, and preference. The results of this brand scorecard are applied to an industry-specific royalty rate range to determine a specific royalty rate for your brand. For example, if the industry royalty rate range is 0 – 10% and your brand achieves a 75 out of 100 brand strength score, then the royalty rate for your brand will be 7.5%.

The next stage involves applying your brand-specific royalty rate to your company revenue. Brand Finance refers to the total value of attributable branded revenues as your company's brand value.

Essentially the methodology is calculating how hard your brand works to generate revenue for the organisation. Your sponsorship should increase the individual brand strength measures resulting in an uplift in your specific royalty rate, translating into more significant attributable income and an increased brand value.

The verdict...

The strength of the Brand Finance method is its grounding in commercial reality. The process is a good indicator of a sponsorship campaign’s impact on the business’s overall value.

However, such a macro view of a partnership can make it hard to measure small incremental changes brought about by sponsorship. As a result, the approach is not as effective at measuring smaller campaigns. This is especially true when evaluating smaller campaigns implemented by larger organisations where the measures can be impacted by external factors unrelated to the sponsorship.

The real benefit of the Brand Finance methodology is that it carries far greater weight in the boardroom. As a result, it is an effective tool when measuring global campaigns and justifying significant sponsorship investments.

The above approaches are two of the most recognised and publicly available to assess. This will not only measure sponsorship impact on brand and business value but also help in avoiding cognitive bias in sponsorship marketing. If you have an alternate ROI calculation that you would like to share with our members, please let us know by emailing info@thesponsor.com.

The post Which methodology should you use to calculate sponsorship ROI? appeared first on The Sponsor.

Sponsorship investment is under greater scrutiny than ever before. Despite challenging economic times, companies worldwide continue to invest in sponsorship as the most effective method of building brand awareness and enhancing stakeholder perception.

As an experienced sponsorship leader, you may well have a good grasp of your target audience and the fan groups that allow you to reach them most effectively. However, great leaders are not just experienced but also informed. Let’s recap precisely why spending money on market research before, during and after your campaign is a worthwhile investment.

It helps to obtain the fundamentals

Little can be known about the changing target demographic and how they perceive the company without market research. As a result, it's a pure guessing game whether a sponsorship deal with a particular brand will be well or poorly received.

Businesses utilising collected data can base their marketing strategies on quantitative and qualitative data providing a competitive advantage compared to those who don’t.

However, it does a lot more than that. Market research allows businesses to explore a few potential partnerships and acquire customer feedback. This vital information can then be used to identify the most prudent choice.

Guides The Campaign

A common misconception is that once a partnership is active, it must run its course, and only then can its success be analysed. On the contrary, this is still a crucial time to collect market research.

“In this day and age, it isn’t enough to base marketing strategies on superficial assumptions”.

During the campaign period, how much value the partnership is generating can be closely monitored. And keep in mind that we’re talking about much more than simply generating sales. Different stakeholder perception objectives can be examined to understand a wide range of factors, helping to optimise the delivery throughout its duration.

Allows reflection and creates the bedrock for future sponsorships

After the contract has ended, the opportunity to reflect on how the campaign performed presents itself. A significant component to understanding how successful it was… you guessed it, is market research.

Surveys, polls and internet discussions on various social media sites will provide evidence of whether the partnership was seen in a positive light by stakeholders. Otherwise, if it fell flat, then lessons can be learnt.

Burying your head in the sand can seem like the easy option when sponsorship deals don’t go according to plan. However, data gathered from market research can ensure businesses take the best steps to influence future sponsorships. In this day and age, it isn’t enough to base marketing strategies on superficial assumptions.

Costs

Yes, market research does consume time and money, so it’s easy to sweep it under the rug when resources are stretched tightly. Although, as we discussed in detail, this can lead you on a path to disaster.

The reality is that market research has always played a crucial role in sponsorship marketing and can directly impact how successful current and future campaigns are. Sponsorship can also be used as a tool to boost your employer brand. Businesses that avoid cognitive bias and take advantage of the information at their fingertips will reduce the chance of pitfalls and achieve their goals.

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You are standing at the bar with your friends deciding what beer to enjoy after a tough week. Of all the choices on tap, that bright green logo with the red star stands out. You’re not sure why, but you point to it for the bartender. Little do you know, all the UEFA Women’s Euro tournament coverage has subtly but surely inundated you with imagery and messaging for all of UEFA’s Official Global Sponsors, including Heineken.

The ultimate goal of every sponsorship is to get more people to buy your brand’s product or service, and the best way to increase these sales numbers is to ensure your brand is top of mind when making a purchase decision. This can be accomplished through several avenues, including traditional activations such as perimeter board ads and TV spots and less traditional activations like community-based programming and charitable works.

While attributing increased sales directly to sponsorship investment is not an exact science, understanding how fans respond to sponsorship activations becomes critical to unlocking an effective sponsorship strategy. Recent studies have delved into memory in marketing and, specifically, what type of memory is needed to achieve your brand’s sponsorship goals.

To this end, there are three types of memory: sensory, short-term, and long-term.

Sensory memory

This memory form includes elements of taste, smell, and most prominently found in marketing, sound. Think catchy jingles for TV adverts or rousing anthems like “Sweet Caroline”. Sensory memory has also come to encompass the tone or voice of the brand. A strong enough brand tone can even go so far as to replace the brand name, as in the case of Coca-Cola’s Christmas campaign, with their polar bears, Santa Claus, and glass bottles. Anyone would see that imagery and know the brand without seeing the name.

Short-term memory

This form of memory in marketing is concerned with the ability of a fan to retain information long enough to complete a task or, ideally, to transfer the information to long-term memory. For example, the fan remembering a code long enough to enter it in their phone to get a product discount or a free giveaway. But the most sought-after memory type in sponsorship is long-term memory.

Long-term explicit memory

Explicit long-term memory is a fan remembering part of the event experience, like a pre-match activity in the fan zone or remembering specifically that your brand sponsored that pre-match activity. This is measured through recall and recognition. Recall asks, “Do you remember which brand sponsored this event?” While recognition asks, “Which of the brands on this list sponsored the event?”. While easier to measure, explicit memories are challenging to create sustainably, which is why implicit long-term memory is just as viable of a goal as explicit.

Long-term implicit memory

Implicit long-term memory is a fan remembering the event’s sponsor without having a reference to the event. It is brand awareness without the context of the sponsor relationship. It is that fan standing at the bar with a plethora of choices in front of them. They likely don’t even consciously link Heineken with the England Women’s momentous victory, but they point to that bright green logo on tap because somewhere in their mind, that link is there.

There are merits to building brand awareness through explicit memory, but this does not need to be the primary goal of a sponsorship. Heineken doesn’t need fans to remember that they are a sponsor of UEFA; they just want to be the beer in your pint glass. The sponsorship contributes to the fan’s awareness of the brand and therefore builds implicit memory, which puts Heineken at the top of mind even when there is no reference to UEFA.

In the end, the goal for most sponsorships is ultimately to drive sales. But the most effective sponsorship strategy should focus on creating a strong enough impact on fans to the point where they don’t need the context of the sponsor relationship to make their purchase decision. In this way, tapping into fans’ implicit long-term memory is critical to achieving a successful sponsorship.

A few ways to create a memorable campaign is by fan engagement and engaging local communities on a national scale.

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