{"id":7447,"date":"2021-01-12T10:33:22","date_gmt":"2021-01-12T10:33:22","guid":{"rendered":"https:\/\/brandfinance.com\/?p=7447"},"modified":"2022-02-23T16:20:30","modified_gmt":"2022-02-23T16:20:30","slug":"5-steps-to-sponsorship-evaluation","status":"publish","type":"post","link":"https:\/\/brandfinance.com\/insights\/5-steps-to-sponsorship-evaluation","title":{"rendered":"5 Steps to Sponsorship Evaluation &Valuation"},"content":{"rendered":"\n

This article was originally published in the Brand Finance Football Annual 2020.<\/a><\/p>\n\n\n\n

Football\u2019s reach stretches further than ever before, as the shirts of the premier league\u2019s clubs carry the logos for Japanese tyres, Middle Eastern airlines, American cars, multiple Asian bookmakers and more. It is not always clear how partnerships deliver value to brands through their various influences and interactions, and so negotiating an appropriate price can be difficult.<\/p>\n\n\n\n

Sponsorship decisions are too frequently made either qualitatively by looking at subjective \u2018alignment\u2019 of brand values or based on shallow quantitative measures such as advertising value equivalents. These fail to capture the full value delivered by a partnership through changes in stakeholder perceptions, sentiment, shifts in stakeholder behaviours towards the brand, and ultimately the impact on the financial performance of the underlying business.<\/p>\n\n\n\n

Without appropriate methodologies for sponsorship evaluation and valuation, properties are undersold by clubs, leagues, and competitions, and brands are unable to appreciate the full suite of benefits that are possible from an engagement.<\/p>\n\n\n\n

We have developed methodologies to express the return on sponsorship investment in a way that makes sense to both brand and financial audiences;<\/p>\n\n\n\n

Head over to our Football Research<\/a> page to learn more about the perceptions of football fans around the world. <\/p>\n\n\n\n

'Bang for Buck' Analysis<\/h2>\n\n\n\n

The Market Approach is the simplest method of determining a price for a sponsorship \u2013 simply comparing the property on offer to similar opportunities and setting a relative price. The weakness in this method is that it doesn\u2019t consider the fit of the particular sponsorship to the brand objectives, which is what creates the difference between a short unsuccessful expense and a long mutually beneficial relationship.<\/p>\n\n\n\n

Brand\u2019s looking to use sports sponsorship as a marketing channel should first have an outline of what they aim to achieve \u2013 a set of attributes and their importance. This can then be used to create a structure to benchmark the value for money against the market, by determining the return each property delivers per \u00a3\/\u20ac\/$ spent.<\/p>\n\n\n\n

The example here shows how Property 1 will deliver the best weighted average return because it has the strongest focus on the key objectives of a strong brand, wide reach<\/em>, and positive media exposure<\/em> opportunities. The key objectives are given significance by applying a weighting to the attribute categories, allowing potential partners to select based on their desired outcomes.<\/p>\n\n\n\n

\"Market
Market Comparison of Sponsorship Properties<\/figcaption><\/figure>\n\n\n\n

Using quantitative analysis to make the decision ensures that the right sponsorship activity is undertaken. Appropriate sponsorship fees can be determined by setting a target for the weighted average return relative to competitors\u2019 properties. With almost \u20ac5.5bn in commercial revenues across Europe\u2019s top 5 leagues, it is essential for brands to ensure they are getting \u2018Bang for their Buck\u2019 and understand the numbers behind the qualitative attributes that attracted them to sports sponsorship in the first place.<\/p>\n\n\n\n

Sponsorship Uplift and Return on Investment<\/h2>\n\n\n\n

The next level of sponsorship analysis is to determine the financial return and uplift to business metrics that is resulting from the investment and to be able to express this in a way that allows a brand team to communicate the partnership benefits to the CFO, CEO, and Board. This requires determining the bottom line effect, and asking the questions that would be asked if investing in a new factory or machinery asset:<\/p>\n\n\n\n