In a bid to win consumers’ hearts, Canadian marketers spent $2.85-billion on sponsorships last year. But half of those companies are not investing anything to find out if their investment is paying off.
That is according to the Canadian Sponsorship Landscape Study, presented by marketing agency TrojanOne at a conference in Ottawa this week.
“One out of about every five marketing and communications dollars are going to sponsorship,” said Norm O’Reilly, a professor at Ohio University who specializes in sports marketing and a senior adviser with TrojanOne. “On one end there are those doing unbelievably sophisticated [return on investment measurement]. The Cokes and Pepsis of the world ... and there are a lot that just don’t.”
The study showed that marketers are spending more money than ever to be associated with things that matter to consumers – including museums, music festivals, charities and causes, amateur and professional sports, and local groups.
In 2006, when the study was first conducted, they accounted for 16.7 per cent of respondents’ marketing budgets; last year, that figure had grown to 21.9 per cent.
In total, marketers spent $1.75-billion in rights fees last year – in other words, the cost just to be associated with an organization, event, or cause. And they spent $1.07-billion on “activation,” which is advertising and any other activity that makes people aware of that connection.
But despite the scope of the output, only about half of the marketers spending that money do any evaluation of the return on investment (ROI). This has been a downward trend: In the first year of the study in 2006, nearly 8 per cent of sponsorship dollars on average were spent on evaluation. By last year, that had fallen to just 2.7 per cent. That is despite the fact that demonstrating ROI ranked highest among all the concerns the industry listed when it comes to sponsorship.
Agencies that handle sponsorships on behalf of marketers also report a drop: In 2012, sponsorship evaluation accounted for just over one-fifth of their billings, and last year that dropped by 4.2 per cent to just under 17 per cent of billings. Billings for sponsorship research – the general term for any study of sponsorship – fell more than 8 per cent, and now account for just 6.6 per cent of billings. “And versus other statistics around the world, we’re falling behind,” Prof. O’Reilly said of Canadian companies’ investment in evaluation.
Part of the decrease is due to recent cuts as marketing budgets have been under pressure. For smaller organizations, the investment in measurement can be prohibitive, as tens of thousands of dollars in fees for a national survey is hard to justify. The study surveyed marketers ranging from small businesses and up to large corporations with as many as 45,000 employees. Sponsorship rights fees ranged from $10,000 to $21-million.
For some organizations, there is also a concern that the results of such measurement could be negative: Since those deciding whether to measure are the same people responsible for spending money on those sponsorships, there can be anxiety over backlash if the investment does not perform well enough. However, Prof. O’Reilly suggested that smaller focus groups and surveys that marketers can do themselves, while not perfect, can help to get a sense of whether an investment is worth it.
“If you don’t get any feedback at all, you’re flying completely blind,” he said.
Sponsorship around the world
Marketers everywhere are spending more, according to forecasts gathered by TrojanOne
Global: Estimated $53.1-billion in spending in 2014, an expected increase of 4.1 per cent.
North America: $19.8-billion, up 4.3 per cent.
Europe: $14.5-billion, up 2.1 per cent.
Asia-Pacific: $12.6-billion, up 5.6 per cent.
Growth in sponsorship spending in Canada