When a business sponsors an event, cause or organization, it can expect to receive benefits in return. Like any other marketing spend, sponsorship should bring a return on investment, and a business should measure the value of the spend. Sponsorship ROI is not an exact science, and businesses have to accept that some figures may be based on estimates rather than hard data.
Estimate the value of the total number of consumer impacts, which are the number of times that a consumer is exposed to your brand through logos, pamphlets or other materials. Estimate the number of times that people will be exposed to your brand as a result of the sponsorship and estimate how much you would normally spend to achieve similar numbers using your normal marketing methods.
Calculate the value of tangible benefits with a measurable value. For example, you might sell event tickets or merchandise at an event, or might trace membership joins and renews linked to your sponsorship. Add up the total value of all these items.
Estimate the value of the media exposure that your brand receives as a result of the sponsorship. For instance, if your name appears in television and print ads, estimate the cost of the ad time an space. Also include nonadvertised exposure, such as news stories when you estimate the value of media exposure.
Add up the value of the consumer impacts, the tangible benefits and media exposure to get the total value of the sponsorship.
Subtract the cost of the sponsorship from the value of the sponsorship to get the net gain from the sponsorship.
Divide the net gain by the cost of the sponsorship. This will give you the ROI for the sponsorship.
- Accounting: Concepts and Applications; W. Steve Albrecht, et al.
- Sponsorship: For a Return on Investment; Guy Masterman
- The Economist Group: What's Your Sponsorship Worth?
- MarketingProfs.com: How Marketers Measure the Effectiveness of Sponsorship and Event Initiatives
M. Scilly is a writer and editor who writes for various online publications, specializing in business and management. He has a fondness for travel and photography. In his free time he enjoys marathon training.