How does one evaluate the success of sponsorship?

How does one evaluate the return on investment from a sponsorship – let’s say the big bucks spent by Dream 11 on sponsoring the shirt of the Indian cricket team. Spend by Dream 11 was reported to be Rs 358 Cr for150 matches across all India teams – Men's, Women and Under 19. The interesting thing is that this rate is not even half spent by Byju’s and before them Oppo, who spent a whopping Rs 5.09 Cr per match. The increase and decrease in rate seems to be based on how buoyant some companies felt, a few years ago as opposed to how they are feeling today.

Is it simply a punt taken by the marketing team? Is there a scientific evaluation of the benefits of this large spend? Does a company like Infosys (which is engaged with top tennis tournaments) get out of the sponsorship?

The purpose any company is to make money, so the evaluation needs to be linked to how efficient this spend is vis-à-vis competitive spend opportunities. In other words, spend should finally result in increased sales or increase in market share. This means that fluffy metrics like visibility or social media coverage or even exposure of the sport on TV or on ground is not sufficient. What is required is a robust analysis if sponsorship is worth buying or not.

Econometric modelling is one possible approach. With sales as the dependent variable, one needs to bring in the lift due to sponsorship while keeping all other factors – marketing or environmental in mind. All the inputs such as TV viewership, on ground exposure, digital exposure, need to be brought into the models while estimating the existing base of the brand, other advertising and promotional effects. We can also use awareness and intention to purchase as dependent variables and link them to sales via another model. The advantage of this approach is that one is able to separate out the effects of various inputs, including the big sponsorship and also evaluate the effect vs other spend opportunities such as TV or Digital spends.

Is there a halo effect from sponsorship onto the impact of other marketing inputs? Very likely and this can be taken into account as well by modelling. Is this a perfect system? Certainly not, but it does have the merit of putting a structure to the evaluation and also has the compelling property of becoming more insightful over time.

Do Infosys, Dream 11 and others do this? The author has no idea, but hopes they have a robust evaluation in place given the high quantum of spends involved. Can’t depend only on the gut!!

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