Interesting article by David Edelman
I grew up in Brooklyn (yes, I was in Brooklyn before it was cool). Although this borough is well known for many colorful phrases, one that I heard often was “What’s it worth to you?” It was generally applied as something of a challenge. But it’s a great question, and as I look at the business world today, it should fundamentally drive many of the most important decisions marketers make today.
Take the World Cup. FIFA stands to make almost $1.5b in sponsorships. Is the cost of sponsoring this tournament worth it? For that matter, is it worth sponsoring some of the great athletes out there today – from Lionel Messi to Cristiano Ronaldo to Tom Brady? You can’t beat the glamor of sponsorships but for all the money spent on sponsorships (companies in the US spent $30b on them in 2013) few companies can really the question: What’s it worth to you?
Some colleagues of mine have tackled this question in a recent article (Is sports sponsorship worth it?). They’ve laid out five different metrics that companies should use to really understand what sponsorships are worth. Among them are thinking about valuing cost per reach (which can allow companies to consistently compare how each of their sponsorships are performing compared to each other) and incorporating the costs of activation (marketing activities to promote awareness of the sponsorship).
But I was particularly intrigued by the idea of how sponsorships have a long-term value to a brand’s identity, something that companies tend to overlook when calculating value from sponsorships. Since we know that brand strength contributes 60 to 80 percent to overall sales, understanding the long-term benefits of sponsorships to a brand are really important. We find that companies need to invets in qualitative assessments or surveys that can help them understand whether the property being sponsored shares reinforcing brand attributes and can help marketers determine which sponsorships are reinforcing a common brand theme. That sort of analysis needs to also factor in how brand perceptions are affected by the sponsorship.
This is not an exact science, but that shouldn’t stop companies from doing the analysis. Determining the impact of a sponsorship on a brand, in fact, might be the most important assessment of impact that a company can do given the importance of the brand and the costs associated with sponsorships.
So before you buy something or charge for something, ask yourself “What’s it worth?” And then answer that question.
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