IEG/Performance Research Study Highlights What Sponsors Want

Decision-maker Survey: Sponsors Report Activation Budgets Have Never Been Higher

The average amount sponsors spend to promote and leverage their partnerships is nearly twice what those deals cost them in rights fees, according to respondents to the seventh annual IEG/Performance Research Sponsorship Decision-makers Survey.

The typical sponsor spends $1.90 on activation for every $1 it pays properties to associate with them. That is a record high amount, surpassing the 1.7-to-1 ratio reported last year and in ’03.

A major factor in hitting that high water mark: a rise in the number of sponsors who said they spent 2-to-1 on activation from 21 percent last year to 26 percent this year.

The percentage of overall marketing budgets devoted to sponsorship also has risen. After the average dipped last year to just 13 percent from a record high of 18 percent in ’05, that figure has rebounded to 17 percent. Significantly, the number of sponsors reporting that they allocate more than 20 percent of marketing budgets to sponsorship rose from 18 percent in ’06 to 29 percent.

Accounting for those higher percentages could be the fact that the majority of sponsors continue to see increased return on their investments each year.

Fifty-two percent of sponsors said their ROI is increasing, 21 percent said return was about the same and only four percent were seeing poorer results from their efforts. However, a disappointingly higher number of sponsors than ever before–24 percent–said they did not know how their ROI was trending.

That lack of knowledge may be due to the fact that only 21 percent of sponsors spend more than one percent of a sponsorship’s total budget on research to determine impact, a decline of four points from last year. There was a glimmer of good news in that the amount of sponsors spending nothing on concurrent or post-sponsorship analysis dropped from 42 percent to 31 percent; nearly half of all sponsors spend less than one percent of a deal’s budget on evaluation.

As for the difference in their ’07 spending versus last year, sponsors followed the pattern of most previous years, with the largest number–43 percent–saying budgets would be flat, followed closely by those who said they would spend more this year–38 percent–with the remainder seeing a decrease in their sponsorship outlays.

Agencies, particularly sponsorship specialists, will find good news in the survey results. Overall, the number of sponsors using outside firms to assist them with sponsorship planning and implementation has risen from 52 percent two years ago to 62 percent today.

The percentage of all sponsors using an independent sponsorship specialist agency rose from 17 percent to 27 percent, the highest number since the survey began in ’01. Only eight percent of sponsors chose to hire the agency that owned or represented the property they bought to help with execution. Four years ago that number was 18 percent.

For the first time, advertising was the form of marketing used by the largest number of sponsors as an activation tool, surpassing both public relations and internal communications.

Exclusivity remained the most important sponsorship benefit, however the percentage of sponsors rating it a 9 or a 10 on a 10-point scale, where 10 is “extremely important,” fell from 67 percent to 55 percent, making signage a much closer second.

In addition, sponsors have become more interested in having title to a proprietary component or area of a property; the benefit moved from sixth to third in importance, while access to the property’s database dropped from fourth to seventh.

The survey was conducted online in February and received 132 responses. For details and additional information from the survey, please visit www.sponsorship.com or www.performanceresearch.com.