OEMs, Is Your Sports Sponsorship Marketing Paying Off?

Sports sponsorships are the most common type of sponsorship among automotive manufacturers, with 64 percent taking advantage of them, according to Sponsorship.com.

The most active OEM sponsorship is Toyota, which accounts for 34 percent of these partnerships. The next closest company is Ford at 19 percent. Many auto businesses follow in these footsteps, based on the assumption that if the top manufacturers are doing it, then it must make sense.

In reality, it's important to know whether your sports sponsorships are paying off. What works for Toyota may not translate to your market or products.

The Problem With Current Sports Sponsorship Marketing

Sports marketing is just one of those things that you do as an automaker. It's the way things have always been, so this traditional method of reaching an audience is commonplace in automotive advertising strategies.

However, do you really know which sponsorships are working and which ones are simply wasting your money? McKinsey found that up to 50 percent of U.S. companies don't have a system in place to track whether their sponsorships are effective.

Sports marketing has a lot of benefits for automakers. You have a captive audience exposed to sponsors that are often exclusive to a particular stadium, event, sports team or athlete. The brand awareness building opportunities are significant, and fans of a particular sport or team may feel a connection in place with the sponsors that helps them succeed.

While these are excellent benefits, you can run into situations where you fail to get the returns that are necessary for a profitable sponsorship.

Sometimes your values and those of the sports organization don't mesh well. In other situations, the fans of a sport or team may be predisposed to another automaker already. Many factors impact whether this venture will work out, and you stand to lose a lot of money for a poorly performing sponsorship.

The Importance of Data

The answer to the sports marketing dilemma is data. When you have the right information available, you can justify your budget and improve the results.

It's difficult, if not downright impossible, to quantify brand awareness metrics and how they translate into your bottom line. When you shift strategy to more granular metrics, be prepared for trial and error when you start looking into the metrics that factor into your ROI calculations.

As you have more data available and begin analyzing it, you'll see specific patterns start to come up again and again.

Your ideal sports sponsorships may be contained in a particular geographic area or limited to a particular sport. You could discover that you need to focus your spending on different sports for each season or focus on minor league teams.

You won't discover the secret formula for a top performing sponsorship overnight, but all of that information adds up into actionable insight over time.

You can begin predicting how well your efforts will pay off before they even get announced.

Here are a few metrics that you should keep in mind:

• Cost per reach: This metric is your base number when you're looking at a sports sponsorship. It calculates how much you're spending to reach an individual in the audience. Some crowds may end up costing more per person, but end up bringing in greater overall revenue for your brand.
• Sales per dollar spent: You need historic data to begin calculating this metric, but you can eventually dial in how many sales are attributed to a dollar spent on your sponsorship. Keep in mind that this number may not scale gracefully, depending on how big the sport or team is.
• Indirect benefits: If you can attribute numbers to indirect benefits, such as developing long-term customers or improving lifetime value, then make sure to work that into your ROI calculation.

Brands Doing Sports Sponsorship Marketing Successfully

Need some inspiration before you start examining your current and future sports sponsorship opportunities? Here are automakers that are executing this strategy successfully.

Toyota

Toyota is the top sports sponsor for a reason -- it works well for their brand. This automaker has an extensive portfolio of sports sponsorships, from the Toyota Center in Houston to the New England Patriots. They even have a 10-year partnership with the International Olympic Committee.

Toyota's strength lies in the diversity of its sports marketing strategy. They have the resources to reach sports fans and enthusiasts of all types, which allows them to develop a customer pipeline that is not overly committed to a limited sports area.

Kia

Kia may not be the top spender in the sports sponsorship category, but it does allocate a whopping 83 percent of its sponsorship budget to sports.

Unlike Toyota, Kia focuses on a more limited number of opportunities to best focus its available resources. The NBA and the LPGA Kia Classic are their two main areas of investment. They might not have the overall reach that Toyota does, but they make strong inroads among the fans in these areas.

When sports sponsorship works, it really pays off for your automotive organization. However, you need to know whether your money is being spent in the best way possible. Leverage your data and pay close attention to the numbers when you start up a new sponsorship or review your current portfolio in the sports industry.