Assessing the Financial Impact of Sponsorship Investment

Abstract

ABSTRACTThis paper outlines an effective approach to the problem of assessing the financial impact of sponsorship investment, which has a track record of successful implementation in the sponsorship industry. Based on a number of interrelated proprietary models the approach provides the tools to measure the brand financial uplift created by a sponsorship programme and the shareholder value thus created. The core thrust of the paper is around the use of the MBO model, i.e., the Millward Brown Optimor model, which has proved successful in capturing the effectiveness of sponsorships and in forecasting financial performance of the brand and thus allowing for the quantification of the value created for the brand by the sponsorship investment. The implementation of the MBO approach is outlined as a five‐step process involving comprehensive segmentation, benchmarking to derive a brand discount rate, modeling of financial performance, determining the role of the brand in ultimately driving usage choice, and ultimately providing the techniques to calculate Brand Contribution in financial terms. The paper concludes that the complex tasks involved in assessing the financial impact of sponsorship investment and the impact on shareholder value can be rigorously addressed through the application of these tools and sponsorship managers can thereby make improved decisions which are underpinned by market and financial analysis.