Sponsorships have long been a key tactic in the marketing toolbox for hospitality companies. The days of branded marquees and simple swag bags are gone. However, the “brand activation” reigns supreme, and sponsorships now involve highly interactive tailored experiences. At major conferences, pop culture conventions, and sporting events, a well-executed sponsorship can place a business in front of an audience numbering in the hundreds of thousands. Nearly half a million people from around the world take part in the week of events that make up South by Southwest® (SXSW®), encompassing a wide swath of demographics. Around one million people were in attendance at the 2018 Winter Olympics, and nearly five billion people globally had access to broadcast coverage of the competitions. While measuring impressions and reach of a sponsorship at events like these will easily show one facet of success, it can be challenging to prove ROI and show that the sponsorship was a worthwhile business investment.
As global hospitality revenues inch steadily toward the $600 billion mark, competition within the industry is only increasing, particularly with the evolution of accommodation-sharing companies like Airbnb. Sponsorships and activations at major events offer the opportunity to rise above the noise in a way that emphasizes solid human connections with consumers. These authentic connections build and help maintain loyalty, which is critical to the long-term success of hospitality companies. Sponsorships and activations appeal to the human desire for unique experiences with things they are passionate about, such as sports, music, and art. But these human connections are hard to measure and challenging to relate to ROI. To evaluate the success of a sponsorship in a way that encompasses both the subjective human element and hard numbers, companies must start with the “why” of a sponsorship.
Evaluation—Both an Art and a Science
There are many reasons a company chooses to do a sponsorship—brand awareness, attention-grabbing PR, rich content, prestige—but each one leads back to the end goal of driving purchase intent. Sponsorships also don’t come cheap. Tracking total expenditures and assigning a value to something as complex as “loyalty” is not an easy task. It has always been difficult to assess the value of sponsorships, but the challenge has been compounded by the changing landscape of media rights and the proliferation of crowd-sourced content and social media sharing. Metrics like impressions, share of voice, and bookings after the event are important, but they don’t tell the entire story when presented alone.
Evaluating the success of a sponsorship in the hospitality industry can’t rely on a single metric. It takes a combination of art and science to measure the ROI of a sponsorship, and the evaluation should include a mix of metrics and numbers. Despite the complexities, it is possible to coordinate data, human perspective, and insights to create a holistic view of sponsorship ROI.
Case Study: Assessing a Sports Sponsorship
Consider the case of one international hotel chain that worked with North Highland to assess its sports sponsorships to decide whether to discontinue, continue, or enhance its sponsorship contracts. It was easy to rationalize the partnerships on the surface; the events involved big brands with similar values as the hotel chain’s. It was more difficult, however, to identify the value that the sponsorship was delivering for the business. There were multiple areas to evaluate, including how the sponsorship resonated with target audiences, how it humanized the brand, and whether it influenced more activation across all channels.
The hotel chain had success metrics in place, including sponsorship awareness, appeal to target audience, promotion results, webpage clicks, room rates, and rooms sold. They captured lots of data for each—some qualitative, some quantitative. Yet it was not clear which results were specifically tied to the sponsorship. North Highland worked to weave in both art and science—brand and customer sentiment with data and analytics—into a common heuristic scale to provide a holistic view of the results. This included defining five key tracks to evaluate the following:
- Revenue fit: Does the sponsorship deliver against key business metrics?
- Activation fit: Does the sponsorship provide meaningful activation opportunities for the organization?
- Strategic fit: How goes the sponsorship fit within the overall sponsorship strategy?
- Company fit: Does the sponsorship fit the organization’s goals and vision?
- Brand fit: Does the sponsorship complement the current and aspirational brand attributes?
North Highland analyzed disparate types of data using the same scale and presented a holistic picture of the sponsorship’s successes and challenges. When different types of data are combined, subjectivity comes into play. Having a defined scaled provided the necessary rigor for the hotelier to identify which areas of the business were most and least impacted by the sponsorship. With this perspective in hand, the hotel chain was able to confidently make a go/no go decision on the sponsorship that supported the company’s long-term business goals.
Enabling Better Strategy
Collecting data is key, but companies need a strategic plan for how to use and apply that data. Qualitative and quantitative statistics combine to paint a realistic picture of what a sponsorship has done for an organization beyond breaking even. It’s a more resource-intensive process than many are used to, but the extracted insights will allow an organization to use customer sentiments to create the rich and memorable experiences. This approach is not limited to sponsorships, either. The process can be used to assess other complex business situations where no single metric can readily define success. Infusing a human perspective and integrating multiple metrics holistically can enhance an organization’s ability to be strategic and see results that boost both the bottom line and the group’s reputation.