Advertising vs. Sponsorship: The Real Cost of Visibility

Economic efficiency and return on investment of sports sponsorship

In our previous article, we started exploring the difference between advertising and sponsorship.

Why should a brand choose sponsorship over advertising? Why opt for a sports partnership instead of a barrage of traditional advertising across mainstream media? In the article that preceded this one, we looked at three key reasons: inclusion versus intrusion, value enhancement, and storytelling potential.

How Much Is a Sponsorship Really Worth?

Today we’ll explore another equally important aspect: economic efficiency and the return on visibility.

First, let’s clear up an old misconception: in today’s world, sponsorship is highly and precisely measurable — not just in terms of emotional impact, but in terms of genuine economic impact.

With the right tools and the most advanced technology available, it’s possible to obtain extremely accurate reporting on how sponsorship affects sales and brand image.

Speaking of brand image, it’s easy to see how sponsorship can deliver real efficiency for a company looking to showcase its brand and build brand awareness. That’s because, on top of delivering weaker returns, advertising is expensive.

Let’s look at some numbers. According to Calcio Finanza (30 March 2017), during the Juventus–Barcelona match broadcast by Mediaset in spring the previous year, a 30-second TV ad cost €200,000, while €165,000 was needed to secure the 30-second “super spot” (1) — in other words, more than €6,000 per second. Those figures are similar to the Sanremo Music Festival in 2018, where — according to Wired — 30 seconds of advertising sold for an average of €219,000 (2). The numbers look completely different for the biggest sporting event on the planet: a 30-second commercial break during the 2018 Super Bowl between the Eagles and the Patriots cost as much as $5 million (3). In short, we’re talking about a lot of money.

Sports Sponsorship: The Numbers Behind It

So what about sponsorship? Let’s take an example closer to the world RTR Sports Marketing works in and look at MotoGP sponsorship, using a European Grand Prix from the previous season to measure exposure and value. For this example, we’ll use a brand (whose name we obviously can’t disclose) that is a mid-level sponsor of a top-tier team — not a main or title sponsor — with visibility limited to: the logo on the bike’s nose fairing, the logo on the rider’s sleeve, the logo on the team uniforms, and the logo on trucks, structures and communication materials.

Over the course of the race weekend — Friday, Saturday and Sunday — the brand in question was exposed for a total of 1,391 seconds, or roughly 23 minutes, of “on-screen time” (in sports sponsorship, on-screen time is defined as the total number of seconds a brand is clearly, sharply and unmistakably visible to viewers during the TV broadcast of the event). How much is that visibility worth, especially considering it needs to be multiplied across the 52 countries where MotoGP broadcasts its TV signal, several of which — Italy, Spain, Malaysia, Indonesia and the UK among them — draw several million viewers every Sunday?

For the brand in our example, that global visibility was worth £1.6 million (4). What does that mean? It means that if this brand had wanted to buy traditional advertising in those countries for the same amount of time, it would have had to spend £1.6 million.

That figure comes from multiplying (seconds of on-screen time) by (the average advertising value in a given country at that specific time of day or week). Simplifications aside, these are extremely complex calculations that factor in hundreds of variables (5) — but fortunately, they’re produced weekly with absolute precision by specialised measurement agencies and then shared with sponsors and agencies.

MotoGP Sponsorship: Impressive Numbers and Economic Efficiency

To wrap up our example — and to finally show the sheer magnitude of the power of sponsorship in terms of economic efficiency when it comes to brand visibility — it’s worth noting that the sponsorship in question (the one that generated £1.6 million from a single Grand Prix) cost roughly the same amount. In other words, with just one round of the MotoGP World Championship, the sponsor had already recouped its investment — meaning every other round of the season delivered pure upside.

If this is true, valid, and significant on its own, it’s worth remembering that these numbers are generated by direct visibility alone — that is, by TV viewers who, during the race weekend and across nationally broadcast channels, tune in to follow their favourite riders.

But what about all the so-called asynchronous visibility — the exposure generated at times, places and through channels far removed from the live broadcast?

It’s easy to see how this aspect is becoming increasingly relevant, in an era where audio/video consumption is more and more detached from real-time production and viewing. In short: what happens to visibility when a teenager in São Paulo, Brazil, watches the highlights of a motocross event held in Stockholm five months earlier on YouTube? Or when a girl in Turin shares on Facebook the best snowboarding jumps from a world championship held in Spain’s Sierra Nevada?

Advertising or Sponsorship?

It’s clear that in these situations, traditional advertising simply dies, while sponsorship becomes even more valuable: it shows up at a relevant time and place, inside a clip the viewer sought out voluntarily, associated with a moment of success and enjoyment.

To better guide and control asynchronous visibility with greater precision, the world’s biggest sponsors and companies are turning themselves into genuine media companies, producing clips and digital content that they then distribute for free online to generate visibility. It’s a strategy that Red Bull, Monster, Nilox, Petronas and others have used profitably for years. Viral phenomena like Ken Block’s Gymkhana videos generated visibility and brand returns for Monster that would have been unthinkable with a traditional advertising strategy.

(1) - http://www.calcioefinanza.it/2017/03/30/juventus-barcellona-pubblicita-su-mediaset/
(2) - https://www.wired.it/economia/business/2018/02/08/sanremo-2018-spot-pubblicita/
(3) - https://quifinanza.it/soldi/quanto-costano-30-secondi-pubblicita-durante-super-bowl/169452/
(4) - Data: Clearsight, Dorna.
(5) - This is because, in addition to precisely calculating on-screen time using dedicated software, it's necessary to know the audience in every country involved, the value of advertising at every moment and in every country, and to break the day down into segments with different values (for example, advertising will obviously cost more on Sunday afternoon than on Friday morning).