If brand budgets get tight, would your sponsors stick around?

The answer is likely no. When budgets get tight — and they will — sponsors must scrutinize every opportunity. Frequently, sponsors will decide they can reach customers online — often for little to no investment and at a higher return on investment (ROI).

Just proving a sponsor’s target market attends your event is not enough to get them to cut you another check. To keep sponsors coming back to your event, you need to prove your value in a way that the company’s executives will understand: ROI.

Proving the ROI of your sponsorship activations is harder than it sounds. In a 2017 Eventbrite survey of 45 event sponsorship professionals, 40% said that measuring and evaluating sponsor ROI is one of their top two challenges. But don’t let it become the challenge that stops your sponsors from coming back.

Here’s how brand expectations have shifted, and how you can prove your ROI to sponsors so they renew for years to come.

The sponsorship ROI evolution

Sponsors want all of their assets and outcomes for cheaper than market rate. What’s more, sponsors have developed their own internal ROI calculators to guide their buying decisions. Some sponsors are open about the ROI they are looking for, but others are not. Many brands want a 2:1, 3:1 or even a 4:1 ROI ratio.

From the mouth of sponsors

In my work as CEO of the Sponsorship Collective, I’ve heard the following sentiment from sponsors many times:

“As a brand, I’m not going to pay $50,000 for a sign valued at $50,000! The ROI is $0.

“Our brand strategy calls for a 3 to 1 ROI ratio to justify the buy. But that’s not the end of the story. It’s my job to get the highest ROI possible, so spending $16K on a $50K sign is average job performance, the standard. I don’t want to be average, so I’m going to value that sign lower.”

In other words, sponsors have done their homework and are motivated to get the best deal possible.

What this means in practical terms

If you, the sponsorship sales person, have valued an opportunity at $30,000, no sponsor will want to pay you that full amount. This also means a current sponsor will be disappointed if their $30,000 activation only brings in $30,000 of revenue.

A 2:1 ROI means that a sponsor would not spend more than $15,000 for your opportunity — or you have to create a package worth $60,000 to justify the $30,000 spend. Most sponsors are looking for at least a 2:1 ROI ratio, if not higher, for any activation they engage in.

Laying the groundwork for measuring sponsorship ROI

Every sponsor wants to do better than their basic ROI ratios. So, what do you do with this information?

Before you can measure ROI you have to know what your sponsorship inventory is worth. That means you need to perform a valuation on all of your assets. (You can use this Sponsorship Market Rate Valuation Workbook to help.)

Performing a valuation is the first step in determining the ROI of sponsor activations. This will help you determine cost and estimate what value each activation can bring to a brand. This value should go beyond brand awareness to concrete measurements like email signups or proof that a sponsorship investment brought them new customers.

The next step is to include an ROI ratio on the front end, as part of your valuation, giving you a range within which to negotiate with sponsors. For example, if your activation is worth $30,000 and you’re asking for $15,000, the ROI ratio is 2:1.

Once you have agreed on a valuation with sponsors, you need to craft a plan to measure ROI. Use event technology like RFID or event apps to measure engagement and purchases with sponsors, and make sure sponsors agree on which metrics are most important to them before the event begins.

This is the absolute baseline measurement each event must do to retain sponsors. But remember — today’s sponsors don’t just want to break even on their activations, they want to earn back significantly more than they spend.

How to prove sponsorship ROI that makes brands renew

Once you’ve made the sale and delivered on your sponsorship opportunity, you absolutely must deliver a fulfillment report. In this fulfillment report you should include proof that you delivered the value you said you would.You should also calculate sponsor ROI for them, using your valuation numbers and your actual deliverables.

In other words, if you promised an event with 500 people worth $X but you had 600 people show up, you recast your valuation based on actual numbers. If you promised one eblast with a coupon attached at $X but you actually did four eblasts, show your sponsor the actual value of what you delivered. The same is true for every on of the assets you sold to your sponsor.

Here’s what I include in a fulfillment report:

  • A simple chart out of all of the benefits I promised my sponsors, and whether or not I delivered on my promise for each item
  • Stats on event attendees or how many people used the program in question
  • Social media data, web traffic, and other engagement metrics — everything that proves return on investment and that my team and I went above and beyond
  • ROI calculation

This puts you in a position to show them the true ROI of their investment. If you over delivered in terms of ROI then you are now in the perfect position to ask them for a multi-year agreement.

Calculate your sponsorship ROI

Now that you’ve learned how to prove your value to sponsors, it’s time to get down to the numbers. Use this Sponsorship Market Rate Valuation Workbook to calculate the value you bring brands.

A version of this post originally appeared on The Sponsorship Collective.