How Well Does Loyalty Scale?

Anybody who has worked in an agency that recommends sponsorships to brand clients -- especially those that get paid commissions on them -- has seen it. Anybody who has worked for a brand has lived it. The “bigger is better, let’s get a big national property and leverage it locally” mentality reigns supreme in sponsorship marketing.

It’s easier for a brand, and much easier for an agency to tell the client to do an NFL or NASCAR sponsorship for $10 million per year (give or take a million), and say to the client “that will be $1 million (or so) for us, please,” than to really work hard to find perfect sponsorship fits and brilliant activations for the client. I mean seriously, how hard is it to put together some cool ads, maybe a sweepstakes to win a trip to the Super Bowl, or be a guest Pit Crew member at a race for the winner’s favorite driver? OK, this is a big oversimplification. And lots of brands don’t have agencies making their decisions. Still, who is going to claim it is that much different. It takes effort to “go big,” yes, but does doing so really generate the best return on that effort for a sponsor?

Last week I had a great discussion with a principal involved with Playmaker, a service that provides distribution and content created by athletes like Ray Lewis and Yao Ming. Recent conventional wisdom would suggest a free content, ad-supported business model is the best way for it to attract a large audience and monetize it. But this isn’t Playmaker’s M.O. Instead, it charges $4.99/month. It isn’t likely to reach tens of millions of users, but the point is not to go for size. The point is to find a niche audience and serve it as much as possible. Use the revenues to improve the product, expand its appeal and increase loyalty.

This conversation got me thinking about how the same idea, going after smaller audiences more likely to purchase, could apply to sponsorship. Is there an opportunity to improve sponsorship’s overall effectiveness by challenging some conventional wisdom?

Which option would be a better outcome for a sponsoring brand?

A) Reach an audience of say 10,000 potential customers via a small property, get 1000 folks to become loyal customers that purchase in a way you can absolutely attribute to the sponsorship, all while knowing - not guessing - the ROI is fantastic.

OR

B) Reach an audience of 1,000,000 potential customers, not know how many folks became loyal customers that purchase as a result of the sponsorship, and guess what the ROI was.

Might it depend on the type of sponsoring brand? I mean maybe with a large ticket item like an automobile, Example A would be optimum. While with a Quick Service Restaurant, Example B would be best?

Could it be smaller audiences that have their passion buttons pushed more on a one-to-one basis by customized property activations tailored to their interests, would be more valuable for sponsors to access? Or would the cost of trying to tailor sponsorship activations to push greater passion buttons in individual consumers outweigh the value realized by doing so, and mean “one size fits all” is the way to go?

Obviously, the extent to which we can know these answers is predicated on the kinds of activations, organizational structures, and corporate objectives a given sponsor brand has in place to support and drive it’s sponsorship investments.

That having been said, has anyone out there done or seen the research, either academically or as an internal corporate exercise, on this topic? Even anecdotal or directional research would be great to see.

Please do share your thoughts with me, and our small, loyal and growing audience!

The opinions expressed herein do not necessarily represent those of the publisher, SponsorPitch, LLC. Mike Munson founded the web's first proposal submission software, Sponsorwise, and currently serves as founder of Fantell and V.P. of Content & Strategy at SponsorPitch. Mike can be reached by email at [email protected] and on Twitter at @mjmunson. Also, don't forget to view all of Mike's previous posts.


photo credit via flickr: mikebaird