The math behind why brands opt for digital over your traditional sponsorship assets

For all the people who are going to comment with full caps about how traditional ads work and brands have been buying them forever...

You are right. Of course, they work. If they had a success rate of 0 they wouldn't exist.

So before you throw this article in the trash and blast it, I hope I can shed some light through data that can help.

Do traditional ads work? Yes.

Are they the most cost-efficient way to grow a brand?... Well, let's let data tell the story below.

First, let's start with the goal of most marketing departments...leads

Overall, most marketing department's jobs are to generate leads or purchases, depending on the industry.

Of course, there is branding at the top of the funnel, but mostly you expect that to come back to the leads you can generate.

With that, leads & purchases are how they are judged and tracked on success.

A marketer's job is to squeeze as many leads, or purchases, out of the marketing budget they are given.

When you think about it, this is amazing. This ultimately becomes a math game. Where can I deploy my assets (dollars in paid media) to get the greatest return for my company?

On the sponsorship side, this simplicity allows us to truly understand where our value is and how we will be judged. This allows us to build assets that help them understand the value we bring them.

So how do traditional assets compare to paid social media assets?

Well, let's look at some cost per lead data.

As you can see from above, the average cost per lead for "traditional" marketing channels is a HUGE range, with an average of $619 per lead.

Why is it so high for an average? Well, you are casting a wide net. Maybe you hit the right people, but most of the time you hit people with an ad for a product they don't need.

Compare that to the average and range for paid social media advertising.

Compared to "traditional ads, paid social media ads are 13X LOWER in Cost Per Lead.

Why? Brands can essentially shoot fish in a barrel.

We can hyper-target our key customers with messaging we know they will respond to (or at least are the most likely to respond to). This is the money ball of advertising, and brands know it.

I'm not a math guy, but when I say that brands deciding to spend $1M on Facebook ads or your sponsorship packages...they will pick Facebook ads.

The math just makes more sense to spend on social media ads for the most part.

But wait, we don't just stop there. The third level is retargeting. This is really the money maker for brands that understand the dynamics of digital advertising.

For those who need a refresher, re-targeting ads come into play when you get someone into your funnel (sees your ad) and don't buy. If they don't interact the first time you can hit them with follow up ads to get another at-bat to pull them into a purchase.

So what's the math when we retarget?

As you see the lower end is higher...but if you get this right you can almost cut your high end in half.

If the brand you are pitching to has this process down pat (paid social media ads with retargeting campaigns built-in) you have a very low shot at closing them.

Why? Well there is a better product out there for collecting leads.

This is why it is so important to go digital with your sponsorship assets. By the math, traditional assets are a bad bet.

Let's bring Bill Belichick into this equation (whether you like the Patriots & Bill or not...you can't deny he builds championship teams). Bill Belichick almost never takes a 1st rounder in the NFL draft.

First-round picks are a big risk, but honestly all picks are a pretty big risk. We've seen plenty of players not pan out in the pros for various reasons.

But the risk isn't the reason why Bill doesn't take first rounders...it's because the cost of that risk is too much. First rounders, more often than not, are a bad bet for the cost.

So what does he do? He trades out and gets more picks at a better value for the risk.

Has he missed out on some absolute hits doing this? Yes. I am sure he has. But he understands that he can get more chances to find that player that will pan out at a lower cost to the team with this method.

The same is true with social media ads. Smart CMO's understand that for every 1 lead they get from traditional ads they can get 13 through paid social media.

What's more, they get that they might miss on the big hits that traditional ads might bring (saw a campaign get's written about or goes viral)...but they are fine with that because the slow and steady math will win for them in the long run.

Ok, Nick, so why are you bringing this up in sponsorship?

I bring this issue up with a sponsorship lense because as I have said before we are competing with digital advertisement for brand dollars.

As brand dollars dry up most marketers will go with the safer bet. The best brands will let math dictate how they spend their dollars.

As we look to make up the dollars we lost with the pandemic we cannot keep selling the same traditional assets we always have. That may have worked in times of good economic standing...but it most certainly won't in modern times.

BUT, in sports we have passion & emotion. We have excitement. We have intangibles that can massively sway our fans to purchases.

If we can ad in the digital attributes to our sponsorship packages...sports sponsorship can be one of the best, and most financially beneficial in ROI, ways to advertise.

As times change and better advertising products come out we can't just ignore their power. If we do, we will run the same fate as JC Penney & Blockbuster.

My hope is this article can help give a different perspective on understanding your sponsors and the other assets they have in the industry in order to drive value.

If my words can't convince you that you need to make a big shift to offering digital assets...I am hoping that math can.

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