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How can companies quantify the ROI of extremely non-targeted advertising like stadium naming rights? For targeted campaigns, they can survey whether that specif

How can companies quantify the ROI of extremely non-targeted advertising like stadium naming rights? For targeted campaigns, they can survey whether that specific campaign influenced customers' perception of the product. But for non-targeted campaigns, I don't see how a company can reliably survey whether the implicit brand awareness stemming from e.g. stadium naming rights has any influence on consumer behavior. I think buying naming rights is mostly done as a signaling factor to company stakeholders. If the company reports that brand awareness declines, it can cover its ass to board members and shareholders by claiming "well, we did all we could in the advertising department—we even bought naming rights to a stadium! Clearly the decline is due to market conditions and not our own advertising failures." If, on the other hand, the company reports that brand awareness increases (likely due to factors other than the naming rights), it can trumpet that buying the naming rights was a genius strategic move. As an aside, I think this is a large part of why companies hire management consulting firms, knowing full well they will yield zero effective results. It gives them another CYA excuse if things go south: "we tried all we could to restructure; we even hired McKinsey and Bain, the best of the best! Our declining revenue must be due to factors beyond our control."

the88doctor 4y ago
My original article actually included an entire section on how to measure the effectiveness of stadium advertising, but I ended up cutting it due to length. Essentially, you can try to break down the benefits into more understandable pieces. E.g. seconds of stadium dome signage shown on TV, seconds of press conference backdrop with stadium name shown on TV, number of eyeballs passing a sign during a game (classic billboard problem), etc. If you run through these estimates (which clearly not all companies do before buying), it almost always looks like a bad deal. The stock ROI analysis confirms this, and is also a bit more compelling imo because it's harder to argue that something was left out. However, there are exceptions (such as Target) where the advertising components of a stadium deal can actually appear to be quite favorable, and interestingly the stock performance backs that exception up. My next Market Intelligence newsletter mentioned at the end of the article will go into more detail on how to do that analysis for an arbitrary deal.
mkmk 4y ago
Once you’re at a certain marketing spend, more targeted advertising has diminishing returns — you’ve already targeted your existing audience and converted the ones that are ready to convert. In addition to helping your existing targets convert due to an increase in brand trust, broad based advertising also helps you break out of that local maxima by delivering new customers that are unlike your current target. You can then identify new segments of customers, interview them to understand their unique use cases, and build targeted campaigns for those new segments. Measuring this and executing on it is an order of magnitude harder than just running targeted ads, because the conversion effects are distributed across all of your campaigns and the timelines are much longer. However, most any sophisticated marketing team will develop these types of campaigns once they start seeing the effectiveness of targeted advertising start to decline.
- the88doctor 4y ago
  That sounds plausible, but the data still suggests doing broad-based advertising through stadium names probably won't give you the ROI you're looking for.

the88doctor 4y ago

My original article actually included an entire section on how to measure the effectiveness of stadium advertising, but I ended up cutting it due to length. Essentially, you can try to break down the benefits into more understandable pieces. E.g. seconds of stadium dome signage shown on TV, seconds of press conference backdrop with stadium name shown on TV, number of eyeballs passing a sign during a game (classic billboard problem), etc. If you run through these estimates (which clearly not all companies do before buying), it almost always looks like a bad deal. The stock ROI analysis confirms this, and is also a bit more compelling imo because it's harder to argue that something was left out. However, there are exceptions (such as Target) where the advertising components of a stadium deal can actually appear to be quite favorable, and interestingly the stock performance backs that exception up. My next Market Intelligence newsletter mentioned at the end of the article will go into more detail on how to do that analysis for an arbitrary deal.

mkmk 4y ago

Once you’re at a certain marketing spend, more targeted advertising has diminishing returns — you’ve already targeted your existing audience and converted the ones that are ready to convert. In addition to helping your existing targets convert due to an increase in brand trust, broad based advertising also helps you break out of that local maxima by delivering new customers that are unlike your current target. You can then identify new segments of customers, interview them to understand their unique use cases, and build targeted campaigns for those new segments. Measuring this and executing on it is an order of magnitude harder than just running targeted ads, because the conversion effects are distributed across all of your campaigns and the timelines are much longer. However, most any sophisticated marketing team will develop these types of campaigns once they start seeing the effectiveness of targeted advertising start to decline.

the88doctor 4y ago
That sounds plausible, but the data still suggests doing broad-based advertising through stadium names probably won't give you the ROI you're looking for.