2016 will be a record-breaking year for sports sponsorships. Brands will be clamouring to attach their names to both the regular annual events but also the two quadrennial extravaganzas: the Rio Olympics and UEFA Euro 2016.
However, some critics question the effectiveness of that spend. Are the critics right - are billions of pounds being mis-spent? After the Rugby World Cup, the market research company, Instantly, commissioned a survey of 2,029 customers to gauge the effectiveness of the official sponsorships. According to their findings 83% of consumers hadn't changed their perceptions of the sponsors during the tournament.
But does this survey reveal the inadequacies of the sponsorships or of claimed data? It is tricky for claimed data to measure the influence of media that communicate on an implicit level. As David Ogilvy said "Consumers don't think how they feel, say what they think or do what they say".
No words but deeds
If sponsorships' strength is implicit then measurement techniques must account for this. Our research did just that.
We began conventionally, by asking directly about sports sponsorships' influence. Of the 1,011 nationally representative consumers only 8% said they were strongly influenced. In contrast, 20% of participants said that a sport sponsorship made a brand less appealing. Just looking at claimed data suggests that sponsorships are uninfluential.
However, our next step adopted an oblique approach, aimed at unearthing true feelings. We created a fake brand, called Black Sheep Vodka, and told consumers that it was about to launch in the UK.
All of the 306 vodka drinkers were told the background of the brand. However, a random selection heard one extra fact: the brand was going to sponsor a specific sporting event. The participants were then asked about the brand's appeal and their likelihood of trying it.
The results were clear. Appeal and likelihood to try the brand increased by 32% and 2% respectively when consumers thought the brand was sponsoring a sports event. Among those interested in the event, appeal increased by a further 12% and likelihood to try by 21%.
This test and control approach gives a more accurate read than direct techniques because the participant doesn't know that the influence of sponsorship is being measured. It measures the genuine change in brand metrics due to the sponsorship, not customers' speculation on what caused them to change their opinions.
Why are sponsorships so effective?
If sports sponsorships convey limited explicit information then why are they influential? The answer comes from another field: evolutionary biology.
In the nineteenth century Charles Darwin was struck by a number of oddities in the natural world that contradicted his theory of evolution. The peacock, for example, with its huge cumbersome tail baffled him to the extent he wrote to Asa Gray on April 3rd 1860:
"The sight of a feather in a peacock's tail, whenever I gaze at it, makes me sick".
The peacock troubled Darwin because his theory suggested it should have evolved a shorter tail that made fleeing from predators easier.
Darwin's conundrum was answered in 1975 by Amotz Zahavi, a biologist at Tel Aviv University, who developed the theory of costly signalling. According to Zahavi costly signals are harder to fake and are therefore, more believable.
The ability to survive despite a cumbersome tail conveys genuine genetic fitness to potential mates. Less fit specimens don't have the agility to avoid predators when handicapped with a long tail.
The advertising application
A similar effect occurs in advertising. John Kay, an economist at Oxford University, suggests that advertising works not because of the explicit messages, but because it's a costly signal. Advertising known to be expensive, like a high profile sponsorship, signals the volume of the resources available to the advertiser. As Kay says in his landmark paper:
"The advertiser has either persuaded lots or people to buy his product already, a good sign, or has persuaded someone to lend him lots of money to finance the campaign"
Just as in the natural world, advertising works, not despite its perception of costliness, but because of it.
Kay further suggests that since advertising tends to recoup its costs in the long term only a company with substantial commitment to their brand would invest significant sums of money in advertising. A poor quality brand can advertise to generate trial but no amount of spend can deliver repeat purchase to disgruntled customers.
In his words, advertising, therefore, acts as a screening mechanism that:
"convincingly signals the quality of a product by displaying the producer's sincere faith in his own output, reflected by the money spent promoting it."
This theory neatly explains why famous sponsorships are effective. They demonstrate a costly and, therefore, honest belief in the strength of the advertised product.
Of course, this theory relies on an awareness of the price of sponsorships. Is this the case? Our research suggests consumers are well aware how costly sports sponsorship can be. We surveyed 536 nationally representative consumers about the cost of the Manchester United shirt sponsorship. Of those who gave a figure 72% thought it cost more than £50 million per year, the rough value.
How can brands capitalise on these findings?
Brands must recognise that much of advertising's impact comes from implicit communication. There is a role for bold brand statements. Investing in costly properties displays a confidence that mere ad claims cannot emulate. High profile sports sponsorships are one of the most effective ways of delivering this.
Traditional research techniques might not show this but that is often as they rely on an overly literal interpretation of customer claims. In order to genuinely measure the power of sponsorship it's better to observe consumer behaviour.
Fittingly advertisers should learn from the motto of Feyenoord football club:
Geen woorden maar daden.
If your Dutch is rusty, that's:
No words but deeds.