What is a Sponsorship?
Sponsorships are a mechanism by which a Publisher can offer an Advertiser complete ownership of an event – and, therefore, an audience – free from competition. This started back when there were just three TV networks. With the limited options for consumers to view content, sponsorships were a viable strategy for Brands looking to blackout the competition.
If a Brand were to sponsor “I Love Lucy,” they could be confident they were reaching the majority of the American audience, since about 11 million families tuned in every week and there were only 15 million television sets in the country.
Why are Sponsorships No Longer Viable?
Over time, the increased number of TV networks and the introduction of Cable-diluted audiences and attention is making it even harder to guarantee share of voice through sponsorships. Add that to the hundreds of magazines, and now thousands of websites or digital properties, and the idea of a sponsorship simply does not offer the same value it once did when all of the eyeballs were in 1 of 3 locations.
Sponsorships were also created in a time when the ability to measure the impact of a campaign on sales was really weak. It was difficult to know if an overall spike in sales over a certain time period following a campaign was correlation or causation to the marketing you did.
Nowadays, the CMO is the new CIO and, in some cases, Chief Data Scientist. Measurement is far more granular, and identifying value in both price and performance is more important than it has ever been before.
So, Why Do Sponsorships Still Exist?
Maybe because it seems easy? Or maybe it’s the sense of pride Brands get from “owning” a given piece of real estate without anyone else being there? Most likely, it’s a combination of both. But that doesn’t make it a wise investment for either the Publisher or the Brand involved. Here’s why:
Sponsorships are Hard to Properly Value
Sponsorships lock Brands into a specific time period that does not take into account the number of unique consumers reached, impressions served or clicks clicked. So if the programming sponsored (TV show, Website homepage, or Newsletter) gets a lower volume of uniques that day/week/month, the value of the sponsorship decreases exponentially.
To use simple math, let’s say you paid $25K for a sponsorship that got an estimated 1M impressions. If the content provider only delivered 500K impressions during that time period, the effective cost per impression (CPM) doubles, from $25 to $50 which makes the overall value for the brand drop by 50%.
This works the other way, as well. If you are a publisher and you sell a sponsorship expecting to deliver 1M impressions, but instead delivered 2M impressions, the eCPM shrinks from $25 to $12.50. The value is cut in half and you missed a massive opportunity to increase your yield.
Sponsorships Don’t Optimize for Performance
Performance is incredibly important today, which makes it seem counterintuitive that a Brand would invest in sponsorships that do not offer any form of delivery optimization.
What if most of the audience doesn’t like the red advertisement shown on the day of the sponsorship? The click-through-rate (CTR) might be very low. And even if a blue advertisement was shown, and resulted a much higher CTR, there might still be some that preferred the red advertisement. Either way, the end results are wasted impressions and budget dollars that could have been used more effectively. For a Publisher, even worse is the fact that that you did get a chance to put your best foot forward to highlight how valuable your audience is. You limited your opportunities and went for a bike ride with only one wheel.
Better Options Already Exist
The truth is that there really is no reason for sponsorships to exist in the media buying space anymore. The underlying technology behind most supply and demand-side platforms (the primary technologies through which media is bought and sold online) have fancy algorithms that optimize the campaign and creative throughout a longer flight date.
For Brands, this means they can always know what their eCPM is going to be, and can more effectively leverage that budget to get double the number of clicks or conversions. In the age of transparency, this is one more lever to understand.
For Publishers, it means no longer gambling on traffic volume or undervaluing impressions, and having a greater chance to prove out the value of the inventory and audience.
And while it may be true that many Publishers have moved beyond sponsorships with their websites, they are still guilty of selling sponsorships for what is arguably their most valuable inventory and audience: Email. The place where consumers have opted in to your brand sending them daily information.
Moving Beyond Sponsorships in Email with a Unified Auction
With the LiveIntent platform, Publishers can sell (and Brands can buy) email inventory and audiences at an eCPM while allowing third-party demand sources (like LiveIntent) and house ads to compete in what LiveIntent calls a Unified Auction.
This process makes sure that every impressions is being used at its most effective value, thus driving performance metrics for advertising clients while maximizing the revenue for the publisher.
Interested in learning more? Click here to get started with maximizing the value of your emails.