Motorsports Marketing Mail Tips
WHAT IS ROI? AND HOW DO WE MEASURE IT?
Posted on: Friday April 22, 2022
WHAT IS ROI? AND HOW DO WE MEASURE IT?
ROI is simply Return On Investment. It’s a metric that measures the performance or benefit of an expenditure. If a company spends $100 on something and it gets back $500 – then the return on investment – or ROI – is $400.
Obviously, this is very simplified example, especially since a company’s benefit from an investment may not always be directly financial. For example – how can you measure a cold bottle of water in the hot desert? You can’t really – although there is most certainly a benefit.
That’s what can make measuring ROI difficult. That’s because it’s not always an exact science per se.
Years ago things were easier in terms of sponsorship. In the ‘90s and even into the mid 2000’s A lot of companies were content if you slapped their decals on your car and they simply called it a day. After the economy took a crap in 2008 things changed and companies both large and small are watching their marketing/advertising dollars with a jaundiced eye.
The world isn’t black or white and ROI falls into that category. As such ROI means something different to each marketing manager. In some cases, marketing managers look at ROI as a moving target while others use it to justify for their companies’ respective marketing strategies.
When it comes to your presentation or your sponsorship deck, ROI may be considered a hurdle but not necessarily a roadblock. If a company like Snap On or Mac Tools sells more tools for example – that’s an easier ROI to calculate.
Many years ago the tavern 54 Run was located minutes from Luxemburg Speedway – conveniently located on highway 54 not far from Green Bay. The owners sponsored several race cars in the ‘90’s and 2000s. Tavern sponsorships in northeastern Wisconsin are common and an easier sell. Most tavern owners will get their money back two to three times over as race teams (at least the smart ones) will support their sponsor after the races.
For 54 Run owners Rick Ledvina and Carolyn Tordeur, ROI was easy to measure with their uptick in business on race nights. For other businesses though, it may be like licking their fingers and holding them up to the wind. ROI in itself can be a conversation starter that you can use to your benefit if you are able to get your foot in the door.
Do your homework on the business. What product or service do they offer? Where are located? What are the average demographics of their typical customers? Are they social media savvy? The more you know about the business you are trying to partner up with, the easier it may be for you to determine what ROI would mean to them. You can both establish some ground rules or benchmarks of sorts as to how they can gauge how successful the marketing partnership is going.
Thanks for reading! The dozens of drivers and car owners from Wisconsin/Michigan who’ve responded here is encouraging! It shows me there are plenty of you who take this sponsorship stuff seriously.
Happy (sponsor) hunting!
Joe Verdegan
joeverdegan.com