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Last month, it was announced locally (Albuquerque, New Mexico) that a local pizza company gave the University of New Mexico $5 million over 10 years to sponsor its infamous basketball stadium, “The Pit.”

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While it’s clearly a boon for the school, does the sponsorship really help the sponsor? WisePies, a locally started chain, committed the up-front cash expecting to get it back through franchise sales (a lofty expectation that its Subway-like approach to customizing your own pizza will catch on). An obvious question is this: what does it really gain the advertiser?

At a base level, the level of brand awareness will skyrocket. This can certainly boost sales, at least in the short-term. This sponsorship puts WisePies directly into the limelight on a local basis, and even gets it some national press.

But is this awareness really enough?

What do people walk away understanding about the brand? Aligning itself with UNM athletics can mean any number of things – the owners like basketball or they care about the community or they were just looking for any opportunity to slap their name on something in lights. A sponsorship can put your name on the map, but does it position the brand in any way relative to its competition or give the brand an identity in the consumers’ mind?

Tony Meenaghan, in his article “Understanding Sponsorship Effects,” says there are three methods of measuring sponsorship effectiveness:
1) effectiveness of sales,
2) media coverage of the event, and
3) communicational effect (awareness, attitude and perceptions).
For a well-established brand, these effects can be measured fairly accurately. However, for a local company, the long-term results of the sponsorship may be much more difficult to determine.

Furthermore, research detailed in “Measuring Sponsorship Effects on Consumer Purchasing Intentions” by Theofilou, Ventoura-Neokosmidi and Neokosmidis intimates the idea that sponsorships do not nurture brand loyalty, nor do they turn consumers away from a brand if a sponsorship ceases. Sponsorships do not do the same things for a brand that a long-term brand positioning strategy might.

Clearly there was an opportunity to spend that $5 million on brand-building advertising via traditional media (TV, print, radio, etc.). However, would they have gotten 10 years’ worth of advertising out of the same $5 million? With production and media costs, a chunk of that money would certainly be lost. This also doesn’t include a budget for research, so advertising in these channels may not even be guaranteed to have strong executional quality or convey the right message from the brand.

Sponsorship is a risky proposition (see Tiger Woods), but even more so for a local brand. Will it get the proper bang for its buck? Even the owners realize the WisePies name may not exactly catch on. “We never intended to change the name of The Pit. Everybody is still going to call it The Pit. We know that. I know that,” co-owner Mike Baird said. “We weren’t doing this to offend anybody. We were doing this to help a program and help our business.”

Time will tell if WisePies is slicing up the right advertising strategy. For now it re-kindles the debate between awareness and long-term brand positioning as the most-effective use of marketing resources. Which side of the pie do you fall on? Feel free to leave us a comment with your thoughts.

Adam Page is an Associate Research and Analytics Director at Ameritest.

To find out more about Ameritest, please contact us at info@ameritest.net or visit our website at http://www.ameritest.net.

reference: http://www.koat.com/news/wisepies-founder-explains-decision-to-buy-pit-naming-rights/30026300