Sponsorship Marketing has become an industry. As long form content has democratized and more and more creators produce more and more content the “inventory” for brands seeking to sponsor that content has grown alongside.
The growth in the number of sponsorships in the past 3 years alone has been huge.
As with any industry in its early stages it takes some time for conventions to develop. Until the first trailblazers plot a course there simply isn’t the data available to understand what works and what doesn’t. That is no longer the stage we are in.
YoY the number of brands investing in sponsorship marketing is increasing, and now there is the data to suggest what to do with sponsorship both strategically and tactically.
So what is the single most important factor?
Success Rate in Sponsorship Marketing
What is success rate? Success rate is the % of first time tests of a channel (YouTube channel, podcast, newsletter) that work.
When a brand settles into a sponsorship program they get into a pattern of testing that stays relatively consistent, even if slanted seasonably. We have looked more deeply into this previously in our article about the VPN wars. For example below we have a chart mapping the number of new tests undertaken by the major VPNs each ending up averaging between 50-100 new tests every quarter.
Testing is part and parcel of sponsorship marketing. Creators by and large have fixed up front fees for their content and so there is inherently a risk built in for marketers.
HOWEVER, the reason that success rate is so important isn’t the $ you waste on unsuccessful tests, it's the OPPORTUNITY COST of not choosing a successful one.
Let's have a look at a couple of brands. Raycon, an earphone company, who have been one of the biggest sponsors of the past 2 years and Bokksu, a Japanese snack company, who has just started their program.
Raycon began with a wave of sponsorship in mid 2019, following it up in 2020 with a similarly shaped but much larger wave. Bokksu had appeared regularly in content prior to 2020 but sponsorship began with a series of tests in the first half of 2020 culminating with a major push in May and what is the evidence of a sustained program in the second half of 2020.
These are two brands with wildly different levels of experience. On the principle platform for sponsorship for both brands; YouTube, Raycon has appeared on 1,668 videos and Bokksu 71. Nevertheless the key principle of success rate applies absolutely to both.
Below are the first 20 sponsorships on YouTube for each brand, highlighted in red are the ones we can say have been a definitive success. You may ask what is the universal definition of success? There isn’t one, it depends brand by brand, and buying pattern by buying pattern.
For Raycon, for example, we know they had a spike in 2019 and a much larger one in 2020. Therefore the creators that appeared in the 2019 spike and the 2020 spike can be considered a definitive success otherwise why would they continue in the second year? For Bokksu there is a clear evidence that they have a pattern of buying a single test video from a creator and only those that work for them do they end up repeating.
Bokksu: Successful in 8/20 of the first YouTube channels tested.
Raycon: Successful in 9/20 of the first YouTube channels tested.
Here’s the incredible part
Even though Bokksu only had success in 40% of their tests the successful channels accounted for 75% of all the YouTube views that have been generated by the first 20 channels tested.
Because when a channel is successful they have run with it an average of 5 times so far. Their program has only been going less than a year!!!
The avg. views per video of each of the channels they tested were 150k. Therefore if they had improved their success rate from 40% to just 50%, just 2 channels out of 20 improvement, the increase in successful impressions to date would have been over 1,400,000.
This phenomenon only increases over time as repetition builds with successful channels. With Raycon they were successful in 9/20 placements, 45% success rate. The % of views generated by those 9 channels is 83%!!!
In their case it's because the avg. number of appearances they have on the successful channels is 10. They also go for bigger channels, their avg. for the successful channels is over 1m views per video.
Let's be really conservative here and say what if Raycon improved their success rate by 1 channel out of every 20 so instead of 9/20 they got 10/20. The increase in impressions generated within the first 20 placements is 11,000,000. ELEVEN MILLION, generated by choosing one test better.
When you extrapolate this data through the entirety of their program not just the first 20 the improvement in successful impressions is above 300,000,000. Sorry this deserves Capitals again and let's throw in bold for good measure, THREE HUNDRED MILLION. The only difference being improving the success rate by 1 out of every 20 placements.
We’ve highlighted two brands here but the phenomenon happens across the board. Here’s some stats about the first 20 placements from other brands:
Displate 6/20 tests, 91% of their impressions came from the 6
ExpressVPN 7/20 tests 85% of their impressions came from the 7
Manscaped 11/20 tests 91% of their impressions came from the 11
When we talk about Sponsorship Intelligence at ThoughtLeaders it really isn’t about creator discovery, which is a step in the process, it's about having the data to predict the likelihood that any given creator is going to provide long term value and be a meaningful contributor to a brand.