I don't do it with sponge filters, but for hatchling aquatic turtle tanks, I use Whisper 10i (the internal kind) half buried down into the gravel, to where the gravel covers up the thin vents, so no small turtle limbs get stuck in.
I've never seriously tested it, but it *seems* like it works better that way when I have it hanging out. It should make for a lot more area for bacteria to grow.
With sponge filters being so low powered I think it would entirely depend on the gravel you had. Something big and chunky (or maybe even something like marbles) may work far better than a very fine gravel.