Valuing Sports Sponsorships

[GTRMagic]

“Australian firm finds new way to value sports sponsorships”
AFR Monday, 26 February 2018, P39
John Stensholt

Gemba hopes Turnstile will value accurately sports sponsorships

How to correctly value a sponsorship of a sports league or team – or at least do it better – has long been a difficult issue for corporate Australia.

One common way has been tracking television broadcasts and media mentions of brands, a method long used by the marketing industry to measure the effectiveness of of a sponsorship or partnership deal.

But whether more exposure of a company logo splashed across a playing shirt or on a race car and shown numerous times on TV is the best way for a brand to sell more of its products or have a deeper engagement with its existing, lapsed or prospective customers is a vexed question.

It is one that boutique Australian sports consultancy firm Gemba believes it may solve with a new sponsorship valuation platform it has developed called Turnstile, which is already being used by the global owner of motor racing series Formula One, Liberty Media.

Gemba chief executive Rob Mills says his firm has developed Turnstile over two years, and will try to provide buyers and sellers of advertising packages with a holistic approach to valuing sponsorships.

"We wanted to provide a methodology that moves beyond just exposure measurement and seeks to understand the intellectual property value of sponsorship assets," says Mr Mills. "The industry does not need more media equivalencies – it needs a robust approach to pricing usual actual market benchmarks."

The Gemba platform has tried to value sponsorships based on three components: benefits, exposure and intellectual property.

Benefits includes tickets, hospitality, media assets and other inventory provided to sponsors based on market rates, while the exposure component uses Gemba methodology to measure the logo exposure and then output values based on market rates across the sponsorship industry.

In terms of intellectual property, Gemba has developed an algorithm that calculates the fan base that can be reached by a sponsorship property, along with consideration of fan engagement levels and the purchasing power of fans of a particular sport.

Gemba and Formula One management presented a paper at the MIT Sloan sports analytics conference in Boston on the weekend, revealing how the motor sport – which Liberty took over in a $US8.5 billion deal in late 2016 – is using the Turnstile system to measure and value its sponsorships around the world.

Formula One is not without its issues, with the NASDAQ-listed Formula One Group having lost more than 10 per cent of its value in six months, and having been questioned about strategic manoeuvres ranging from a change of its logo to the banning of grid girls at races this year and how it can maintain the large fees it charges of every race organiser around the world.

But the sport believes it can get a better handle on its sponsorship portfolio by working with Gemba and its Turnstile system, which it will need to placate some worried teams on the grid that are receiving slightly less in team payments and will compete for about 5 per cent less prize money in 2018 than last year.

"It's now front and centre in all our sales pitches," the head of global sponsorship & commercial partnerships for Formula One Murray Barnett tells The Australian Financial Review.

"It certainly resonates, especially with brands that were previously sceptical of a relationship with F1. The days of sponsorship being 'the chairman's whim' are long gone and tools that show a meaningful connection to the desired target market are essential. Increasingly brands are looking for real insight into consumer behaviour rather than pure brand visibility, although that remains an important component of the mix."

Mills says the Turnstile system is the culmination of about two years of work by an in-house team at Gemba, which tested its approach on AFL assets in Australia and sports and entertainment contracts in China, where it has established a fledgling business. It also had a staff member working out of the Formula One office in London for five months last year.

The development process included several research studies, including work looking at how consumers recall brand exposure at sports events and how that may impact on their consideration of the brand.

Gemba also studied 20 countries around the world – "we chose the biggest 20 countries that account for about 80 per cent of the world GDP [gross domestic product] as those are the ones global brands generally talk about," says Mills – to develop its intellectual property algorithm, including fan engagement with brands and sports and how that may effect their propensity to purchase goods or products.

Next for the firm, which has a staff of about 40 mostly across Australia and New Zealand, comes pitching the products to the individual Formula One teams, which Mills says he has already begun meeting, and then potentially other sports in Europe.

Story Here

A bit more than just sticking a brand logo on the side of a car...

[woodduck97]

Looks like the days of the "Cochrane rubbery crowd" figure is doomed...

[peckstar]

Originally Posted by woodduck97

Looks like the days of the "Cochrane rubbery crowd" figure is doomed...

just as likely it might show improved numbers

[Umai Naa]

Originally Posted by GTRMagic

Story Here

A bit more than just sticking a brand logo on the side of a car...

Well you wouldn't just pitch the side of a car to a potential sponsor, would you?

You'd attempt to sell the side of the transporter, the team attire, the pit equipment, and the social media real estate too, yes?

[GTRMagic]

Originally Posted by Umai Naa

Well you wouldn't just pitch the side of a car to a potential sponsor, would you?

You'd attempt to sell the side of the transporter, the team attire, the pit equipment, and the social media real estate too, yes?

Having had both solicited and unsolicited requests for sponsorship fly across my desks over many years, truthfully I am not quite sure.

Integration makes perfect sense. Few do it well. Especially with the clutter of competing brands/marketing objectives/spend/leverage/deliverables on a car.

[Just Do It!]

Mitre 10 was one of the best back in the day. I've always maintained that Mark Larkham was a man ahead of his time.

[Mixer]

Originally Posted by GTRMagic

Integration makes perfect sense. Few do it well. Especially with the clutter of competing brands/marketing objectives/spend/leverage/deliverables on a car.

Supercheap now are arguably the benchmark, using the same B2B model that Kmart racing used to get all their suppliers involved, and constantly promoting the race team in-store.

[Umai Naa]

I find it interesting how well-known brands are splashed across the support catagories like AusGT and the Utes, such as KFC, Hogs Breath, Total Tools, McDonalds... but are rarely seen in any great capacity in Supercars.

There must be some very average team marketing managers in the paddock.

[Mixer]

Originally Posted by Umai Naa

I find it interesting how well-known brands are splashed across the support catagories like AusGT and the Utes, such as KFC, Hogs Breath, Total Tools, McDonalds... but are rarely seen in any great capacity in Supercars. There must be some very average team marketing managers in the paddock.

Gentleman drivers put logos on the side to make it look like they have sponsors, when in fact they will either be involved in the business (say Donut King) or be involved with an individual franchisee (McDonalds). None of these have ever had the kind of commitment for the big game, and it is a shame.

Belief is if you have a big name on the car you might be luckier getting others on board...

Wayne Gardiner seemed to get some FMCG involved but really it has been thin on the ground for the most part. Sadly still a niche sport. Energy drinks are profitable enough and "edgy" enough to play in the pond but that is about it.

Hogs Breath has been on the 888 cars - remember the Hogster?

[peckstar]

Originally Posted by Mixer

Hogs Breath has been on the 888 cars - remember the Hogster?

just adding, currently on DJRTP, front bar.

2 years ago they had a whole car for one event

[Umai Naa]

Originally Posted by Mixer

Gentleman drivers put logos on the side to make it look like they have sponsors, when in fact they will either be involved in the business (say Donut King) or be involved with an individual franchisee (McDonalds). None of these have ever had the kind of commitment for the big game, and it is a shame.

Belief is if you have a big name on the car you might be luckier getting others on board...

Wayne Gardiner seemed to get some FMCG involved but really it has been thin on the ground for the most part. Sadly still a niche sport. Energy drinks are profitable enough and "edgy" enough to play in the pond but that is about it.

Hogs Breath has been on the 888 cars - remember the Hogster?

Hogs are on the DJRTP cars, albeit somewhat small.

[mayhem]

Originally Posted by Mixer

Supercheap now are arguably the benchmark, using the same B2B model that Kmart racing used to get all their suppliers involved, and constantly promoting the race team in-store.

I wonder if Supercheap are paying as little as Kmart did back in the day? Story was the associated brands picked up the majority of the tab in return for store placement and being featured in catalogues.

[Mixer]

Originally Posted by mayhem

I wonder if Supercheap are paying as little as Kmart did back in the day? Story was the associated brands picked up the majority of the tab in return for store placement and being featured in catalogues.

It is likely the same now, and with the rise in private label brands taking up space on shelves, you can imagine the "negotiations" with suppliers might be a bit one sided.

But at least they get something out of it, allegedly unlike Wesfarmers suppliers!

[one five five]

Originally Posted by mayhem

I wonder if Supercheap are paying as little as Kmart did back in the day? Story was the associated brands picked up the majority of the tab in return for store placement and being featured in catalogues.

Target did the same for nearly 30 years with Ganassi in Indycars

[chavez]

Originally Posted by mayhem

I wonder if Supercheap are paying as little as Kmart did back in the day? Story was the associated brands picked up the majority of the tab in return for store placement and being featured in catalogues.

That is correct re Kmart.

It also helped that a few key people there had an interest in motorsport.

[cavvy]

Originally Posted by one five five

Target did the same for nearly 30 years with Ganassi in Indycars

& it was pitched by the Ganassi team.

[Tourer]

Good article here about the change in viewing methods for Australians.

Based on this, TV ratings are going to get less & less relevant and streaming information more and more relevant.

Interesting times for those planning broadcast models for sports.

[Umai Naa]

I have to say, I haven't watched much motorsport at all on TV, FTA or otherwise.

Everything's live-streamed, or I've watched a replay at my own convenience that's been uploaded somewhere.

Why Supercars doesn't upload replays to Youtube, I'll never know. Structured right, it can be a good revenue stream.

[mayhem]

Originally Posted by Umai Naa

Everything's live-streamed, or I've watched a replay at my own convenience that's been uploaded somewhere.
.

Weren't we all going to be able to watch Supercars on our mobile/tablets if we signed up to OVO?

[peckstar]

Originally Posted by mayhem

Weren't we all going to be able to watch Supercars on our mobile/tablets if we signed up to OVO?

Not live

[Umai Naa]

Originally Posted by mayhem

Weren't we all going to be able to watch Supercars on our mobile/tablets if we signed up to OVO?

No idea, never looked into it.

I'm just thankful someone else is paying for the Foxtel subscription I stream from

[Mixer]

Originally Posted by Umai Naa

I'm just thankful someone else is paying for the Foxtel subscription I stream from

That is funny, I'm in exactly the same boat.

Steaming is nice on Android but it sucks on Windows.

[Kingair]

Depends on how much media coverage your organisation gets when the driver has a big prang.

Depends on much media coverage coverage your organisation gets, when your clean cut fan friendly Mr Nice Guy driver gets busted for being a naughty lad.

[GTRMagic]

Originally Posted by Kingair

Depends on how much media coverage your organisation gets when the driver has a big prang.

Depends on much media coverage coverage your organisation gets, when your clean cut fan friendly Mr Nice Guy driver gets busted for being a naughty lad.

Nobody wants to write about that stuff in the trade publications, or for the most part the dailies or New Idea et al.

And it isn’t clear why. There is (allegedly.....) a mountain of stuff there that would put 50 shades of grey into darkness... allegedly..

There is a particular brand, now no-longer supporting a race team, that got quite a bit of mileage out of a VF rollover at Clipsal in years past.

[Mixer]

I remember when BJR put BOC on there car upside down because they had rolled so much!

Sent from my SM-G950F using Tapatalk