Giving The Companies What They Want For Sponsorship Valuation
BY ADAM GROSSMAN
Multiple people sent B6A a copy of AdAge’s most recent post titled “MARKETERS DEMAND MORE (AND MORE) FOR SPORTS SPONSORSHIPS.” This article focuses on Anheuser-Busch InBev's (AB InBev’s) new approach to sponsorship where “leagues and other so-called rights holders get paid more if they reach certain goals, like making the playoffs.”
The reason that AB InBev is implementing this strategy reflects a fundamental shift in how partners approach the space. In particular, partners want to know the answer to this question: Why is a specific sponsorship good for my specific company? For AB InBev, “Fans of winning teams buy more tickets—and ultimately more beer.” With its relationship with the Minnesota Timberwolves, the team will be paid more if market share in Minneapolis and St. Paul jumps over the next 12 months.
Having sponsorship tied to the specific revenue and marketing goals of each partner is at the heart of B6A’s approach to sponsorship valuation. Our technology and analytics are specifically designed to answer the questions that companies like AB InBev are asking. It is why so many people sent us this post.
However, there are some key differences in our approach versus AB InBev’s when it comes to valuation. Having sponsorship tied to on-field, on-court, on-ice, etc. performance goals is a strategy that may or may not work well for partners as we have discussed here. In this specific case, AB InBev has the right approach because winning does appear to drive sales for their products (at least inside the Target Center, where the Timberwolves play).
Yet, relying on sales outcomes is not always the best approach when looking at sponsorship ROI, even when examining it from a revenue perspective. In the AB InBev example, the company appears to be looking at the results (or dependent variable) rather than looking at the process (or independent variable) that could be causing the results.
- More specifically, how does AB InBev know if increases in market share in the Twin Cities has to do with the Timberwolves? If the share goes up but there is no direct attribution to the team then does it still get rewarded?
- What if the Timberwolves do everything right but sales do not increase because of external factors? For example, what if there is an unusually cold winter in Minneapolis (which would be saying something) and people buy less beer because they are less likely to go to the store. This has nothing to do with whether the Timberwolves activated the sponsorship directly but the team could still be penalized for not increasing sales.
B6A’s approach focuses on maximizing the probability of success from both a revenue and brand perspective. Each company has different business goals, customer types, and brand metrics that are important to them. Is the rights holder putting a company in the best position to target the right people at the right time with the right message to increase customer acquisition, customer retention, brand perception, brand awareness, and / or brand sentiment? In addition, is the company receiving a lift on these core metrics by partnering with a rights holder above and beyond what it could receive on its own or potentially through other opportunities?
It is certainly possible that AB InBev could have put something similar to this approach in place and it was not reported in the AdAge post. The larger point is that AB InBev is asking the right question that is becoming the industry standard – How does this partnership specifically benefit my company? Rights holders and agencies need to be able to answer this question and B6A can help with the solution.