How To Value The New World Of Sports Sponsorship
BY ADAM GROSSMAN
Facebook Head of Industry for Financial Services Deepanjan De expressed a key insight in “The New World of Sports Sponsorship” in an article the company sponsored recently in AdWeek. De focuses on four core activation opportunities - Pre-Event, On Site, In Venue, and From The Couch. The thesis of the piece is that “It’s all about engagement” and engagement primarily occurs through differentiated experiences.
It is not surprising that an article by someone who works at Facebook examines engagement in all of these activation opportunities through a technology lens. De asserts that “many of the old tried-and-true activations are still standard issue for sponsors—hospitality tents, product demonstrations and swag giveaways still have their place. But for a lot of sponsors, those have been supplanted by tech-enabled executions that really get at the passion that fans feel.”
There are several points of contention that sponsorship industry veterans could make with De’s claims. In particular, De’s seemingly negative connotation of “standard issue” items and the idea that tech-enable executions “really” stir passion and / or are necessary to have great experiences could be criticized particularly in the context of the first principles for “The New World Of Sports Sponsorship.”
However, De’s thesis is one that needs to be examined carefully whether one is a sponsorship buyer, seller, or agency. More specifically, De is right in that everyone needs to be able to determine if and how new technologies are good fits for a sponsorship portfolio. Yet, measurement has always been the essential challenge for new sponsorship assets.
In particular, most sponsorship models are built around quantity and reach. Yet, the primary goal has shifted to engagement with targeted audiences that can drive specific business outcomes for companies. De articulates how sports can uniquely create the experiences that generate the engagement opportunities that brands are looking for in a sponsorship.
The next step is to be able to quantify the tangible business impact of engagement and experiences in non-traditional channels and platforms. Our Corporate Asset Valuation Model (CAV) accomplishes this goal in a clear and concise way.
The essential CAV insight is that all sponsorship assets can be broken down into specific attributes that can be measured for their impact on the specific revenue and brand goals of the company. In particular, the CAV breaks out fit, sentiment, and engagement to determine the value of a partnership in addition to overall reach. We then can determine the value for virtually any sponsorship opportunity by using the same approach for both “standard issue” and “tech-enabled” sponsorship activations.
For example, De spotlights the American Express interactive gaming experience that “fused augmented reality with actual tennis play” through Fan Experience at the U.S. Open . This was the way the company could “up its presence with innovative benefits for both its Card Members and all tennis fans.”
It is likely that the augmented reality activation did reach a larger audience than the card members that attended the U.S. Open. De’s featuring of this sponsorship in the AdWeek article is an example of the earned media that has been generated by this tech-enabled activation. This is one way that the in-venue experience has a reach outside of the venue.
However, the larger benefit comes from differentiation in the crowded markets of both credit issuers and credit processors. American Express has built its business in large part based on its ability to provide unique experiences to its card holders and use those to command a higher willingness-to-pay for access to these product offerings.
More specifically, card holders saw significant value through the unique experiences provided by American Express. This also enabled American Express to charge merchants a higher fee for processing transactions because it had lucrative customers for stores that accepted American Express.
In the “standard issue” world of the past, the unique experiences often meant providing items such as travel perks and high-touch concierge service. Other credit card companies now have the capability to offer a comparable experience to American Express. In the “tech-enabled” world of the future, the American Express augmented and virtual reality experiences create the opportunity to attract and retain customers. American Express can use its U.S. Open sponsorship to show how it is creating differentiated experiences at the events that most resonate with its card holders.
This type of analysis is at the heart of the CAV. We can break down an augmented reality partnership into its component attributes. Augmented reality will maximize the probability that American Express’s target customer (fit) will spend a longer period of time interacting (engagement) with the brand in ways that drive lifts (perception in the probabilities of customer acquisition and customer retention) and revenue.
The impact of fit and engagement on brand perception and driving revenue become the framework for measuring value. More specifically, virtually every tech-enabled and standard-issue sponsorship activation can be broken into component parts and tangible business metrics. The decision then becomes which type of activation is right for the company.
The “New World of Sponsorship” is not what is ushering in the change in understanding of sponsorship value. Tech-enabled activations are the Trojan Horses for a shift in focus to fit and engagement rather than myopically examining reach when it comes to sponsorship. Having the tools to understand how value is created in the “New World” will be the key to success for sponsorship buyers, sellers, and agencies.