Coronavirus Highlights The Importance Of Communicating Sponsorship Value

BY ADAM GROSSMAN

The coronavirus is already having a significant negative effect on the global economy. While a potential recession is negative for many reasons, the impact on sponsorships could be severe. To lessen any potential repercussions of an economic downturn, industry leaders must be able to determine and communicate the value that sponsorship provides to companies.

Many have characterized the recent drops in the stock market and other economic indicators as being similar to the situation prior to the global recession that started in 2008. While hopefully the impact will be less severe, this time period does serve as a case study for how many will react negatively to companies’ sponsorship spends unless it is clear why value is being created through these partnerships.

Bank of America’s sponsorship of the Super Bowl Experience during the 2009 Super Bowl demonstrates this point. An ABC post at the time stated, “Despite a near collapse that required $45 billion in federal taxpayer bailout funds, Bank of America sponsored a five day carnival-like affair just outside the Super Bowl stadium this past week as President Obama decried wasteful spending on Wall St.” President of the Citizens Against Government Waste Tom Schatz also stated, “the prominent sponsorship of the Super Bowl says to the American people we'll take your money and then we're going to go waste it."

Because of the negative perception of sponsorship at the time, many corporate partners decided to end, suspend, or not pursue relationships with the NFL, NBA, MLB, PGA Tour, LPGA Tour, and NASCAR. This had a significant impact on the revenue of leagues, teams, events, agencies and players that “have become increasingly reliant on revenue from corporate sponsorships.”

Rather than wait for a similar dynamic to potentially occur in 2020, now is the time for people and organizations to address this potential challenge to future sponsorship revenues. More specifically, the best way to combat the negative perception that many have about the sports industry is to clearly determine and communicate company-specific values generated from sponsorships.

Block Six Analytics (B6A) products are specifically designed to achieve these goals. This starts with our Corporate Asset Valuation Model (CAV) which is used to determine the revenue and brand goals for specific companies. We then determine the ability for specific activation elements across multiple channels within a partnership to help a company better achieve these goals. These channels include in-venue, traditional media, social / digital, corporate hospitality, experiential marketing, and intellectual property (IP) activations.

One of the most important benefits of CAV is that it does not focus on what the activation element is but rather it focuses on what the activation does within a partnership. More specifically, CAV determines how the activation element increases the likelihood of more effectively generating incremental revenue growth or of better engaging with a targeted audience for a specific company.

This enables our clients to use the same approach to determine value across multiple activation types within a sponsorship and across multiple different sponsorships. We then create unique dashboards based on the specific needs of our clients to communicate data-driven insights to key stakeholders. This enables anyone to easily communicate exactly how and why value is generated through partnerships.

This cross-channel approach is particularly important when sporting events may occur without fans present in venues more frequently than currently is occurring across the world. A natural question that emerges is will sponsorships generate comparable value in this environment.   The answer for many sponsorships can be yes depending on the company’s goals.

For example, the value of courtside signage may increase for those looking to maximize value by increasing brand awareness for a large audience. More specifically, courtside signage is valuable for its ability to reach fans via linear, streaming, and / or social media channels as these audiences are often much larger than those in the venues.

There is a strong possibility that more people with consume sports content in these channels because they are more likely to be working and / or spending more time at home. B6A’s Media Analysis Platform and Social Sentiment Analysis Platform (SAP) leverage machine learning to enable our clients to determine if this is occurring in near real-time.

The coronavirus’ impact on sports and sponsorship could be severe. Rather than wait for people to question continued sponsorship spend in this environment, it is critical for industry leaders to be armed with the tools and insights that clearly communicate value to all stakeholders.