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How is the value of a sponsorship calculated?

The evaluation of a sponsorship is a key parameter when establishing new business relationships between brands. Measuring its possible effect is complex because it must take into account a large number of factors. Many of them, moreover, are not easy to read, so it is vital to develop a strategy to highlight all the pluses of this type of initiative.

What is the value of sponsorship?

Sponsorship offers additional opportunities for companies beyond marketing and advertising. Indeed on closer inspection it is a fraction of these activities and has the merit of directly engaging the audience rather than simply providing information. It is able to increase the value of a brand, its reputation as well as the reach of its general audience.

Reasons for calculating the value of sponsorship

Sponsorship itself, of course, is not a universal tool and can only be effective if coordinated with other communication channels. In some cases, however, it can produce a "wow" effect if the audience is chosen correctly. Participation in particular projects allows sponsors to attract a well-targeted audience by being part of the event themselves. The association between brand and context helps to increase brand value due to the natural pull provided by the scenario.

Appearing alongside sports figures, teams and events can moreover generate media coverage that would otherwise be difficult to achieve with the traditional media mix. Sponsorship deals, however, must conform to the brands' corporate culture and policies and goals and, of course, contribute to brand awareness and profitability.

A sponsorship proposal for a team, event, or league must necessarily consider the propensity of consumers to associate sponsors with the event they are promoting. It is then up to the agency to select the most appropriate events and contexts for the sponsors' brand, product, or corporate image. It is evident how careful analysis can clarify the suitability of the message and campaign based on the desired objectives.

Calculation parameters

There are numerous parameters to consider when trying to calculate the value of sponsorship: the opportunity landscape, the goals of the campaign, how results will be measured, engagement-related initiatives, and messages.

The target audience is one of the most important criteria in defining a bid. Partnerships must conform to the sponsors' corporate culture and policy and their goals and contribute to brand awareness and profitability. In many ways, companies engage in sponsorships based on individual characteristics when deciding where and how much to invest. Much of the success depends on how effectively a company can guess the mood of its target audience and choose the right niche to invest in, while also knowing how to measure the value of the sponsorship in the end.

Dorna and Clearsight

The importance of these metrics is such that the organizers of the major championships themselves collect and aggregate exposure data. For example, Dorna, the company that runs MotoGP and Superbike, provides very detailed reports on broadcasting to each individual team. In these documents compiled by Clearsight, the intervals of time each logo remains visible on screen are measured. This is made possible by meticulous analysis of everything that is broadcast over the course of the race weekend.

Based on this body of data, rankings and charts can be drawn up so as to understand which logos have enjoyed the most exposure. Consequently, through a series of calculations that take into account a variety of economic parameters-which include, for example, the average cost of advertising and television share-the actual value of that visibility can be derived.

The depth of research goes so far as to assign a sort of score-expressed as a percentage-to how brand exposure is spread across the various media and the bikes themselves. In the former case, we talk about the motorcycle, rider, team members, garage, and more. Referring specifically to the vehicle, the entire "brandable" surface is broken down into fairing cowl, fairing side part, tank, tank-saddle-tail area, rear fender and front fender.

Clearsight sponsorship analysis

Clearsight sponsorship analysis

In doing so, it becomes much easier to figure out which areas and times are the most interesting to get the most exposure. Given an average minute-long that allows all investors to see their efforts rewarded, certainly sports and territorial dynamics create a hierarchy among brands. The most successful rider, team, and bike will enjoy more shots while local idols will get more space in their home races.

Other factors can contribute to altering these types of breakdowns: for example, the type of circuit and relative placement of cameras, weather, specific events over the weekend.

Clearsight sponsorship analysis

Clearsight sponsorship analysis

On the motorcycle, in ways that are also quite intuitive, the favored area remains the middle and upper part of the fairings, which, thanks to its more regular shape and greater extension, allows for the display of larger brands and lettering. This is followed by the windshield (smaller and irregular but almost always in the center of frontal shots), the lower part of the fairing and then, more detached, the tank-tail area (often covered by the rider's body and structured according to very articulated volumes) and finally the front and rear fenders including the swingarm cover.

If for the vehicle the percentages related to the above areas vary within a range that does not, however, distort the overall values, different is what happens in the mix. In the image we can vere how from time to time both team and rider can enjoy exposure equal if not greater than the bike itself.

Clearsight sponsorship analysis

Clearsight sponsorship analysis

This valuable tool thus makes it possible to be able to return to teams and investors a more faithful snapshot of the results achieved and obtainable with regard to awareness, at least that achieved at the television level. To it must be added a channel that has become increasingly important over the years: we refer, of course, to web and social. Here, too, technology comes to our aid in indicating audience metrics with good accuracy.

Web and Social

In this regard, Hookit.com (an agency specializing in the analysis of data related to sports sponsorship) has developed its own system of analysis to determine the value of sponsorship in these areas. To give us an idea of how it works, it provides an example of a report, specifically the one for the 2021 Monte Carlo Grand Prix weekend. Instead of dealing with the competitive side, it highlighted the returns obtained by brand investors in the Formula 1 World Championship through the value generated by the teams' activities. This algorithm mainly considers the social-web sphere as it allows for data on engagement and a perimeter of the audience reached. To this must obviously be added all the volume provided by print, TV, live viewers.

Hookit Valuation Model (HVM) example

Hookit Valuation Model (HVM) example

The total figure exceeds $48 million, a very high value and well above any other motorsport event. This figure is the result of an aggregate formula that is called AAV - Adjusted Ad Value - which averages the cost of engagement (visits, views, interactions) with a quality parameter based on the type of brand exposure and its values.

Based on this dynamic we find that there were 3700 hashtags related to the event, 136 million interactions and as many as 297 million video views. The percentage of posts that included brand promotion was 71 percent while the average quality of promotion was 18.5 percent.

Primarily benefiting from this volume of traffic and visibility were the manufacturers and main sponsors of the championship and teams. Ferrari, McLaren, Red Bull, Pirelli, Rolex, Tag Heuer, and Misson Winnow all exceeded the $2 million mark.

The figures are obtained by cross-referencing interaction data with the costs that the same spaces would have if the result of ads and promotions.

The report is obviously much longer and more detailed, but even this summary allows us to understand how there are "scientific" ways to be able to measure return on investment even when it is not immediately perceptible.

Making these insights available becomes vital in communicating the potential of the medium, about which there is often no real and total awareness.

If you found this article interesting and would like to discuss the topic directly with our team, please contact us to arrange a call!

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