I recently received (anonymously) a ‘sponsorship valuation’ commissioned from a specialist agency by a brand: the sender was a little incredulous at what he’d been persuaded to pay for. Arguably sponsorship ‘valuation’ has a role to play in instilling rights-holders with a greater sense of confidence in the commercial value of their sponsorship offering – but these reports, when commissioned by brands, assume a far greater significance, as the organisation is left to assume the sponsorship industry actually defines its own value in this way. Although tone of voice and language both suggest rigour, objectivity, expertise and science, the truth is far from the case.
The valuation, for anyone who hasn’t seen one, is based on two measures – ‘tangible’ and ‘intangible’ – and two corresponding fictions. The tangible component is calculated by assigning a value to every conceivable touch-point with the brand. Calculating the ‘tangible value’ is based on the fiction that an accurate commercial value can be assigned to the consumer touch-points offered by the sponsorship.
The methodology begins with a detailed list of every conceivable consumer touch-point, from verbal mentions by an event announcer to the bumper branding on the TV show, from PR mentions to the credit at the back of the programme.
Secondly, a commercial value is assigned to each brand exposure. This is supposedly based on the cost of buying the equivalent space for advertising. Now, despite the in-house expertise credited in the report, we’re already veering dangerously into the realm of fantasy, as there simply are no meaningful comparables for some of the touch-points. It is relatively easy to find a comparable for radio mentions – but sponsor credits by an announcer, or branding on balloons is a different matter.
The methodology then consists of making assumptions about the reach of those brand exposures. So, for example, a report will assume that 40% of spectators are ‘impacted’ by the announcer credit and 65% ‘impacted’ by the balloons. The word ‘impact’ flatters, of course, expressing the brand’s fullest aspirations for its communications, and is applied equally, and liberally, to flags, advertising, website sponsor credits, giant flags and branded inflatable sumo wrestlers.
So that’s part one: now for the intangibles, which refers variously to brand and audience fit, event stature, impact, sponsor clutter, promotional opportunities etc which vary by agency.
According to this particular report, the ‘accepted breakdown’ values the intangibles – including brand and audience fit – at a maximum 25% of the tangibles. The implications of this phrase are worth teasing out. Firstly, it implies an industry-wide concensus which doesn’t exist; secondly, it implies that the impact of brand and audience fit and all the other intangible elements of a sponsorship can only be positive; and, finally, that the value of event status, for example, carries a weighting of at best one third of the value of the media exposure the sponsorship offers. Which places a slightly lower value on the Olympic brand than the IOC would have you believe. In this case, the agency claims to apply ‘a little more science’, setting the upper bar for intangible value at 40%.
The process now attributes scores out of ten to this range of intangibles, along with a one line commentary, such as ‘such a high profile event was entirely appropriate for the sponsor’ or ‘the wide cross-section of audiences allowed the sponsor to target a wide range of consumers’. Bingo. These scores are converted into a percentage, which is then applied to the maximum allowable 40%, resulting in the ‘intangible value component’.
So the second fiction is more insidious: the methodology implies that brand and audience fit, and all of the other intangibles, can only ever play second fiddle to media. The IOC will want to address their clean venue policy, I’m imagining.
Now this isn’t intended as an attack on the agency which produced this report. There is definitely a place for media assessment as one of a number of value indicators when it comes to large media-driven properties such as Champions’ League, But to suggest it is relevant to the vast majority of sponsorships is bunkum. These reports don’t help our industry because, although they claim to be valuing sponsorship, the methodological perspective views any sponsorship as no more than the sum of its media.
The absurdity of post event valuation as a service is ultimately that the methodology is at best intended to measure potential. By the time a sponsorship has past, it’s too late to look at its potential – the only thing that should be of interest is the results.
Rights-holders should not be deceived into thinking these reports provide much guidance into building sponsorship value. And anyone professionally responsible for sponsorship who commissions one of these reports, or uses one as part of an evaluation, budget request or report, is potentially putting their head on a block.