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Using Sponsor Analytics to Negotiate Media Value

Innovation, Insider   |   May 06, 2022   |  by Antoine Laurient

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When it comes to sports sponsorships, both teams and sponsors are looking for ways to accurately assess the value of the partnership. As with any business transaction, all parties have their own priorities and expected outcomes. Sports sponsorships are no different.

In this context, it is critical that marketing teams maximize return on investment. After all, leadership is mindful that other channels exist. Investments that do not perform will get reallocated by leadership. Marketers that invest in sports sponsorships do so with the expectation that the sponsorship is the best place for a high return.

Teams also want to maximize the value of the placements they offer to sponsors. If a banner behind home plate at a baseball stadium does not maximize revenue, then the team is impacted. Every dollar missed in selling a sponsorship placement is an opportunity lost, never to be recouped.


The Role of Analytics in Sports Sponsorships

When it comes to sports sponsorships, data and analytics are essential for teams and sponsors alike. Data helps ensure that both parties are making informed decisions about their sponsorship. Accurate, unbiased data allows teams and sponsors to track the return on investment they are getting from the partnership. This information is necessary for making decisions about whether or not to continue the sponsorship.

It is important to recognize that teams and sponsors use data and analytics in different ways. In the case of Germania Insurance and the Texas Rangers, the partnership’s success is based on an alignment and understanding of shared data. Even though both parties have different goals in the partnership, an agreed-upon set of data that each party understands keeps them aligned on the broader goals that they share. This does not mean each party views data the same way. It does mean that each party understands and appreciates the point of view and perspective of the other. That common ground is an excellent foundation for success in partnership.

How Teams and Rights Holders Assign Value Using Analytics

Analytics are a key part of any evaluation for a professional sports team. In addition to traditional measures like ticket sales and merchandising revenue, teams are now looking at things like social media engagement and broadcast media value when assessing the value of a partnership.

For example, the Chicago Cubs track more than 100 different metrics when evaluating their partnerships, including things like TV ratings, radio listenership, digital impressions, and even traffic patterns near Wrigley Field on game days. And they're not alone; other teams are using data to inform their decision-making as well.

The New England Patriots, for instance, have used data to assess partnership value, including their team-specific TV network and ticketing agreement. In both cases, the team looked at things like media rights fees and ad rates to determine the fair market value of the deals.

Significant data sets gleaned from an authoritative channel informs how teams assign value to sports sponsorships and potential opportunities.

How Sponsors Assign Value Using Analytics

Similarly, sponsors are also using data when assessing the value of a sponsorship. In addition to more traditional measures like TV ratings and attendance, sponsors are now looking at social media engagement, digital impressions, and even brand awareness when evaluating a deal.

For example, Coca-Cola uses data to assess the value of its partnership with the Olympics. The sponsorship began in 2019 and could be worth up to $3 billion by the time it ends in 2032.  With such a significant investment in being the official beverage sponsor of the Olympic games, it is imperative that the return on sponsorship investment across multiple media channels is maximized. 

From logo placements during live events to advertising during broadcast social media shares around the Olympics, Coca-Cola’s brand presence is widespread. A central source of truth for not just tracking impressions, engagement, rotations, and shares is just the first step. The data is also necessary to inform future decisions around campaigns and events. After all, Coca-Cola will have a highly-visible presence at the Olympics for at least another decade.

By tracking the metrics detailed above across a wide range of media, Coca-Cola can track its return on investment. When the time comes to negotiate for an extension or continuation of the contract with the Olympic committee, Coca-Cola will have literal decades of data to draw from during pricing discussions. The wealth of sponsor data generated during the engagement can help set the investment range for other, non-Olympic sports sponsorships.

The Right Kind of Data in Sports Sponsorships

For both teams and brands to achieve their sponsorship goals, it is important that data have a number of immutable qualities. First, data needs to be accurate. Next, it must be objective and agnostic. Finally, it should be as close to real time as possible.

Accurate Data

Accurate data is important because it allows teams and sponsors to track the return on investment they are getting from the partnership. This information is essential for both parties, as they can use it to make decisions about whether or not to continue the sponsorship. If the data has discrepancies, incompletions, or other inaccuracies, then all decisions are flawed.

As a metaphor, you cannot accurately drive from point A to point B if you only have a rough idea of where you are and where you are going. Accuracy is key not just for getting to the desired result, but also for charting the optimal path for the journey.

Agnostic Data

Data should exist in an objective and unbiased state. This can be challenging in sports sponsorships. Teams may be inclined to share data that fits their agenda. Sponsors may be tempted to share data that serves their agenda. In both cases, the bias or slant negatively impacts the sponsorship for some or all parties.

Data without agenda, influence, or bias is critical for the evaluation of a sports sponsorship.

Real-Time Data 

Old data is bad data. Not long ago, teams or agencies would update sponsors with data at the end of a season or upon completion of the sponsorship campaign. As a result, the data was only useful as a reactive and retrospective tool.

Now, data sets can and should be shared on a regular basis. Both teams and sponsors benefit from updated data that can inform decisions and changes during a sponsorship campaign.

The chance for maximum benefit and ROI for all parties exists when the free flow of accurate and unbiased data is happening at all times.

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Leveraging Analytics to Negotiate Media Value

Sports sponsorships are not just about signing a check and seeing where it takes you any more than they are about cashing a check and hoping for the best. There must be alignment between the team, sponsor, and audience or the partnership will never reach its full potential.

For example, teams may choose to pass on certain sponsorship opportunities because they feel the data does not support their investment. Similarly, sponsors may evaluate deals based on metrics that do not benefit their customers or target market.

In some cases those decisions are correct. In others, and far too frequently, decisions are made because data can't be trusted for accuracy and objectivity.

By using analytics to track the value, both parties can achieve greater success in sports sponsorships and align with a shared vision for success. Whether it is evaluating current partnerships or looking for new ones, sports teams and brands can find ways to work together by ensuring accurate and timely access to data sets that accurately assess ROI and drive results. With accurate and agnostic data, teams and sponsors can put their best foot forward in aligning with each other's goals to create a mutually beneficial partnership.

Alignment does not always mean agreement in a negotiation. Understandably, the parties involved are looking to maximize value in different ways. With an agreed source of analytical truth as the foundation for negotiation, at least each party can understand the perspective of the other. That single characteristic unlocks the potential for thoughtful, reasonable, and data-supported negotiation.

Finding Alignment Between Sponsors and Teams

Sports sponsorships are increasingly important for teams and brands. In order to achieve success, both parties must use analytics to assess the value of their partnership and potential opportunities.

In order to be successful, sports teams and sponsors need to have accurate, up-to-date data that is easily accessible by all parties involved. Furthermore, it is important that the data is able to be understood by everyone so that evaluations of investment and impact can be accurately made. When sponsors and teams agree on the value of a sponsorship, they can each use it to achieve their own goals. By leveraging analytics tools that work both ways, brands and teams can find common ground and make the most of their investment. By working together and being transparent with one another, both teams and sponsors can find success in a sports sponsorship.

To explore how Relo Metrics helps brands and teams align on the value of a sponsorship, click here.

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