Note:  Because of the explanation necessary here, this piece will exceed the four-minute read rule.  Hopefully it’ll be worth your time (precious though it is, I know).

 

 

In Part 1 of this two-part series, we considered how a set of results from any type of marketing campaign isn’t measurement by itself.  Rather, it’s part of a larger overall process that involves applying context to those results through a systematic approach involving many stakeholders working in sync.

 

Now we’ll see how this process all comes together.  Years ago, my agency team and I built a measurement model for a major spirits brand that was deeply involved in sports sponsorship.  Both my client and the professional team partner we based the initial model on will remain anonymous for confidentiality purposes.  I’ll also cover the methodology in broad strokes out of respect for the proprietary work involved.

 

 

Situational Overview

 

Our client’s sponsorship agreement with a professional sports team (the “partner”) was expiring.  They wanted to understand their current ROI to help guide renewal conversations.  The brand didn’t have any sort of measurement system in place for this, so our task was to build one from scratch.

 

End game:  determine whether they were getting their money’s worth based on their all-in spend (rights fee paid to the team plus additional investments to activate the partnership) as compared to the total value they received in return for this spend.

 

 

Measurement Infrastructure

 

This was all brand-new.  So, we had to figure out what it was that we were going to measure, how we were going to do that, and what each result would tell us at the end of the day.  We came up with four categories.

 

Sponsorship Asset Mix

We would determine how much all of the tangible assets the brand received from the team were actually worth (not including use of IP, category exclusivity, pass-through rights and intangible benefits whose values are highly subjective).  We used a proprietary model for this that incorporated CPMs, multipliers, discount rates, and other factors to arrive at defensible values for many of the items like venue signage and tickets.  Then, we worked with our client’s media agency to provide values for things such as radio spots and billboard ads.

 

Collectively, this would tell us whether the contractual value of the assets covered the rights fee being charged by the team.  We could then use that information to help our client negotiate an updated asset mix to improve its contractual value.

 

In-Venue Sales

Since this was a spirits brand, knowing how much of their product they moved at the team’s on-site F&B locations was important.  After all, it stands to reason that you’d want your sales to go up after signing a major deal with the team, not down (or even stay flat).  We’d pull case volumes using concessionaire reports and other industry resources like Nielsen TDLinx.

 

We could then compare profitability year over year at the venue to see if it was rising.  Additionally, we could compare profitability with other similar venues that weren’t sponsored by the brand but did sell its product to see if the enhanced marketing partnership made a sizable difference at the bar.

 

Retail Activation

Our client understood the power of branding and produced special-edition bottles featuring the team’s logo to sell in the local market.  It also developed team-themed signage for placement in liquor stores to promote those bottles.  We’d therefore compare sales of the special editions with sales of standard bottles in various outlets across the metro area.

 

Working in conjunction with the distribution division, the data we’d collect would indicate whether the promotion resulted in a marked increase in revenue during that time period.  We’d also be able to determine if that revenue outweighed the production costs for the special bottles and advertising.

 

Brand Activation

Just because the client had paid for various assets in its sponsorship deal doesn’t mean that it used them all.  We wanted to analyze how they were actually activating these things in the market aside from the branded bottles.  Were they using all their tickets?  Did they create fan promotions at local sports bars?  Did they do any sampling in the venue concourse areas?  Was there any paid media to support the sponsorship?  This would involve working with the brand team, local sales division, and media agency to aggregate available data.

 

Simply put, the deal’s rights fee was just one part of the picture.  The dollars spent to activate it also had to be factored in.  True ROI accounts for all return on all investment.

 

 

Key Findings

 

Since there was no measurement model already in place, there were no measurement goals to evaluate against.  So, the data we uncovered would serve as a benchmark for goals they could start creating for the partnership from that point forward.

 

Select findings and their significance included the following.

 

Asset Valuation

As a best practice, sponsors ought to pay no more than what their contractual assets are worth.  There are exceptions when it comes to things like venue naming rights that also rely on comparables (similar to home values).  But, for a team deal like this, the tickets, advertising, signage, and other assets should all at the very least add up to the partnership rights fee and ideally exceed it for immediate ROI before they even lift a finger.

 

Theirs didn’t.  They were overpaying by 35% based on what they were receiving in return.  Knowing this, we’d then use our proprietary valuation model to come up with alternative asset mixes that would help them break even in the next term.

 

Asset Utilization

In some cases, the above asset valuation is an indicator of potential value.  To realize actual value, the assets themselves need to be used by the sponsor.  It turned out that our client wasn’t using its full allotment of game tickets—by a long shot.  This left tens of thousands of dollars’ worth of inventory unused throughout the season.

 

That’s okay.  By doing this exercise, we were able to match brand and business objectives with the types of assets that would best fulfill them.  Knowing that tickets weren’t as much of a priority as they may have been at the beginning of the previous term let us convert them into more desirable assets to propose for the next term.  Sports organizations realize that needs change and they are motivated to keep partners on board, so this was perfectly reasonable (and often expected).

 

On-Site Product Sales

This project opened up lines of communication between the marketing, sales, and distribution divisions in ways that hadn’t happened before with sponsorship.  Those who felt like they were on the outside looking in were now asked for their input toward creating a better deal for all.  Improved collaboration brought immediate benefits in the form of new insights.  It turned out that, despite over a half a million dollars being spent annually on a full-fledged marketing partnership, product sales at the had venue declined each year of the term.

 

As you can imagine, this was obviously disappointing.  But, whereas before decisions would have been made on a single, siloed piece of information, greater collaboration opened opportunities for dialog and problem-solving.  Dipping sales didn’t occur in a vacuum—all of the corporation’s liquor brands were down at the venue.  The team’s attendance had been declining for several years due to poor performance, plus the previous season was an unusually wet one that kept even more fans away.  When we dug deeper, though, it was clear that sales of the sponsor brand weren’t down nearly as much as the others, which bode well for the effect of the partnership.

 

Understanding the economics of the situation not only helped tell the story internally, but it also revealed leverage points for the renewal negotiation.

 

Special-Edition Bottles

One of the biggest successes of the partnership came at retail.  The team-themed bottles made up nearly half of all sales at liquor stores that sold both these and non-themed bottles.  The even bigger story was the comparison between stores.  Total brand sales at locations that carried both types of bottles were up 37% year over year, whereas total sales at places that didn’t carry the team-themed bottle were down 12% from the previous year.

 

This was hugely exciting.  The program became an internal case study for the company’s other spirits brands and was recognized as a best-in-class activation by the team partner’s league.  Of course, that didn’t mean there wasn’t room for improvement.  We compared our knowledge of the fan base with product distribution timelines.  By releasing the bottle at the beginning of the season when excitement is high rather than at the end when the team is (ostensibly) already out of playoff contention, they would improve their chances for greater sales volume.

 

 

Takeaway

 

Measurement on this scale is a complex discipline that blends art and science.  No one metric or data source is all-encompassing.  We had to use our industry experience to evaluate logical combinations of various internal and third-party reporting to compile the data we needed.

 

Of course, as comprehensive as our model was, it didn’t include every conceivable input.  Brand health metrics, market share, etc. weren’t included at the time for various reasons, but certainly could have been introduced down the road.  As long as their value can be justifiably quantified and their causality be reasonably tied to the partnership, that would only add to the model’s strength.

 

That said, what we did accomplish was a first for any of the brands within our client’s larger beverage enterprise.  We demonstrated how the partnership was producing value, where it was producing value, and how it could be better structured and used to produce more value in the future.  We also showed leadership the benefits of stakeholder buy-in and role alignment at the beginning so as to make the back-end assessment fully turnkey.

 

Whether you’re prepping a spirits brand for sponsorship renewal or analyzing the effectiveness of a mail campaign, this type of strategic mindset can be tailored for any type of marketing analysis.  And if you’re lucky, yours will come with complimentary cocktails as well.

 

 

Want to talk measurement, booze, and/or sports?  Nice.  This way, please.