DeterminingFair Market, MarkOrding- IEG

Transcription

page 1
Determining the Fair Market Value of Sponsorships
Presented by Mark Ording and Tom Perros, IEG, LLC, March, 2011
TITLE OF PRESENTATION
Determining
the Fair Market Value
of Sponsorships
Mark Ording, Vice President, IEG Consulting Group
Tom Perros, Senior Director, IEG Consulting Group
Why Determining Fair Market Value Is Important
Helps rightsholders determine what to charge and sponsors
determine a fair price
Allows both sides to overcome unrealistic expectations
of what it’s worth
Eliminates guessing games and wasted time going back
and forth
© 2011 IEG, LLC. All Rights Reserved. IEG, LLC prides itself for innovation and quality in the content, layout and design of IEG® products.
IEG® products are protected by a variety of intellectual property rights, including, but not limited to, federally registered trademarks and copyrights. These
trademarks and copyrights not only recognize the distinctiveness, creativity and trade dress of IEG® products, but also afford legal protection to IEG, LLC
from infringement of its rights. IEG, LLC will diligently enforce its intellectual property rights and prosecute those who infringe on those rights.
page 2
Fair Market Value is Not the Same as ROI
Price – The upfront cost of the sponsorship (rights fee)
Fair Market Value – What the rights and benefits are worth
on the open market
ROI – The bottom line impact on the sponsor’s business
and objectives
Fair Market Value vs. ROI
Fair Market Value
ROI
What does it measure?
Value of rights
and benefits
Sponsor’s bottom line return
What is the measured
value compared to?
Price tag
All of the sponsor’s costs
(e.g., rights fee, activation costs)
When is it measured?
Typically before
contract is signed
Typically after the term is over
What is included
in the calculation?
Tangible and intangible
benefits, geographic
reach
New business, increased brand
awareness and loyalty, enhanced
image, etc.,
page 3
IEG Valuation Service
Developed by IEG based upon 25 years of tracking sponsorship
industry
Backed up by IEG’s sponsorship intelligence database and
review of hundreds of sponsorship contracts each year
Endorsed by nearly 200 sponsors
Street-tested with more than 2,000 properties and hundreds
of sponsorship sales
Used by sponsors and properties to justify millions of dollars
of sponsorship fees and promotional value
Why Clients Hire IEG for Valuation
Need a third-party, objective view of value
Need to justify price/value internally
Want to maximize opportunity
Can’t do everything themselves!
page 4
Pricing Process
$$
PRICE
PRICE
SPONSORSHIP
SPONSORSHIP
BENEFITS
BENEFITS
PROPERTY ASSETS
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COMPETITIVE
COMPETITIVE
ANALYSIS
ANALYSIS
Four Main Components of IEG Valuation
Methodology
1 Tangibles – Quantitative Assets
2 Intangibles – Qualitative Assets
3 Geographic Reach – Market Reach for Sponsor’s Activation
4 Price Adjusters – Market Factors to Consider
page 5
Tangible Benefits
What are Tangible Benefits?
The “stuff” in a sponsorship package
Can be measured based on attendance, circulation,
quantities, rate-card rates, face values
Valued based on quantity and quality of benefit
page 6
Sponsor Recognition in Measured Media
Sponsor ID on/in:
Event Broadcast (TV, radio)
Property Media Buy (paid and/or trade advertising)
VALUE RANGE
ID: 5-10% of rate-card value
Messaging: 25-75% of rate card value
Sponsor Recognition in Non-Measured Media
Sponsor ID on/in:
On-Site Signage
Public Address Announcements
Publications/Collateral Materials
Property Website
VALUE RANGE
$.0025 - $.10 per impression
page 7
High-Impact Website Visibility:
MasterCard and UEFA
Sponsor Integration in Social Media
Social media about engagement, not impressions
Could be valuable to sponsors as an extension of a sponsorship
or activation platform, but not as a stand-alone benefit
Intangible value of social media integration far more important
than tangible value
page 8
Sampling/Display
Types:
Product Display Booths
Interactive Displays
Entrance/Exit Sampling
Inserts in Goody Bags
VALUE RANGE
Rate-card, or $.04 - $.25 per person sampled
High-Impact Display:
Ford and FrancoFolies de Montreal
page 9
Database Access and Mailing Lists
Types:
Use of Mailing List
Use of Email List
Insert in Property Mailing
VALUE RANGE
$.075 - $.15 per name
Tickets and Hospitality
Types:
Event tickets
Suites
VIP receptions
Backstage passes
Athlete appearances
VALUE RANGE
Face Value, or $25 to $750 per person
page 10
High-Impact Hospitality:
HP and San Francisco 49ers
Face Value, or $25 t $750 per person
Summary of Tangible Benefit Types & Values
Type
Value Range
Measured Media
5% to 10% of rate-card value
Non-Measured Media
$.0025 to $.10 per impression
Sampling/Display
$.04 to $.25 per person
Database Access
$.075 to $.15 per person
Tickets/Hospitality
$25 to $750 per person
Note: See download on IEG Conference Dashboard website for more detail and examples
page 11
Example Tangible Benefits Worksheet
Description
Value
On-Site Signage/ID
$17,500
Publications/Collateral
$15,000
Web Site
$3,200
Sponsor ID in Measured Media
$50,000
Sampling/Display
$6,500
Tickets/Hospitality
$27,500
GRAND TOTAL =
$119,700
Intangible Benefits
page 12
Intangible Benefits
Intangibles are the qualitative benefits in a sponsorship
package
Intangibles are what distinguish one property from another,
and what distinguish sponsorship from the rest of the
marketing mix
10 Types of Intangible Benefits
1 Prestige
2 Awareness
3 Audience Loyalty
4 Category Exclusivity
Intangible
INTANGIBLES
Assets
5 Ambush Protection
6 Clutter Management
7 Ability to Activate
8 Networking Opportunities
9 Media Coverage
10 Track Record
page 13
How IEG Accounts for Intangibles
Full disclosure: IEG employs a proprietary methodology
to determine the impact and value of intangibles
IEG scores each intangible element on a scale of 1-10,
scored against standard criteria and similar properties
Total intangibles score and geographic reach determine
a multiplier, which is applied against tangible value
Average impact of intangibles and geographic reach is
between 1.2 and 3.5 times the value of the tangibles
1) Prestige of Property
What it is:
A measure of how meaningful/relevant
property is to its audience
How to Evaluate it:
Property attributes/imagery research
Tier of league / sanctioning body / level of competition
Types of athletes/celebrities involved
Amount of prize money
Awards won by property
page 14
2) Level of Audience Interest/Loyalty
What it is:
A measure of the propensity of your audience
to actively support sponsors because of their link
to the property
How to Evaluate it:
Attendance history and capacity patterns
Number of season ticketholders/subscribers and renewal rates
Number of Twitter followers and Facebook fans
Surveys and results that document audience attitudes and
behavior regarding sponsorship
3) Category Exclusivity
What it is:
A measure of the ability of a sponsor to forge a
unique relationship with the property apart from
its competitors
How to Evaluate it:
Number of product/service categories included in
the sponsorship
Depth of exclusivity within the property (e.g., on-site
during event, venue, off-site, broadcast)
page 15
4) Degree of Sponsor Clutter
What it is:
A measure of how many companies are competing
for share of voice related to the property
How to Evaluate it:
Number of total marketing partners and “official”
designations
Exposure and positioning compared to other sponsors
Attainment of a proprietary event, area, program or
component
5) Ability to Activate
What it is:
A measure of how easy it will be for the sponsor
to promote its association with the property
How to Evaluate it:
Built-in promotional opportunities
Types of exclusive access/experiences
Guaranteed sales rights (on-site, off-site, licensing)
Pass-through rights
page 16
6) Awareness of Property
What it is:
A measure of how familiar targeted audiences
are with your property
How to Evaluate it:
Amount of promotion and advertising around property
Amount of guaranteed broadcast coverage
Year founded and number of years using same
marks/logos
Awareness studies
7) Protection from Ambush
What it is:
A measure of how well you limit opportunities
for sponsor competitors to claim an association
with your property
How to Evaluate it:
Number and types of benefits sold “a la carte”
Permanent signage and advertisers at venue
Property’s control of athletes and performers
Property’s control of broadcast
Use of property logos and promotions by cosponsors/
promotional partners
page 17
8) Networking Opportunities
What it is:
A measure of the value of cosponsors and the
opportunity for a sponsor to work with them
How to Evaluate it:
Blue chip cosponsors in varied distribution channels
Property-organized workshops and networking receptions
9) Media Coverage Potential
What it is:
A measure of the ability of the property to
attract print and broadcast coverage
How to Evaluate it:
Amount of media coverage generated for events
Presence of media partners
Dedicated PR agency or property PR staff
Third-party media equivalency reports
page 18
10) Property’s Track Record
What it is:
A measure of how well you have worked with
previous sponsors
How to Evaluate it:
Number of years working with sponsors
Dedicated servicing staff
Fulfillment/post-mortem reports
Annual sponsor renewal rate
Over-delivered benefits
Example IEG Intangible Scorecard
Benefit
Score
Prestige of Property
7
Awareness
8
Level of Audience Interest/Loyalty
7
Category Exclusivity
10
Protection from Ambush
9
Degree of Sponsor Clutter
9
Ability to Activate
8
Networking Opportunities
9
Media Coverage Potential
7
Established Track Record
6
TOTAL =
80
page 19
Geographic Reach and
Price Adjusters
Geographic Reach
Geographic Reach reflects the number, size and value of
markets in which a sponsor is likely to promote its affiliation
with the property
INTERNATIONAL
REGIONAL
LOCAL
STATEWIDE
NATIONAL
page 20
Simplified Valuation Methodology
Sum of Tangible Benefits
x
Intangibles & Geographic Reach Factor
(Apply multiplier of 1.2 – 3.5)
= Starting Point for Fair Market Value
Note: Still need to account for price adjusters and market
factors before the fair market value can be determined
Examples of Accounting for Effect
of Intangibles and Geographic Reach
Ex. #1: Undeveloped Intangibles, Local Reach
Value of Tangible Benefits
Multiplier
Total Package Value
$120,000
x 1.2
$144,000
Ex. #2: Highly Developed Intangibles, National Reach
Value of Tangible Benefits
Multiplier
Total Package Value
$120,000
x 3.5
$420,000
page 21
Price Adjusters
Factors that must be considered to arrive
to a fair price:
Sponsor’s category
Supply of similar opportunities
Sponsor’s promotional commitment
TITLE OF PRESENTATION
Takeaways
page 22
Key Takeaways for Determining FMV
The first step to any value calculation is determining
degree of fit with sponsor’s objectives
Even the biggest and most prestigious properties have
no value to the wrong sponsors
The property’s intangibles can account for half or
more of the total fair market value
It’s difficult to come up with a definitive, objective fair
market value on your own
Key Value Drivers in a Sponsorship Package
Unique and exclusive sponsorship elements
“Can’t buy” hospitality opportunities
Interactive and engaging proprietary areas for sponsors
Demonstration of audience interest, loyalty and purchasing
behavior through research
Extended promotional timeframe and year-round platforms
page 23
Pricing Tips for Properties
Reduce benefits, not prices
Slice categories thinly
Start small and build the relationship over time
Pricing Tips for Sponsors
Only pay for benefits you plan to use
For multi-year deals, exchange or “trade in”
unused benefits
Utilize pass through rights
page 24
Downloads
Downloads available at
www.sponsorship.com/dashboard:
Valuation Session PowerPoint
Tangible Benefits Worksheet
IEG Valuation Statement Prototype
page 25
Thank You
IEG’s Tangible Assets Worksheets
Guaranteed Sponsor ID in Measured Media
Description
Reach
Amount
Notes
ID on Property’s
Media Buy
Value of ad buy
with sponsor ID
5–10%
• Value at between 5 and 10% of rate card value of
media that includes sponsor ID
• Generally 10% for Title; 7.5% for Presenting; 5%
for Cosponsors
• 7.5% for Title Sponsor ID in Ads Placed by 3rd
Party Promoters
• Include both paid and donated media (IK or trade)
ID Visible
on Event
Broadcasts
Advertising
equivalent value
of televised
signage time
10%
• Calculate number of seconds sponsor receives
clear, in-focus exposure per broadcast; Determine
equivalent value in :30 increments and discount
by 90%
• Generally value at 10% of advertising equivalency
value
• Quality sponsor messaging or highly integrated
features could be valued between 25% to 75%
Guaranteed Sponsor ID in Non-Measured Media – Publications and Collateral
Description
Reach
Amount
ID on Tickets
Number of
tickets printed
$.0025–$.05
ID on Program
Book/Collateral
Piece
Number of
pieces printed
$.0025–$.05 •
•
•
•
•
ID in Email
Newsletter
Circulation of
each distribution
$.0025–$.05
Ad in Property
Publication
(no rate-card)
Number of
pieces printed
$.0025–$.05 • Ads in general are valued at $.03 per book
© 2011 IEG, LLC. All Rights Reserved.
Notes
• Fewer logos higher the value
• More keepsake-like the ticket is, higher the value
• Rarely more than $.03 which is reserved for
couponing offer on ticketbacks
Multiply value only by number of pieces printed
ID on cover more valuable than ID on inside
Logos on schedules, program books: $.01
Rarely more than $.02 for most items
Keepsake and souvenir items with sponsor ID
valued up to $.05
• Can apply email open-rate to ensure benefit is
not overvalued
• ID on top of email generally more valuable
• Rarely more than $.01-$.02
Guaranteed Sponsor ID in Non-Measured Media – Website
Description
Reach
Amount
ID on Property
Web Site
Number of
unique visitors
$.0025–$.10
Notes
• Unique visitors is the proper number to calculate
value against; estimate number of visitors likely
to visit page or see logo
• The more niched the site and the more integrated
the sponsor’s content, the higher the value
• Benefits beyond ID such as cobranded content may
be more than $.05 per unique visitor
• ID & Link: $0.01
• Click Through Banner Ad: $0.02-$0.03
• Logo, Link, Product Info: $0.03
• Sponsor Page/Thank You Page: Typically assume
5-10% of Unique Visitors will see
Guaranteed Sponsor ID in Non-Measured Media – On-Site Signage or Mentions
Description
Reach
Amount
Signs with
Sponsor ID
(no rate-card)
Number of
attendees
$.0025–$.05 • Multiply value by the number of attendees likely
to see sign
• More or longer they will see, more valuable
• Exclusive and non-cluttered signage more valuable
• Static signage most often worth $.0025-$.005
• On-field signage worth $.02-$.03
• Street Banners/Directional Signage/Exterior Marquees
visible from highways/streets: need DOT/Highway
Department documentation with number per vehicle
Electronic Logos
Number of
attendees who
will see
$.0025–$.05 • Electronic or moving signage is slightly more valuable
than static
• Rarely more valuable than $.02 per attendee
30-second Ads
on Jumbotron
Number of
attendees
who will see
$.0025–$.05
PA
Announcements
Number of
attendees
who will hear
$.0025–$.05 • Generally valued at $.0025-$.005 and low percent hear
• May be higher if sponsor acknowledgement is well
integrated into the performance
Notes
• Ads are generally valued at $.03 per attendee
• Count only the number of attendees likely to see
the ad
Mailing Lists
Description
Reach
Amount
Use of Property
Mailing List
Number of
names mailed
$.075–$.15
Notes
• Use $.15 if list is not compiled, not sold á la carte
and is fairly well targeted
• Use $.20 if list is well targeted, i.e. Member Mailing list
• Can be more valuable if names are not available
elsewhere and are of a highly loyal constituency
Sampling
Description
Reach
Amount
Product
Sampling/
Display
Number of
people sampled
$.04–$.25
Notes
• Count only the number of people likely to be
sampled, not necessarily total number of attendees
• Inserts in goody-bags: generally $.04
• Face-to-face sampling: generally $.075 to $.15
• Highly integrated/engaging display: up to $.25
• Can be more valuable if highly desirable or hard-toreach audience
Tickets and Hospitality
Description
Reach
Amount
Notes
Tickets to
Event
Number of
tickets
Face value
or percent
of capacity
• If ticket has face value, use unless event gets less
than 70% capacity, then discount
• If ticket has no face value, use range of $25 to $750
depending on desirability of ticket or pass
• Exclusive passes and VIP hospitality valued higher
based on desirability
Facility Usage
for Sponsor
Function
Number of days
Face value
or sponsor
discount
• If facility is rented out, use standard rental fee
• If no face value, base on comparables
Advertising in Measured Media
Description
Reach
Amount
Ad in Audited
Media
Rate card
value of ad
100%
Notes
• Value at rate card and unbundle from the sponsorship
benefits so as to make offer as transparent as possible

DeterminingFair Market, MarkOrding- IEG

Transcription

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