Media Value

Media value is one of the most widely used measures of sponsorship value, but this measure is arguably flawed. Does this add credibility to the industry, or breed cynicism amongst the major practitioners?

The marketing press recently quoted findings of research into the levels of media exposure for sponsors of individual Formula 1 teams. Analysis took place on a daily basis of every type of broadcast across seven European countries from January to June 1999, finding that Ferrari (30%) and McLaren (22%) accounted for over half the available exposure between them (Source: SRI). Not surprising, given the relative success of both teams in this season's championship. More surprising, though, was that this exposure had been valued at over $3bn each, had that airtime been purchased at commercial airtime rates.

What does this value tell us? On the face of it, it might say that McLaren and Ferrari are generating an extraordinarily good return on their investment, were we to know what their true investment in the sport really is. Or we might surmise that the marketing rights for F1 teams are massively undervalued.

In reality, valuing media exposure in isolation at commercial rate-card cost is misleading and meaningless. Very little advertising is ever bought at this price, and sponsorship media value quoted in this way fails to take account of the regular discounts that advertisers normally derive. Thirty seconds of logo exposure on screen, one mention of the sponsor in a press article, one reference to the sponsor within a radio broadcast, does not deliver the same impact as the same amount of broadcast or print space bought to communicate an advertising message.

There are very rare occasions when it can be argued that the value of being at the heart of the of an event, appealing to an audience usually difficult to reach by more traditional methods, might be worth more than rate card value. The same might be said for a product very visibly endorsed by an athlete in the heart of positive action. But more often than not marketers and rights holders persist in using hyper-inflated media value when presenting the outcomes of their events, without reference to context or campaign objectives.

Why is this? We believe there are three major issues at stake, the impact of which are inhibiting the growth of the sector and leading to cynicism amongst major practitioners. Firstly, the sponsorship industry lacks any universally agreed formula to approaching the discounting of rate card media values. We have seen factors of anything between 5% and 100% applied to the visibility of event signage within an industry that cannot agree on what is acceptable or meaningful, or reach consensus on a scientific approach upon which to base that assumption.

Secondly, too many sponsors still hold the belief that media coverage alone will achieve sponsorship goals (assuming these were known in the first place) and spend very little in exploiting the equity of the event to fully reach the hearts and minds of the audience. If the media component of a sponsorship package is evaluated in isolation, no account is taken of the impact of the message on the consumer or the quality and tone of the impression. There is also no understanding of the impact of the clutter of other sponsors on the recall of the consumer.

Thirdly, the use of rate card values for media coverage provides rights holders with the opportunity to oversell and overstate the media impact of their event to naïve marketers who should know better. Many take data provided by the rights holder at face value, as a means of post-rationalising a sponsorship spend and without undertaking their own independent assessment. It is little wonder, in our experience, that once an impartial evaluation is undertaken, so many sponsorship contracts and promised deliverables fail to stand up to scrutiny.

What can be done? Thankfully, we are seeing an increasing shift towards the understanding that sponsorship impacts the consumer in a different way to traditional communication methods, and that measuring media value is simply not enough. Integrated campaigns, trade and consumer promotions and on and off-line support all ensure maximum value from the equity of the event, and given the increasing entry cost and complexity of a decent campaign the need for an objective, strategic sponsorship approach is crucial.

All major sponsors need a return on investment framework that, dependent on the goals of the sponsorship in the first place, assesses not only the reach and media coverage of the activity but considers the impact on consumer behaviour, brand favourability and direct sales, where these can be specifically isolated. The media exposure that major events can offer is (usually) the major draw for sponsors, and if a value must be placed on it, far better to use a comparative index over time than a random use of rate cards and discounting factors. Impartiality is vital and this analysis should take place independently of the event's stakeholders - the rights holder, the rights sales agency and the event management company if used.

This framework enables sponsors to demonstrate to all levels of the business the value of the investment and enable comparisons between different sponsorship activities. It also helps to determine the strengths and weaknesses of the programme allowing remedial steps to be taken if the contract is long-term and a reconsidered approach and strategy to the next sponsorship if not.

And the future? The US Institute for Public Relations announced earlier this year plans for the creation of a commission, represented by a number of leading agencies and clients for the development of an international standard for the evaluation and measurement of PR. We believe the only plausible method for the development of a universally accepted sponsorship media value will be for a similar commission to be established equally populated by stakeholders in this industry. We need consensus, not discord, if sponsorship is to reach its full potential.

Sally Hancock
Chief Executive
Redmandarin