Aussie sponsorship platform set to become 'global standard'

Arvind Hickman
By Arvind Hickman | 26 April 2018
Turnstile was trialed at Formula One races last year

This first appeared in the April issue of AdNews Magazine.

An Australian–designed sponsorship valuation platform could become the new currency for the US$62 billion global sponsorship market.

Turnstile, created by Australian sports and entertainment marketing company, Gemba Group, is a new approach to valuation, providing buyers and sellers with the ability to recognise physical assets such as signage and tickets exposure, as well as the intellectual property of sponsorships.

The approach has been extensively tested with Formula 1 and is attracting interest from leading global brands, clubs and sports bodies in the US, UK and Europe.

“I wouldn’t be surprised if you don’t see this become the standard way in how people analyse things inside a couple of years,” Murray Barnett, Formula 1’s head of global sponsorship and commercial partners told AdNews.

“We implemented it for the first time last year in a pilot format and will implement it more robustly this year,” he revealed.

Formula 1 has been looking for a new approach to valuation after becoming frustrated by the limitations and inconsistency of other valuation methods. 

“We’ve been very unhappy with the way people evaluate sponsorship, it doesn’t give a full picture of what the sponsorship is achieving," Barnett said.

“People haven’t been given the right metrics to analyse the success or failure of their partnerships. It’s valued in a very antiquated way and we need to bring it more into the 21st century. 

With sponsorships valuations stuck in the past they often weigh heavily on a range of exposure methodologies and the perceived value of hard assets like tickets.

“What quite often happens is the industry mixes up a buying approach [to sponsorship] and what we are trying to do here understand the appropriate price to pay for an asset,” Rob Mills, Gemba CEO and director, explained.

Quite often people mix up an ROI conversation, Mills said, which starts by looking at what the benefits are that might come out of a sponsorship, such as direct sales or brand lift. 

“We would treat that very separately as a different metric to a buying metric,” he said.

The aim of Turnstile is to drive a consistent approach to how sponsorship is valued as well as being able to benchmark a code’s intellectual property against other sports. Gemba revealed it’s based on 10 years of consulting work helping buyers and sellers deconstruct and understand the value of “hundreds” of sponsorship deals.

This approach focuses on three core components:

  1.   Benefits: Tickets, hospitality, media assets and other inventory with proven market rates.
  2.   Exposure: Using a proprietary methodology to assess the effectiveness of logo exposure, Turnstile captures logo exposures and then outputs values that reflect actual market rates of the sponsorship industry.
  3.   Intellectual Property: A proprietary algorithm that calculates the fan bases of sponsorship properties.

Mills says TV broadcasters have shown interest in the valuation method to work out how much integrations of their sports and entertainment properties are. He told AdNews the new approach should see a drop in some of the “wildly exaggerated exposure valuations” and a lift in IP valuations of sporting codes.

“We might see a contract value of $10 million, we might then value it at $11 million, but the media exposure value might reach $40 million,” he said. 

“Nobody really believes that number anyway. We’re better off having a grounded discussion in what these things are worth and the different components of value.”

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