Valuation tool coming to Australia finds sports sponsorship massively undervalued

Arvind Hickman
By Arvind Hickman | 27 March 2017
 

Brands that sponsor sports teams and competitions will be able to accurately measure the value of their investment across broadcast and digital channels for the first time.

New technology, which could provide a new currency for how sports sponsorship packages are valued, is being rolled out by computer vision platform GumGum in partnership with Catalyst Sports and Media.

GumGum Sports has officially been launched US and will come to these shores later this year.

The tool *see video below) applies computer vision technology to aggregate and analyse every brand impression during a sports match across live television, social media, streaming and in replays.

It recognises branding across every frame of footage in video and mentions across the social media ecosystem, such as shared content and likes and so on.

“Our goal is really to be the currency,” GumGum president and COO Phil Schraeder tells AdNews.

“We're working with the rights holder and brands and basically they won't be able do a deal without leveraging our technology and our insight around that value. Currently there's no other currency that exists, we've created that.

“When negotiations are taking place, we're providing insights into exactly what value a brand is getting. To the rights holders, it will give them more data into how they should be pricing their sponsorships.”

A valuation revolution

The global sports sponsorship industry is worth about US$60 billion a year but still relies on traditional valuation techniques that haven't evolved for several years.

The value of sponsorship packages are usually based on traditional metrics such as reach (attendance and TV ratings), market forces and perceptions about how successful a team is or the prestige of being attached to an event.

Sponsorship packages are often locked in for a number of years up front, such as shirt or kit sponsors.
While such factors are likely to continue playing a role in valuations, they fail to analyse how much exposure brands receive during broadcasts and across social media.

GumGum Sports technology will be able to provide much more granular real-time data, such as how often a logo is able to be viewed on a playing strip or in-stadium advertising board during a match, as well as the exposure and engagement on social media.

“It goes deeper than just what was the engagement, likes or how many impressions did you get. We also look at what was the quality of the logo in that post – was it solely the logo or was there another brand on a step in repeat or within the confines of a highlight reel,” Schraeder explains.

“We then create a media valuation cost and revenue association to those algorithms that we've built to provide that metrics back. We can give rights holders the success of all the brands that sponsored their event – the where and how. So we can then help them value different placements within an event or on jerseys – different parts of the sponsorship and adjust pricing on where is the value.”

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ROI undervalued by 100% to 500%

GumGum Sports has trialled the technology with US sports teams and rights holders, including NBA team the Brooklyn Nets.

“We've seen some remarkable success upward of 500% on ROI of additional value that they didn't even know they were gaining from social,” Schraeder says.

The GumGum president says the broadly sports sponsorship in the US is being undervalued between 100% to around 500% - alarming figures that could hugely inflate how much future sponsorship packages are valued if their tool becomes widely used.

“When you don't have that data and you have marketers that are focused on where and how do we really bring our brand presence across a multitude of distribution tactics, such as digital media activation through traditional advertising, through sponsorship dollars and traditional television,” Schraeder adds.

“Those data points and having access to understanding how deep each dollar is going within all of those different distribution tactics is critical for a CMO to be able to make those smart decisions.

Schraeder says this new currency could effectively inflate the value of sponsorship on current prices, but believes that marketers will now have the data to justify any increases in spend.

“What's interesting is will it cost brands more to sponsor a team or does it give them the reassurance that where they are putting the money backs out the ROI more effectively. Regardless of whether price goes up or price goes down, it becomes the currency and allows for effective decision-making and to be strategic about effective and smart investments,” he says. “We think this is going to change the conversations in negotiations entirely.”

Australia a big market

In sports mad Australia, such tool could be rolled out widely across all four football codes, cricket, netball, basketball and elsewhere.

“Australia is such a sports-oriented market. When you look at our big codes here, like cricket over the summer, and rugby league, AFL, rugby union in the winter – there's a lot of marketing investments here,” GumGum VP Australia and New Zealand Jon Stubley says, adding that he has been meeting with brands, sporting bodies and media agencies to showcase the product.

“When you think about TV and the value of rights for taking on one of the major codes with the networks under pressure to attract a broader audience, the implications are potentially huge. We're already starting to see various sports administrators becoming broadcasters themselves."

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The tool is not the only attempt to try and quantify the value of sports branding in a more granular way.

An Australian media technology expert, who spoke to AdNews on the basis of anonymity, says there are at least two other companies looking into similar solutions, but the GumGum offering was the best to hit the market at this stage.

"The market is moving more and more towards smarter and more complicated images and they're at the forefront of an important growth sector," the expert says. 

"The ability to do image recognition in live sports and measure the dollar figure based on the amount of time a brand was on screen and the eyeballs viewing it is technology that blows me away.

"I'm aware of two other companies that have similar technology...they're doing it in a slightly different way, but GumGum is the only one that attributes to user technology to calculate the value of brand recognition."

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