The value of sailing sponsorship

Ulrich Lacher on TV analysis of the major yacht racing events

Wednesday March 18th 2009, Author: James Boyd, Location: United Kingdom
One of the most important part of the World Yacht Racing Forum was the session entitled ‘learning the value of sailing sponsorship – how effective is the return?’. For this some heavyweight sports marketeers and sponsors made presentations, including Riccardo Simoneschi, best known as a Star sailor and skipper of the Audi Q8 TP52 but also a sports marketing expert in Italy; Annemarie Meyer from UBS, who who the giant sponsorship for UBS with Alinghi during the last America’s Cup; sponsor Andrew Pindar and Ulrich Lacher who’s company IFM Sports analyses TV and media figures from sporting events.

Annemarie Meyer pointed out that if the media market wasn’t there, it had to be created or at least the seeds sown so that it could grow - hence why the Inside Alinghi TV programme was created for Eurosport. Riccardo Simoneschi made the valuable point that in pitching sailing it was better to consider ‘Return on Objectives’ (ROO) rather than the more normal ‘Return on Investment’ and went out to spell out why this was the case.

The general message was that when pitching to sponsors, it is now no longer good enough to make pitches with a nice Powerpoint presentation and bristling with enthusiasm. These days marketing executives demand to know hard numbers, in particular TV viewing figures. The man with the man with the answers, or at least some answers, in this respect was Ulrich Lacher.

Here are some parts of Lacher’s presentation:

“I am going to start with a brief introduction of what we do. We are the biggest and most successful media research company in the world of sports. All we do is sports. We don’t do any other media evaluations. We have got offices in virtually every part of the globe and we have developed a number of tools that help sponsors, rights holders and federations to assess and value their sponsorships and their properties.

“So what should you monitor? There are three stages.

“There is the pre-sponsorship stage which looks at strategic data that can help you figure out where to invest and at which cost to invest and to make the contracts in such a way that you as a sponsor or you as a rights holder have a fair and transparent system that will avoid any potential conflicts later on in the partnership. There is obviously then the control and there is the post-race or post-sponsorship evaluation things that Francesco and I talked about in terms of ROI or ROO. Obviously for any ROI and ROO calculations there is one pre-requisite to do that, which both a lot of sponsors and a lot of rights holders still don’t do: If you want to measure your investment and if you want to measure your objectives, you had better define them first and that is unfortunately and particularly in sailing is not the case with a lot of sponsorship properties. So once you have defined them, you have got to control them and especially in this economic climate it is very, very important that you are able to measure and to justify your expenditures. Once you have done that it becomes a lot easier to make the decision if you are going to continue or discontinue with any property.

“So as I said, I have put together a number of figures here which are just snapshots, just to give you an idea what can be done in terms of where sailing is positioned, what it is worth, what is the platform like?

“We’ll start off with a general benchmark of sailing. Most of the sponsors that are involved in sailing consider it a premium platform and the other properties that sailing is up against is generally golf, horse sports and tennis.

“We generally distinguish between four parameters: The first one is the number of broadcasts. Now there are a number of different broadcast sites, but I’ll come to that later but obviously by being on a lot of news TV or on paid TV with a lot of re-runs you can influence the number of broadcasts that are shown. So that is the first very crude measurement stick - now many different programs are out there and maybe see that actually sailing isn’t doing too badly.

“The second element is how much coverage is out there? Ie: how long on average is any one of those broadcasts that are out there? Then you immediately see that tennis becomes the number 1 sport. We’ll see when we look at the audiences and then you see as well that tennis is the most watched of those premium sports. But all those figures only tell half the story. Like I said, you can have a lot of coverage by being on paid TV, but that is not necessarily good, if you are looking to raise brand awareness and you need a lot of eyeballs. You can push the number of eyeballs by doing what the America’s Cup did very very successfully, ie having a very sophisticated, good and well established news distribution system that will push your audiences, but it doesn’t necessarily give you the broadcast hours that you need to have the sponsors’ visibility to retain awareness.

“So as all good statisticians we try to come up with index systems which help to confuse everybody and obviously we’ve tried the same thing by establishing the IFM Event Index. All that it does is it links the length of the coverage for any particular program item to the audience of any particular program item. So obviously if you have a minute on the BBC News which is watched by 10 million people you want to know how that relates to an hour on Sky News which is watched by 5,000 people and the IFM Event Index allows you to do that. And there you can see immediately that sailing, compared to the other sports, has some catching up to do.

“Now of these sports that we saw before none of these sports has only one platform: Tennis is probably the best example of both. They have a number of platforms that compete for air time, for sponsors’ money, for exposure within their sport. In tennis it is the ATP Tour, it is the WTA Tour, it is the ITF with the Davis Cup and the Fed Cup and it is four Grand Slam tournaments. In golf it is the US PGA Tour with all their elements, it is the European PGA Tour, so you already see that there are a lot of different platforms. The same goes for show jumping. Less so for sailing where there are only, at this point in time, a limited number of programs or platforms that receive television coverage and they are mainly the America’s Cup and the Louis Vuitton Cup plus the Volvo Ocean Race. And here you see the same indicators that we saw before, the broadcasting time, the audience levels and the IFM Event Index and you immediately see that certain of the sailing platforms, particularly in the premium element, hold their own against the other properties that we are looking at.

“Then once you have the general overview that we just saw, we can look at how does a sailing event, where is it popular, how does it work, etc here you see the same parameter again, then you can see that there are some countries where some properties work, in this case Italy and Germany and Spain, and there are others where it doesn’t work - Netherlands and not surprisingly the UK, because they didn’t have any challengers or participants in that event.

“Obviously what sponsors are looking for, they are always looking for a comparison. ‘I have $1 million, I have got $2 million, I have got $500,000. Sailing is the platform for me – where do I go?’ What I am going to show you now is a bit misleading, because it only looks at a certain number of countries, it only looks at the TV element. There are other elements like print, like on-line, like the hospitality element, like things like internal communications that can’t be measured, the image of being associated with an event. But the platform for most of the sponsors is the TV side and here you can obviously see that at this point in time and following the discussions yesterday afternoon who knows if that is going to be the case any time soon, the America’s Cup is still the dominating sailing event in the globe. Volvo Ocean Race is very very solid, especially when you look at the number itself compared to other premium properties, but it can’t reach the America’s Cup. Now the question every sponsor will ask is ‘if I pay 1 million for 360 index points, what can I pay for the Volvo Ocean Race? And this is the type of data where we can help or where we support sponsors that are in the decision making process.”

…it goes on. Lacher concludes with:

“Sailing is not an easy to plan platform for sponsors. You need to activate and you need to leverage, if you are a sponsor, to make it successful and if you are a team or a rights holder, you need to be pro-active about supplying platforms like Alinghi did with the Inside Alinghi, to help promote your platform and to give your sponsors an additional platform to activate. Obviously if you are a team or a team sponsor, sporting success is critical but that is the same case with any sport be it cycling or Formula 1.

“You need to be able to prove that what you are delivering, delivers value for money. That done in a lot of the sports, particularly in the premium sports already and that is how you will be measured against what you are charging. You have to consider spending additional money, like Annamarie said, UBS did on media money, to actually make the event successful, to get your platform out there, if there isn’t enough genuine interest in the mainstream TV channels out there and in most cases, with the possible exception of Italy, in Europe it is not going to be there. So you have to see if you can create those platforms that are available, that means that you have to create and spend and invest in media news release to offer that platform to your sponsors. There are a lot of creative elements that help boost sponsor’s exposure. BMW Oracle did this very successfully with the computer animations that they had. And a key point, and that is proven with this year’s Volvo Ocean Race which has to be considered is that there is an increasing value in the internet coverage nowadays, especially from events like the Volvo Ocean Race.”

An interesting point was made from the floor by OC Group boss, Mark Turner: “Riccardo’s point on ROO, Return on Objective, is a really important one, because I think if we continually spend too much time comparing our sport on media values, we will pretty much always lose. And our real value is in return on all those other factors that have been raised over yesterday and today in your piece Riccardo. That said, unfortunately, absolute reality, is that the media value is still one of the very few things to have a number on them. Particularly, not just banks, but financial institutions which have been a big part of the sponsorship make-up in the sport, will always want those on the first Powerpoint slide when the guy is presenting back to his board.

“The real problem is, and thanks Ulrich for your analysis, but unfortunately beyond the America’s Cup and perhaps the Volvo, for the rest of us it is a real struggle to find the money to really do the analysis on a global scale, to actually support our properties, because the cost of that analysis is extraordinarily high. But we are actually obliged to do it. In our contract with iShares, close to a quarter of our actual budget can be taken away if we don’t achieve particular numeric media value targets, but actually their main objective is not at all media, but that’s the only thing today we have some actual numbers to put to. So it is a tough scenario.

“My question though is on TV. TV is the lion’s share, every time, of trying to achieve those media values, rightly or wrongly, because actually perhaps it is not what we should be measuring any more, particularly for the younger generation. But it is the biggest part of it. And the problem is – and I’ve seen figures here in the last two days and we read them all the time - your figures mention total sailing audience, I think of 260 million. I presume that is only in a 12 month period. If I add up the numbers we have already listened to or see on the screen here in the last two days - we are at something like 6 billion! So we have a fundamental problem, because we are all putting numbers around which make no sense at all. I think today alone, two events have claimed 700 million view-ship. And we have a real problem between the word ‘view-ship’ and ‘audience’. You numbers were for audience where were good to see and they sound pretty accurate. But how easy is it to really get those audience figures versus reach, which is what a lot of people are using and bandying around, in terms of the footprint of the stations they are going to. Just how easy is it to get those real audience figures in TV and how we get those, can we get those at a price we can actually afford to be able to do proper analysis of those and actually benefit from the coverage we are getting? Because right now it seems to me that there isn’t a solution to that and that forces us into using reach figures and mixing them up in translation between viewers and audience and everything else.”

To this Lacher replied: “You have got three values are flying around. There is the accumulated audience, which is the figure that we use. Yes, that can be measured and it can be measured in virtually every country around the globe and yes, it is expensive. But most properties are not global properties and most sponsors don’t look for global footprint, they have priority markets - 10, 12, 15 of them - and that reduces costs quite significantly. The second value then you have is the ‘technical reach’ and that causes problems indeed, because it was what was done 10 years ago. You had a TV broadcaster, you knew how many households it was reaching - potentially - and then you either take that figure or you assume that 1-5% of those figures were reached with any given TV broadcast. And that is obviously very very crude. You might get away with it. But if you have a sophisticated sponsor sitting at the end of the table - and there will be more and more of them, especially with the financial situation being what it is - you will have a problem. And the third figure is the actual classic reach figure, which are the individual viewers that were exposed to a property at any given point in time for 1, 3, 5 minutes. That is the least used figure and the one that only the advertisers are interested in because it helps calculate GRP. From your perspective, the ones you should go with is accumulated audience because that is what most sponsors are actually using and that is the actually people who watched a given program.”

The presentations, complete with the most relevant Powerpoint slides is available in the World Yacht Racing Transcript for a price of £75. Click here to purchase this.

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