Asset Valuation

Asset Valuation

In the past several months, as we have delivered more and more virtual training and mentoring services, I have received an array of common questions. I made a list. This week and for the next two weeks, I will address three of the top recurring questions. This week, is it “How do I value sponsorship marketing assets and why?” followed next week by “Why can I not use stock packages?” and finally, “Why internal capacity-building versus outsourced sales?” If you have questions you want answered, feel free to shoot them to me through this link Questions for Brent to answer in an upcoming TMC.

How do I value sponsorship marketing assets and why?

There are several ways to determine the value of your assets/packages. But first let’s answer the why! It’s simple. You need to know the market value of your products just like a store or any business. Once you determine the market value, you can “make a stand” on that value. If you were selling your house, you would ask a professional, or at least do research to determine its market value. You would hate to list it too low or too high and not get the desired results. But if you know it is worth $550,000 to $600,000, then you would list or try and sell it in that range. Your sponsorship assets are the same. You need to know what they are worth—and the sponsors will do their own evaluations and determine what they are worth to them. When both do it right, the numbers should be pretty close!

Now that we have determined why you need to value your assets, let’s look at how to value them. First, understand that the value of your assets is much more than just “the number of eyeballs that see it.” For decades, properties and sponsors have evaluated sponsorship marketing assets like media buys. They determine how many people will see the logo, message, or experience and place a value against that. Too many agencies still do that. The value of your assets includes those quantitative valuations, but that is only part of it. There is the goodwill you provide to a sponsor “to be associated with the property.” Plus, there are the activation opportunities combined with B2B opportunities, and audience delivery. As I pointed out to one client recently, it is not always the largest of crowds that you want. It’s the quality of those crowds. It’s far better to have 1000 people who will buy your product than 10,000 people who will not (or cannot) buy it! So understand, in determining a value, there more than just eyeballs.

Second, understand that you can do this yourself or you can outsource it. Outsourcing to a professional like our team at the Partnership Group – Sponsorship Specialists® or any of our competitors (there are lots) is one way. It will save time, ensure accuracy, and is third party verified. But it will cost money! Alternatively, you can do it yourself. There is no cash investment, but you use up a lot of your sponsorship person’s time when they could be out selling. Plus, it will take them longer, and they will typically get a less comprehensive and less accurate valuation delivery. But both options work.

There are three ways to value your assets. One is to copy your competition. If they have a golf tournament and yours is pretty much the same, use their values. (If they had them professionally done—yahoo!—yours will be pretty accurate.) If your event is higher end, or has more attendees or a more qualified audience, then up your price from theirs, and vice versa. This is truly a viable option. It will save time and money, but is typically not very accurate and will only give you “package” values versus specific asset values.

The second way (not recommended, but we see it often) is what I call “Throw it against the wall and see if it sticks valuation.” This is where you throw out a number, guess what the sponsor is willing to pay, and hope they will buy what you are selling for what you are asking. I am going to say, “No one reading this would ever do that—I hope!” But we see it all the time. It can work, especially if the sponsor prospect has no experience in sponsorship marketing, or they are thinking more about philanthropy than marketing opportunities.

Then there’s the professional approach. In simple terms, set up a spread sheet, and in column A, list every single asset you can think of selling—logo on your web site, logo on your posters, right to set up a booth, right to sample product, right to hang a banner at the entrance, right to hang a banner on the stage, etc. The list should be long. When you look at every little thing you could sell, you have lots. Then figure out how many people will see or experience it and determine a value for each “impression.” Then look at the value of the association with your property. Some agencies use a derivative and multiply by 2 or .5 to determine intangible value or goodwill. Others like us work to determine the actual goodwill value through proprietary formulas. But understand that is a big part of the value. Then also determine what type of audience they will be met with. Take that into account and also if the messaging will be one time, or perhaps over and over all year. All the formulas we use in valuations for our clients can be found in Reality Check – Straight Talk about Sponsorship Marketing. Also, if you Google, you will probably find several versions of valuation formulas.

The key thing to remember with valuation is that it is more than eyeballs. It is about association and opportunity, and determining what that is worth.

And remember, if you have questions you want answered, feel free to shoot them to me through this link Questions for Brent to answer in an upcoming TMC.

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