Recently I have had a plethora of discussions around “valuation”. These have been around questions like “what is my naming right worth?” or “what has changed in the valuation process for sponsorship and experiential marketing” and “what goes into the valuation process?” These are all great questions. And they should be the questions we are asking… truly what is new and different?
If we go back 15-20 years ago, the basis for asset valuation was basically on “eyeballs”. Or how many people will see my logo or my sign or be able to sample my product? It was a pure numbers game. That is still important to have the “eyeballs” as part of the valuation process, but with the sophistication and tools available today, the “impressions” numbers are only part of the process or simply one piece to the whole puzzle of asset valuations.
Other areas that play a critical role are the brand value. How valuable is your brand or what is the “halo” effect for the sponsor in being associated with your brand. If you are the Red Cross or the Canadian Cancer Society or the Montreal Canadiens, then there is typically enhanced “goodwill” with being aligned with your brand. And of course, you need to understand the recall factor of your asset’s exposure… how many times will your audience see these to build repetition of brand awareness beyond just the impressions themselves.
Another area we place importance on when doing valuations for clients is landscape studies for benchmarking. What is a similar organization getting for those assets? We compare several elements to match and create a “similar” organization. Other elements you may want to access is the immense research available by companies like Enigma Research, Data Jungle or SponsorPulse that will assist in both quantitative and qualitative analysis of assets to determine marketing valuation. In our considerations we use a great deal of Environics data around audiences associated to your organization which allows us to determine valuation based on the propensity of your audience to buy from certain sectors of the marketplace. All of these elements plus, in our case, three senior consultants who review the valuations each have over 30 years in the industry are critical in the valuation process. The three key overall elements that are important in your valuations process are the quantitative, qualitative and experience-based analysis. When you have all three of those mixed together you will get the most accurate valuations.
One last point. Remember, valuation is based on the marketing value and exposure / engagement of the association. It has nothing to do with the “cost” to deliver the asset. For instance, the naming right of a building or program or gala or tournament is not what the cost is to operate that program or building or gala or tournament might be, it is the value associated to reaching a given audience through that aligned investment.
It is exciting to write about this in today’s TMC as I am addressing “valuation” in an address I am giving to the International Association of Venue Managers in Vancouver later today. Perfect timing!!
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