Sponsorship Assignment 9b

Post-event Evaluation (Joyce Julius & Associates Methodology)

______

______

SPONSORSHIP VALUATION (Hypothetical)

Consider the following scenario where Coca-Cola was the official sponsor of the recent Gold Coast (Australia) Indy Car race. (All figures are quoted in Australian dollars). The sponsorship fee paid by Coca-Cola was $150,000 in cash and $25,000 in VIK. The contract provided Coca- Cola with the right of first refusal for next year’s race and guaranteed that their cost for renewing the sponsorship would not increase though it is anticipated that new sponsors will be required to make a total commitment of $210,000 for the 2011 race. The total number of official sponsors will remain unchanged at six; however, category exclusivity is not provided. In an effort to leverage their sponsorship and discourage ambush marketers, Coke purchased fifteen 30 second ads which were aired during the live broadcast. There were a total of 60 commercials by 27 different companies aired during the broadcast; each 30 second spot cost the advertiser $ 9,000. Additionally, each sponsor received a “free” one page print ad in the official program that was sold at the race site. Coca-Cola purchased an additional page at the prevailing price of $12,000. During the live broadcast, Coca-Cola trademarks appeared on TV for a total of 255 seconds. In an effort to ambush Coca-Cola, competitor Pepsi-Cola purchased a total of 6 advertising spots. Ironically, despite not being an official sponsor (and perhaps because one of the drivers is related to a Pepsi executive), Pepsi-Cola was mentioned by the announcers two times during the broadcast. Coca-Cola fared even better with six mentions during the course of the race and one more during the interview with the winning driver. In one additional effort to provide collateral support to its sponsorship, Coca-Cola committed a total of $53,000 for displays at super markets on the Gold Coast during a 4-week period that coincided with racepromotions and activities.

A) What was Coca-Cola’s commitment for fees paid for sponsorship rights?

B) How much did Coca-Cola spend leveraging their sponsorship?

C) What is the estimate of the economic (comparable or equivalent) value of Coca-Cola’s sponsorship?

D) Given today’s standards, did they do an adequate job of leveraging the sponsorship? Explain.

E) Given the data above, was the decision to be a sponsor a good one? Explain your reasons for your answer.