This month’s Stern Alumni spotlight is CEO and founder of Block Six Analytics, Adam Grossman. Block Six Analytics determines valuation for sponsorship and marketing opportunities in professional sports, and during The Oppy’s recent interview with Grossman, we asked him to give an example of this the only way we knew how: with comedians, racing cars, and mass-produced white bread.
Block Six Analytics measures the value of certain sponsorships, so I wanted to ask you about a thought experiment: Have you seen the movie Talladega Nights with Will Ferrell?
In that movie, Ferrell’s character Ricky Bobby is a NASCAR driver sponsored by Wonder Bread. Wonder Bread’s then-parent company, Interstate Bakeries, was approached about sponsoring him because those working on the film thought it would be funny to pair this crazy character with such a wholesome product. They did not charge Wonder Bread for that privilege, and the logo is all over that movie. There were estimates that the exposure gave anywhere from $4 million to $100 million of free advertising to Wonder Bread, so is that the kind of thing Block Six Analytics would do, and, for that particular example, is that the type of thing that makes your brain go crazy because it’s so much monetization that was lost, so to speak?
Well, yes and no. That is one thing we do. One of the things we look at is cross-channel asset valuation, so “in venue,” “on television,” “in movies,” on social media, hospitality, experiential marketing, IP evaluation analysis, etc. The point you bring up is a good one, though. Obviously, given the success of the movie, there was a lot of potential value. Now one of the challenges when it comes to logo activation in general is that different companies should get different value from the same asset. One of the things logo exposure and video is really good for is maximizing brand awareness and brand exposure. It’s not necessarily clear that Wonder Bread needed brand exposure or brand awareness, given its relative ubiquity for that type of product. When people think of bread, almost everyone thinks of Wonder Bread, for lack of a better term.
To be clear, there is value that’s being created, but it’s probably more likely on the $4 million end and not the $100 million end.
When you do an inherent asset valuation, you have to look at what, in this case, what are the assets that you’re looking at? What is it that they throw off? In this case, when you talk about sponsorship, you typically talk about the impressions and value of those impressions.
A saying I use frequently is from the book “Animal Farm.” The most famous line arguably is “All animals are created equal. Some animals are more equal than others.” That’s similar in sponsorship. All impressions are created equal, but some impressions are more equal than others. If you take a company-specific asset valuation approach, then you can determine that Wonder Bread vs. all the other sponsors that they had in the movie, each of them should get different values even from what look to be similar assets, because they have different businesses and different brand goals. That should be reflected in the context of the model.
So yes, it is definitely hard to see a movie like that and not be like, “Well…”, but one of the things that’s interesting about that in particular is clearly that movie had an initial box office run, but it also had a run on cable television, and, in particular, social media, right? There are still a lot of memes on social media to this day that have Will Ferrell or John C. Reilly or Sasha Baron Cohen. There are a lot of memes on social media where it is possible that Wonder Bread’s logo is featured in those memes, and then you want to be able to track not just what happens in the movie, but potentially outside of the movie as well in terms of what are people talking about, how are they talking about it.
One of the things I think would add more value is not necessarily from the logo exposure itself, but pairing the logo exposure with increases in sentiment, right? People will feel better, so to speak, about Wonder Bread, because they’re pairing it with the funny nature of the movie, and those lifts in sentiment have a stronger impact on lifts in revenue growth according to our model. I’ve never heard that specific example used before, but it’s definitely an interesting example.
You raise a good point about the social media impact on the longevity of that exposure. That movie is 14 years old and Wonder Bread has basically gotten a 14-year-long marketing campaign out of it with no cost or effort. Can you quantify something that is that long-range and that permeates the culture in that way, or is that one of the challenges you’re still trying to piece together?
I think the answer to both is yes. The main thing is it’s not necessarily technically limiting. It’s more like the cost and is it worth looking at it for a 15-year time horizon. The short answer is what you’re talking about is in general called “earned media,” right? Something, where you don’t pay for it, but you get the value of it, and that’s something that, increasingly, brands are trying to take a look at and quantify. When I worked for the Washington Capitals and we were trying to find a sponsor for the Scarlet Caps fan club, it’s not just that we necessarily sponsored the Capitals new female affinity club, and that’s the entirety of the activation, right? It’s not the entirety of the value. It’s what the Capitals do with that sponsorship is what happens in other channels, and being able to track what happens in other channels is certainly something that clients of ours are particularly interested in. So not just the owned channels of the league, team, event, or athlete, but does that spur on additional conversation and how do you track and value that conversation.
The specific way we look at brand sentiment and brand engagement and brand awareness, has a strong statistically significant correlation with revenue growth. So that way you can take these brand metrics, and when you see things where you get these lifts in awareness or sentiment, you can see, based on the lifts, what the expected probabilistic impact on revenue growth would be. That’s actually a relatively recent development for us, but that’s one of the ways we’re able to separate ourselves in the market.
These are from concepts derived in part from my time at NYU: How you can figure out whether it’s the regression analysis or any of the other things — detailed financial modeling — all the different things you learn at school. I basically took those kinds of concepts and applied them into the sponsorship and marketing space. What we ended up doing is we basically say, “We’re agnostic for the most part about the input or what the activation is. We’re focused on what the activation does.” So in your example, with the Wonder Bread and Talladega Nights, it’s not necessarily that it’s in the movie per se. It’s what being in the movie actually means if you break it down. That means exposure in box office, exposure in video, exposure in social media, and all of these owned and earned channels are picking up that information. That’s more of how we look at things and that’s similar to a discounted cash flow model in certain ways in terms of breaking those assets down into not necessarily what those assets are, but how do those assets generate free cash flow for an organization and what’s the value of that cash flow on a go-forward basis. So, it’s obviously not one to one, but it’s a similar construct that we try to apply in the space.