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Racewriter
07-18-04, 11:43 AM
Through some media connections, I've been able to get my hands on a few Joyce Julius reports for some of this year's IRL and IPS races. For those who don't know, the JJ reports are the "bible" on accounting for sponsor ROI in individual races. They are used as a primary source by race teams pitching sponsorships, and also by teams reporting back to current sponsors on their received value. There are also some sample reports for other series on the Joyce Julius website at www.joycejulius.com and they provide some very interesting comparisons - and explanations for the IRL's inability to get full fields and non-leveraged sponsorships.

Don't ask for links for this year's reports. I have paper copies, not electronic. You can either believe what I quote, or not - I don't care. What I'm going to quote is the line calculating "Total Sponsor Value," or the total exposure value of each race.

First, the two IPS reports in my possession are Homestead and Phoenix, 2004. Phoenix returned $359,000 and Homestead returned $445,000.

The Indy 500 generated a total value of $149,000,000.

The Richmond IRL race generated $5,790,000.

Homestead IRL generated $5,301,000.

Now, here are some samples. First, let's look at series that cost about the same or less than IPS:

2002 USAC Sprints, Cedar Rapids, Iowa: $554,000
2002 ASA, Irwindale, CA: $2,327,400
2000 World of Outlaws, Las Vegas - $7,432,000

Next, let's look at the NASCAR big three series:

2002 Subway 400, Winston Cup, Rockingham: $104,791,380
2002 BGN, Rockingham: $21,109,000
2002 Craftsman Truck, Martinsville: $10,318,000

What does this mean? Simple:

A televised USAC Sprint race has more ROI than IPS, and ASA and WoO do as well.

A run of the mill Cup race has 2/3 the ROI of the Indy 500, and 20x the ROI of a run of the mill IRL race.

A run of the mill BGN race has 4x the ROI of a run of the mill IRL race, and a Truck race has double.

Is it any wonder that the only way teams can raise enough money to run the IRL is by the engine manufacturers, and their allied deals?

Chitowncartfreak
07-18-04, 11:49 AM
Wow, that's good stuff, Racewriter. As you say, JJ is the "Bible" for determining sponsorship value. I'm sure the IRL numbers will only continue to drop. We're nearing the point where even the Indy 500 won't be enough to keep sponsors involved.

Chitowncartfreak
07-18-04, 12:05 PM
To clarify, Racewriter, the ROI you quote is purely the value of the exposure they receive from the sponsorship and does not account for how much the sponsor is paying for the sponsorship, correct? So, a sponsor would take this info and compare the cost of this expoure to the costs of other advertising mediums and choose the advertising/sponsorship mediums that produce the most bang for the buck.

Racewriter
07-18-04, 12:09 PM
To clarify, Racewriter, the ROI you quote is purely the value of the exposure they receive from the sponsorship and does not account for how much the sponsor is paying for the sponsorship, correct? So, a sponsor would take this info and compare the cost of this expoure to the costs of other advertising mediums and choose the advertising/sponsorship mediums that produce the most bang for the buck.

Correct. You can go to www.joycejulius.com and see some sample reports. Click "sponsor report," then "standard sample reports," then your choice of series. JJ has no access to how much companies are paying for sponsorship.

Chitowncartfreak
07-18-04, 12:16 PM
Interesting stuff. There is no way an IRL sponsorship can payout. We haven't even discussed how many incremental sales of the sponsor's product it takes to make the sponsorship investment worthwhile. It would be very difficult to generate incremental revenue greater than the cost of the sponsorship with that little exposure (the company I work for can measure that).

nrc
07-18-04, 12:25 PM
Something else to keep in mind. IRC, the "value" of the exposure is set according to the ad rate for the program being aired. So the actual number of people who are watching the program doesn't really enter into the equation, except as it affects the ad rate. Since the IRL has certain sponsors locked into buying ad time, I would bet that they're paying more than the time is really worth based on viewers.

JoeBob
07-18-04, 01:19 PM
Joyce Julius has used the same ad rate for the IRL since at least 2000.

Ziggy
07-18-04, 02:06 PM
How much did Defender charge you for this info?

woosh

Ziggy

jonovision_man
07-18-04, 03:32 PM
Hate to ask, but what about Champcars? I can't imagine it's good news, other than a few events like LB.

Racewriter
07-18-04, 03:36 PM
Hate to ask, but what about Champcars? I can't imagine it's good news, other than a few events like LB.

I don't have any CCWS info. However, considering that ad rates, times, etc. are the key factors, I can't imagine that it would be much different.

DaveL
07-18-04, 04:38 PM
A run of the mill BGN race has 4x the ROI of a run of the mill IRL race, and a Truck race has double.

Is it any wonder that the only way teams can raise enough money to run the IRL is by the engine manufacturers, and their allied deals?

Those were my exact thoughts.

Let's say you can run a good BGN program for IRL money. Reasonable, no? If you multiply the ROI over the course of a season, that 4x becomes 60x or more because there are more BGN races and therefore more opportunities for exposure. Even with Indy thrown in, a sponsor gets almost exponentially more ROI from BGN than it can dream of from the IRL.

Like R-dub said, without the subsidies and allied sponsorships from the auto mfgs, the IRL has no grid. It's the same false prosperity that CART had.

Racewriter
07-18-04, 05:03 PM
Those were my exact thoughts.

Let's say you can run a good BGN program for IRL money. Reasonable, no? If you multiply the ROI over the course of a season, that 4x becomes 60x or more because there are more BGN races and therefore more opportunities for exposure. Even with Indy thrown in, a sponsor gets almost exponentially more ROI from BGN than it can dream of from the IRL.

Like R-dub said, without the subsidies and allied sponsorships from the auto mfgs, the IRL has no grid. It's the same false prosperity that CART had.

Yep. And keep in mind - the auto mfg's that are spending big money subsidizing teams in the IRL (Honda, Toyota) are doing so because they are, as yet, not allowed to participate in NASCAR (just like Marlboro wasn't allowed in NASCAR). It's likely that Toyota will see better ROI from its Truck efforts this year than from its IRL efforts, so it's anyone's guess what happens next year.

The Hulmanistas are trumpeting the fact that Toyota and Honda have re-upped to supply engines through 2006 - but they haven't re-upped to continue to fund the majority of the grid.

pchall
07-18-04, 09:20 PM
I've read Joyce Julius reports. They are more bunk than Nielsen ratings. The JJ report actually asigns a dollar value to things like 2 seconds of long lense coverage of a car that only has a few small decals on it. They actually said that 2 seconds of presence on TV for unreadable decals was worth about $1K.

Chitowncartfreak
07-18-04, 10:16 PM
I've read Joyce Julius reports. They are more bunk than Nielsen ratings. The JJ report actually asigns a dollar value to things like 2 seconds of long lense coverage of a car that only has a few small decals on it. They actually said that 2 seconds of presence on TV for unreadable decals was worth about $15K.

Just curious, what's your beef with Nielsen ratings? Is it the statistical methodology, or the fact that they can't handle TIVO/taped programs properly?

FanofMario
07-19-04, 02:05 AM
Regardless of the merits of the JJ, the IRL and OWRS ROI value is in the toliet. :( Pretty sad state for openwheel no matter how you slice it. :shakehead

Chitowncartfreak
07-19-04, 10:33 AM
Regardless of the merits of the JJ, the IRL and OWRS ROI value is in the toliet. :( Pretty sad state for openwheel no matter how you slice it. :shakehead

Very true. Sad, but true.

jonovision_man
07-19-04, 10:46 AM
I don't have any CCWS info. However, considering that ad rates, times, etc. are the key factors, I can't imagine that it would be much different.

I assume not.

I guess the advantage that CCWS has is that it doesn't depend on Honda or Toyota money to the extent that IRL does (a dubious advantage!). I feel strongly that at some point the Honda and Toyota business folks will question their return on investment by whatever criteria they use, and will eventually cut their losses.

That would take tens of millions of dollars out of the IRL just like it did with CART, and we all remember the sea of red ink that followed.

IRL may be the stronger series financially at this current moment, but IMO with their ratings and attendance where it is the future looks as bleak for them as for Champcars, if not worse. At least CCWS has already fallen off it's cliff and survived.

jono

RichK
07-19-04, 02:08 PM
I've read Joyce Julius reports. They are more bunk than Nielsen ratings. The JJ report actually asigns a dollar value to things like 2 seconds of long lense coverage of a car that only has a few small decals on it. They actually said that 2 seconds of presence on TV for unreadable decals was worth about $1K.

I agree with you, pchall.

In addition, some companies don't participate in motor racing (especially formula car road racing) for just the TV exposure. Ask Pioneer if their involvement in CART would have been as big without Toyota and Honda in the series? They wanted new Japanese cars to have Pioneer stereos, and they used CART as a business to business platform. There were tons of examples in CART circa 1990s.

Where the IRL model breaks down, in my opinion, is that the corporate B2B tents are reported to be empty most of the time. People just aren't excited about the racing and don't care. Free tickets/hospitality at Long Beach are different than the same at Sparta.

Chitowncartfreak
07-20-04, 10:02 AM
I've read Joyce Julius reports. They are more bunk than Nielsen ratings. The JJ report actually asigns a dollar value to things like 2 seconds of long lense coverage of a car that only has a few small decals on it. They actually said that 2 seconds of presence on TV for unreadable decals was worth about $1K.

On a related note regarding the Nielsens...

http://www.adage.com/news.cms?newsId=41075

AdrianInFlorida
07-21-04, 07:58 AM
Wow, that's good stuff, Racewriter. As you say, JJ is the "Bible" for determining sponsorship value. I'm sure the IRL numbers will only continue to drop. We're nearing the point where even the Indy 500 won't be enough to keep sponsors involved.

Yep ,like it or not the marketing departments of the big sponsors all refer to JJ when making the decision to re-up or not. (Not sure if that includes TrimSpa or TaeBo, but who knows)