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Pepsi, AB InBev Turn to FanAI to Measure Sports Sponsorship Value

johnwallstreet
·6 min read

FanAI, a platform pioneering attribution within the sports marketing and sponsorship business, recently closed a $3 million Series A extension (the company announced an $8 million Series A in November 2019). OneTeam Partners, Wasserman and Tech Coast Angels participated in the latest funding round. Industry insiders view the development as the latest indication that sports marketing and sponsorship is in the midst of a fundamental shift toward the same type of outcome-based performance-measurement approach that has transformed media buying—a change that could influence brand spending and will alter the way team and league deals are structured moving forward.

JWS’ Take: Historically speaking, the sports marketing and sponsorship business has largely been based on subjective decision-making and/or bottom-up market research. Justin Toman (head of sports marketing, PepsiCo) said that companies across the sports sponsorship space “have been on this journey, trying to get more and more accurate ways to measure our [investments], evaluate [the assets] we have and how [each] is actually turning into tangible results for our business” for much of the last two decades. “We’re focused on negotiating outcomes and FanAI’s data helps us do that more accurately,” he added.

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Brands relying exclusively on subjectivity are undoubtedly in the minority today. Said Johannes Waldstein (founder and CEO, FanAI): “Almost everybody is using some sort of analytics.” But nearly all of those companies remain fixated on upper-funnel activity. “They are using social listening or some sort of [media] valuation tool to benchmark the success of their sponsorship. None of it [has concentrated] on how much more people are spending on a brand,” he explained. Upper-funnel, or top of the funnel activity, refers to the introduction of a brand to a new audience (as opposed to sales/transactions/revenues at the bottom of the funnel).

That is because until FanAI emerged in 2020, sports marketing and sponsorship professionals lacked the ability to connect real world transactions (i.e. not just those that take place in the stadium) to actual consumers, a functionality necessary if you’re going to answer the fundamental question: How much retail value does a given partnership generate?

“If you don’t know how effective [a campaign or activation] is on the bottom line, it is hard to iterate the best sponsorship or digital strategies,” Waldstein said. So, naturally Toman was intrigued when he learned of FanAI and their claims to be able to measure lower funnel ROI. “If they can do what they say they can do, this could be game-changing,” he remembers thinking. PepsiCo leaned into the technology with a test-and-learn approach, applying the model to two or three partnerships. “And it came back even more promising than we thought,” he added. After tweaking some of the data sources and methodologies two more times and doing some more testing and validation, the company had opted to roll the technology out more broadly across the portfolio.

Speaking of data sources, FanAI has managed to acquire exclusive ticket sales data from one of the largest ticketing companies in the U.S. (contract terms prevent the company from disclosing which one), merchandise data from Fanatics and smart TV data from TiVo. Its patent-pending technology then “matches” real transactions to real audiences, in a GDPR and CCPA compliant manner, to provide brands with an accurate look at sponsorship ROI.

While some brands remain unconvinced it is possible to tie an offline event back to a sponsorship campaign and are content to stick with the status quo, blue chip brands like Coke, AB InBev and Dunkin (along with PepsiCo) have embraced FanAI. Shelley Pisarra (EVP global insights, Wasserman) called it a “fantastic” sign for the industry at large (forecasted to grow +6% globally to ~$614 billion in 2022). “They are obviously [some] of the biggest in the sponsorship space, and their desire to truly understand performance helps set the foundation from which to build new engagement opportunities and likely new assets.”

Having the ability to assess the sales impact of sponsorship campaigns has begun to alter the way PepsiCo structures its deals. “If you have a better sense of what you’re doing, you can do more of the stuff that works and hopefully less of the stuff that doesn’t work as well,” Toman said.

Since implementing FanAI into its evaluation process, PepsiCo has started to optimize several relationships. But that does necessarily mean reducing spend. Toman explained that in some cases it may mean, “Let’s try to activate differently…. There are [also] those examples where the data says this is a phenomenal deal, and [we] should be willing, if there is a competitive threat, to spend a little bit more money if the return is there. So, we’re seeing it both ways.”

The ability to measure lower-funnel activity could result in more performance-based sponsorship deals moving forward. “It probably leads to more performance hurdles and incentives [being included] or it just leads to [smarter negotiations; a brand is] willing to pay a certain amount and no more because they know the true value of [the assets],” Toman said.

As Toman alluded, the FanAI platform can be used as more than just a post-campaign measurement or benchmarking tool. In fact, some of their brand partners are already using it to evaluate unsponsored assets. “You can look back three or four years and look at the audience and what types of activations [or engagements] worked well within a particular type of campaign before making a decision,” Waldstein explained.

The company has found over the last two years that “just having passive signage does almost nothing for [a brand advertising in sports]. What works best [to drive lower-funnel activity] is having a combination of three things—live in-stadium activation, interesting mobile digital activations and an in-store activation. Then, you get an actual sales lift in-store,” Waldstein said. Of course, the three levers may need to be pulled with varying levels of force depending on the consumer profile (think: an older target demo is going to spend less time on mobile).

The bulk of companies using FanAI at this point are Fortune 500 brands like the ones cited. While several sports teams have expressed interest in the platform as a sell-side sales tool, none have been willing to pay the asking price (runs between $200,000-$500,000 depending on sponsorship revenue). The company is working on a less exhaustive, less expensive solution for clients with smaller budgets.

FanAI opted for a Series A extension because it was not “ready to do a whole other round but really wanted strategic partners [Wasserman and OneTeam Partners] to come in,” Waldstein said. The new money will be used to continue funding the operation as it looks to grow internationally (see: Europe, Asia) and extend its reach within the entertainment sector. “We’re also starting to look at virtual worlds and virtual experiences. What happens in the metaverse, how does that relate to real world spend,” he added.

FanAI has grown revenues by 100% YoY “and we’ll more than double it again next year,” Waldstein said. But with the company’s investors seeking to grow at an even steeper rate he does not expect to be profitable for some time. People and data are its largest expenses.

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