Brands know that “sport + product = sales”. With huge sporting events such as FIFA World Cup and the Olympics brands, marketing agencies know only too well that their marketing promotions will draw huge customer participation. But a lot of brands typically go to market not knowing the potential over redemption that can occur and the excessive costs that can be generated.
By their very nature sporting events can be very unpredictable. For example a poor performing national team may not cost millions because a promotion did not over redeem but it may have cost the brand a small fortune because they bought the wrong promotional insurance. sport-vitalife.nl/ This is where promotional risk management companies can be particularly effective in helping brands with the risk assessment of their promotions.
Promotional risk management companies approach sports based promotions using a two part analysis system. Firstly, the companies know that the number of customers who take part in the promotion form the redemption risk, and secondly, the actual outcome of the event forms the specific risk. For example in team sports this could be the number of goals scored or in individual sporting events the number of medals won. Many promotional risk management companies use historical databases of past promotions to help brands buy the right kind of promotional insurance.
Sports risk based insurance premiums are typically calculated on a real-time basis. Huge fluctuations in cost can be attributed to a current sporting team’s performance or that of their opponents. If you were to take a national team for example and examine their predicted performance in a sporting event you might look at the following:
1. That the team in question played well in the lead up to the sporting event and thus were currently playing in good form
2. The number of medals or wins that the team in question were likely to score throughout the entire sporting event
The closer you get to a sporting event the more expensive your promotional insurance becomes. Insurance companies who offer promotional insurance typically put aside a ring-fenced pot of money. Say for example that pot was ten million dollars to cover one sporting event. As more and more brands buy insurance from that one company, so there is less of it to go round, and so premiums rise. It is not uncommon to see insurance premiums double as the start of the sporting event draws ever closer.
Brands and marketing agencies need to employ the services of a good promotional risk management company as soon as they possibly can. This will ensure a well-run promotion and potentially save the brand a fortune.