If everything that Steve Burgess and Joe Sweeney claim is true, then their new company Margaux Matrix is set to revolutionise how sponsorship exposure is measured in Formula One. If it works as well as its founders think, it will have a far-reaching effect on the value of all future sponsorship deals. Their software uses a ‘digital eye’ system to recognise decals, as opposed to the ‘pattern recognition’ system used by other research agencies. The main difference is that their system can report in real time whereas the ‘pattern’ system takes a lot longer to produce its results.
Burgess and Sweeney are co-founders of Margaux Matrix, an information services company which officially launched its commercial operation in January this year. It immediately stands out because it has managed to attract David Coulthard, Mark Blundell and Martin Brundle to invest in the company. They are three of 18 private investors who have invested US$1.8 million and share a 40 per cent share issue in the company. Burgess and Sweeney have managed to keep 60 per cent for themselves.
What has got everyone so excited is a software system called SpikeNet – originally designed for use by medical science in cognitive research. Sweeney and Burgess have adapted it to automatically measure television sponsorship exposure on Formula One cars. Burgess says: “Our objective is to offer the most accurate and objective facts possible. The process we have developed is completely unique and exclusively ours.”
The investors have agreed to stand by the company for three years. Having three famous names on board has not hindered the company. Coulthard is thought to have acquired a 9.9 per cent stake whilst Brundle recently bought up the final five per cent
of shares. Together with Blundell, the three are thought to have invested over US$600,000 between them. The system will work for any televised sport that is sponsored, but Formula One is the most obvious immediate attraction.
Margaux has already done work for Vodafone, HSBC and GlaxoSmithKline’s NiQuitin CQ brand. It has also held what it says are constructive talks with Allsport Management’s Patrick McNally, who handles all trackside advertising, and a number of teams. Though Margaux Matrix officially launched its service at the start of the year it has been working with various clients, such as GSK, since early 2003.
Burgess, who is responsible for the technology side of the business, used Formula One as the template when developing the brand exposure software. He says: “We thought, in terms of sport, if we could do it in F1 then we can do it in any other sport. F1 is quicker, it has more brands, smaller sizes, and is the hardest thing for us to do.”
Outside of Formula One the company has worked with finance group Royal Bank of Scotland on its sponsorship of golf’s 2003 British Open and with Michelin in this year’s World Rally Championship. RBS was so pleased with the results that it immediately commissioned Margaux Matrix to evaluate all of its sponsorship in rugby’s 2004 Six Nations tournament, including that of subsidiaries NatWest bank and Direct Line insurance.
Patrick McNally is excited by the development of both ‘digital eye’ and ‘pattern’ systems, and has seen them in action, but will not decide which one to use until his clients have made their views known. He says: “A quantum leap has been made in this area. We are watching with great interest to see how it develops. At the moment we are sitting back and seeing which system emerges.”
Sweeney, who handles the commercial side of the business, says: “The response we’ve had from advertisers and agencies has been fantastic. They’ve said, if you guys can do this it’s the holy grail. If you can deliver it to the marketplace we’ll buy it. And since we launched the service that is precisely what has happened.”
The idea for the company came about in 2001 when Sweeney and Burgess were directors at consultancy firm Cap Gemini Ernst & Young. They decided to combine their commercial and technological knowledge and start their own media consultancy service. Whilst researching the project they came across the idea of measuring sponsorship exposure using computer software, which no one was really doing at the time and the idea took over. They spent 12 months scouring the world to find the best software solution. After 18 months of research and development the company launched.
Burgess, a self-confessed ‘petrolhead’, knew a number of people in the motorsport industry through his brother Adrian, who currently manages the Carlin F3 team and worked for McLaren for over 10 years. Through this they met David Coulthard, who was one of the first to invest.
The company now prides itself on its objectivity and accuracy. The only thing arbitrary about it is the name. Burgess named the company after his favourite red wine, Margaux. He admits: “After we had a few bottles in Leicester Square a few years ago, Joe turned to me and said ‘we’ve got to make the name sound technology based, stick matrix on the end’.”
There is nothing capricious about the measurement software itself. The key to the software is consistency, accuracy and speed. Previously, most research agencies have used a team of employees to manually track sponsorship exposure, noting down every time a sponsor appears on screen and the time it occupies. Burgess says: “None of the information we produce can’t be produced by the old method, none of it is rocket science, but it is exponentially more expensive and less accurate to do it manually. Previously it was a case of ‘is Castrol on the screen? Yes.’ Whereas this system will say how big it is on the screen, where it is on the screen and so on. These are not revolutionary methods, they just would not be practical under the manual method. In our system, at no stage during the detection process is a human used so there cannot be any human error.”
But Margaux Matrix is not alone pursuing this method. In the last year or so, leading research companies in the sector, such as TNS Sport and Sports Marketing Surveys, have launched their own software solutions to measure brand exposure. TNS’s Sportsi brand and SMS’s Magellan service are both based on pattern recognition technology.
Pattern recognition software, which has been developed over the past 15 to 20 years, was originally used for optical readings such as fax technology and fingerprint identification. It works by making a copy of the brand, rotating the image through its potential angles then looking for it on the screen each time.
Burgess says the problem with pattern recognition is that it is relatively slow and has trouble reading brands that are on the screen at a small size. According to Burgess, pattern recognition can take 10 to 15 seconds to search for one football perimeter board whereas Margaux Matrix’s SpikeNet software can locate half a dozen boards in less than one second. Pattern recognition also has problems picking up brands that take up less than one per cent of the screen. A typical screen credit is 0.25 per cent of screen size. Burgess insists: “Our system is infinitely better than pattern recognition.”
SpikeNet was originally developed for medical science by the Brain and Cognition Research Centre in Toulouse, which was attempting to replicate the way a human eye works using a computer. So rather than taking a direct copy of the image and looking for it, SpikeNet converts the object into a digital snapshot using electronic pulses. Burgess says: “The back of the eye has a million photo receptors on the back of each retina. When it sees a shadow through the iris each one fires a different electronic pulse and the brain takes a pattern of the electronic pulses. Your eyes can do 10 to 15 of these a second. This technology works in exactly the same way as the eye works.”
Margaux Matrix bought the exclusive global rights to the technology for use in brand, logo and image detection in broadcast television for the next five years until October 2008. It also has first refusal on a renewal. Burgess would not reveal the amount paid but admits ‘the system is very clever so it isn’t going to be cheap’.
SpikeNet can benefit both rights-holders and advertisers. It can offer an objective way for both parties to evaluate the effectiveness and value of sponsorship. As Sweeney says: “What we are doing creates an additional layer of science to apply to the way in which advertisers manage their branding.”
Clients can set the parameters of the software to any configuration. It can measure at any frame-rate per second and pick up branding from 0.25 per cent of screen size to 100 per cent. They can adjust how much of the brand needs to be on the screen to register but most work to an 80 per cent rule. They can also set the level of contrast, usually set at 20 per cent, to cater for low visibility levels if there is rain or fog.
Essentially, Margaux Matrix claims to be able to tailor the report to any client’s needs. For example, it produced a report for HSBC at the US Grand Prix in September 2003, which measured brand exposure durations during the Friday, Saturday and Sunday of the Grand Prix. HSBC’s Johnny Harrison wanted to find out how much exposure it received at less than two seconds as a continuous duration, how much at two to five seconds and how much at five seconds or more. This was relevant because the sponsor’s advertising agency was adamant that one continuous duration of 20 seconds is worth a lot more than 20 random spots at one second each. By all accounts Harrison was impressed, as he said: “The way that the software works is a much more sophisticated way of measuring impact on the screen. I liked the fact that it could pick out the location of the brand on the screen. This kind of sophisticated research is the way forward. We are certainly considering using them again for 2004, although we haven’t made a decision yet.”
The system can offer similar feedback for the size of the brand, multiple brands on the screen, and solus time, where the brand is the only company displayed on the screen. Another popular request has been screen location. One US research company found that 80 per cent or more of the viewers’ attention is focused on the central 50 per cent of the screen. Margaux Matrix software can divide the screen into five sections (the central section and four corners) to show how much exposure the brand receives in each zone.
But perhaps the most impressive feature is the ability to do all this in real time. Whilst other research companies take at least a week to process the data, Margaux Matrix can have it ready in one hour. This is especially beneficial to Formula One. As Burgess explains: “Patrick McNally could send us the tapes from Formula One practice sessions or qualifying. We could process the information in one hour and send back the exposure rate of the signboards. He could change the boards around before the race even started.”
Burgess insists that SpikeNet’s detection accuracy is currently running at 97.3 per cent and improving all the time as he irons out glitches in the system. False detections are said to be only 0.1 per cent, which is one in every 20,000 frames.
Considering what is on offer the company is selling its services relatively cheaply. It charges around US$200 an hour for one brand and a further US$100 for additional brands. A premium is added if the sponsor wants to publish the information or if it needs it done in real time. To evaluate the exposure of one brand across the whole Formula One season costs around US$17,000. For five brands in Champions League football (32 games) it charges around US$37,000.
But some in the industry are sceptical about the service. They have been around long enough to be wary of companies offering spectacular results simply. Mark Cornish, managing director of TNS Sport, says: “No one can turn around accurate results within two hours. Testing needs to be done seriously and evolved over time. I think it is dangerous to raise any market’s expectations.”
Burgess is aware of the scepticism. He says: “People like me have been approaching advertising agencies and sponsors for the past few years saying ‘I’ve got the holy grail, I can do this’ and they’ve turned out to not quite do it. People have invested and lost a lot of money. So there is a lot of scepticism about this kind of service. But we sit here and make our own promise. What we show potential clients is not a demonstrator, it’s not a simulator, it’s actually real time, real processing on the screen in front of you.”
Margaux Matrix will not challenge the full-service research agencies because there are no plans to offer evaluation or market research. It will merely offer data and leave the evaluation of that data to other companies. In fact, the rival research companies were the first that Margaux Matrix approached when it was looking to sell the product. But it was rejected and as a consequence has become a competitor for exposure measurement. Burgess says: “We never set out to compete with research companies. They were the first people we approached. In an ideal world, in the UK, I would have three clients: TNS Sport, SMS and S:Comm. They would still do the job they do now but with more accurate information. But they have decided that this is not the way they want to approach us. They are forcing us to be more competitive.”
Burgess wants his company to become the standard bearer for providing sponsorship exposure measurements. The company wants to monopolise the sector in the same way that groups such as the British Audience Research Board have become the only supplier of television data for the UK industry. Margaux Matrix would be the BARB of exposure.
In this way, it is already helping with sponsorship negotiations. If the future of the sponsorship market is performance-related deals, then Margaux Matrix is well placed to become a major player. Burgess says: “There are conversations going on currently between a rights-holder and a sponsor, in a major sporting event, whereby the sponsor pays for what it gets in terms of exposure. We can facilitate a contract of that nature by offering a completely independent, impartial and consistent measure that both sides can agree on.” A universal measurement would also help companies compare their exposure across sports. Vodafone, for example, could come up with a direct comparison between its sponsorship of Manchester United and Ferrari.
Sponsors have been dissatisfied with the research they have received in the past. Burgess says: “Some advertisers we’ve spoken to have been dissatisfied with the research market. Some prefer one research method to another whilst others have been upset that agencies have made incorrect comparisons between one sport and another.”
Burgess also found that some F1 teams were reporting the data that gave them the biggest number, so there was an incentive for research companies to over-inflate figures. Using Margaux Matrix software he has found that most clients have been receiving less exposure than they thought. But this will not necessarily decrease valuations. Burgess says: “The level of detail is more. The software shows duration, size and location and so whilst time on screen is less, the value of the exposure tends to be higher. Its all about quality not just quantity.”
The increased detail has led to major advertising agencies such as WPP, Mediacom and Carat all negotiating to use the Margaux Matrix software for their clients. And Burgess believes the increased levels of accuracy will attract more companies to Formula One. As he says: “I think this software will be the saving grace for the sponsorship market in Formula One. It will create a common platform from all sides that all parties can agree on as a measure. After all, the future of any sport, any business, isn’t the client it has got today, it is the client it has got tomorrow.”