Digital Killed the Sponsorship Star
Aug 26, 2015
This post was originally published in Sportcal Insight.
An industry observer has argued that increasingly only challenger brands and new market entrants are using big budget sponsorship vehicles to drive their brand. Instead, it was claimed, bigger brands are passing traditional big-ticket sponsorship by, preferring to embrace digital technology and niche partnerships to target their key customer groups with razor-focused commercial messaging.
This is not an easy shift for the sponsorship industry to make. Brands, rightsholders and agencies worldwide have grown up trading in a proxy currency of “media value.” However, there is no need for this currency in the digital, direct-to-consumer era brand marketing now frequents. Consumer marketing either sells products or it doesn’t—data provides the objective evidence.
In the U.K., this all dates back to London 2012, a watershed moment. The evaluation of the big brands’ £80m sponsorship deals was conducted by finance directors wielding the same kind of business models they would use to acquire a company, rather than sports marketing agencies brandishing spurious brand awareness metrics. “I am aware of this brand being a sponsor” is a long way from “I bought the product yesterday.”
These same FDs insisted on plucking high performers from across their businesses to deliver and then evidence the financial return. London 2012 saw this coming and hired an entire commercial team from outside sport. Sports marketing agencies panicked a bit and did their best to sell high margin event activation (There’s no problem a branded event can’t fix, apparently!) to paper over the cracks in their strategic understanding.
All this reminds me of when iTunes launched. I was working at MTV Europe at the time. Everyone knew music was changing, but nobody quite knew how to react. It was easy enough to put our own content on the website, waffle endlessly about the power of the MTV brand and hope the problem would go away. But the game had changed, and overnight our market had shifted.
As music felt then, so sponsorship feels today. The industry is struggling to adapt to the brave new world. Whether the big agency groups like it or not, the industry will change beyond measure in four key ways in the next five years:
Cost per 1,000 Revisited. Any global automotive marketing director worth their salt understands the cost of generating 1,000 new customer test drives from each of their marketing channels. Sponsorship must deliver against the same equation.
Agencies: Change or Die. If “media value” is redundant, then so is much of the sports marketing industry. No wonder I’ve witnessed big sports marketing agencies pitching for four-figure pieces of work recently.
Customer Centricity. Sponsorship packages will finally be designed for customer groups, not events. Don’t sell me advertising hoardings, sell me quantified and guaranteed access to 25-to-34 affluent urban males, with up-weighting in my priority Asian markets. That’s a material shift for commercial directors in many leagues to make, even if the NBA and others are slightly further down the line.
Innovation in Rightsholders. In leaner times, innovation thrives. The rightsholders realising most sponsorship value will no longer be those with the best TV deals, but those most able to digitise and engage a fan base. They will not only be able to send those 1,000 customers into the marketing director’s dealership, but also evidence that success.
The new sponsorship era is digital, global, direct-to-consumer, evidence-led and confident in its impact. Sponsorship as a medium is more than capable of delivering all of these things; the industry has no choice but to deliver it.
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