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Interview with John Kristick, Global Chief Executive, ESP Properties

SportBusiness, May 03, 2016

By Matthew Glendinning

Last year, the WPP-owned advertising company Group M, launched the rights holder-facing ESP Properties under its new global agency brand, ESP. Almost one year on, Sports Sponsorship Insider spoke to ESP Properties global chief executive John Kristick about the business and the direction that agency and rights-holders relationships are heading.

Interviewed at the IEG 2016 Conference in Chicago in April, Sports Sponsorship Insider also spoke to Laren Ukman, global head of consulting and regional head, North America ESP Properties, and Gareth Balch, chief executive of Two Circles and member of ESP Properties global executive committee, about their companies’ roles in the organisation.

SSI: What was the driving force behind the launch of ESP Properties last year?

JK: I joined the organisation GroupM ESP (Entertainment & Sports Partnership) around five years ago. My initial task was to oversee the brand-facing business with clients primarily of the [Group M] media agencies, helping to advise brands, like Xerox and Citi, on their sports and entertainment partnerships. During that time I got to know this very big and complex organisation a bit better and how we could bring together certain assets within WPP to create an offering that would serve the rights-holder community. We saw where the rights-holder industry was moving in terms of the need to optimise their assets, attract different partnerships and the role that digital and data was taking, so it was not just a traditional sport agency that we were going hatch.

SSI: How have other agencies/ personnel been integrated within ESP Properties?

JK: My background was from the property side with major international rights-holders. IEG was originally acquired in 2006 by Group M for its brand-side offering, but there was also a flourishing rights-holder side consultancy practice. There was a hidden asset there and in discussions with IEG we identified the UK company Two Circles for its data offering and insights into data-driven sports marketing. They were primarily Europe-based and entirely focused on the rights-holder sector. We knew they were the perfect fit in rounding out where we felt rights-holders needed to take their products.

LU: IEG has always provided go-to-market strategies, sponsorship architecture and valuations for rights-holders. Over the years, we began advising brands, but we started with rights-holders, helping to show them how their marketing platforms could be just as valuable to companies as the one-way medium of advertising. We originally worked with Fifa in the early 90s. This relationship was project-based and gave Fifa an outsider perspective on how the sponsorship side was constructed and priced. Instinctively, all rights-holders today know there’s more opportunity to monetise their assets and to act like media owners by monetising digital assets, but they don’t know how to do it. We offer a very smart solution to help them do that.

GB: Two Circles believes that data is an accelerator and differentiator through almost every revenue line for rights-holders. Whether applied to ticketing, hospitality, growing global membership products and/or selling sponsorship, we can ‘sportise’ rights-holder data by understanding the psychology of sports fans to supply best-in-class data methodology. What we are doing is fairly commonplace outside of sports and that’s where we get most of our talent pool from - other savvy, consumer brands that understand the role that data can play to connect with an audience. Another pillar of what we do is around rights-holder content and media platforms. We recognise that content and data are brother and sister, and can put our data behind their content.

SSI: How does the business model work?

JK: What you’re seeing is more and more agencies with both brand-facing work and rights-holder facing work. It’s the same model as more traditional sport marketing companies where they have a consulting practice to advise brands on where they should be spending their dollars in sports, and how to activate and measure the return. On the other side, they have a sales group that may represent the rights-holder to create a package, price it intelligently and sell it.

What makes our proposition so unique is our understanding of where the industry is going, helping rights-holders to enhance their proposition by knowing their audience better and utilising data better. Rights-holders need to drive revenue to build new facilities, pay higher transfer fees, hire a new coach or to build the brand internationally. We are happy to work behind the curtain not just selling sponsorship and bringing deals to them, but implementing marketing programmes. And then we are different because we have WPP on the bench behind us: around 350 of the Fortune 500 brands are clients of WPP in some shape or form and one in every three media dollars is spent through Group M, which helps provide the insights and data that we need to do our job better.

SSI: Were there other major structural changes in the relaunch?

JK: Before the launch of ESP Properties, GroupM ESP North America (brand-advising business) was more centralised whereas in Europe the teams were embedded in media agencies such Maxus and Mindshare. Now with a few exceptions, it’s very much the same premise in all the markets with the brand-facing work baked into the individual media agencies… and globally the centralised offering is our ESP Properties rights-holder facing business.

SSI: How do you compete with agencies which may pay higher guarantees to manage sports rights?

JK: We’re going to be smart, but I believe that model is changing. More and more of the premium right-holders are taking control of their own destiny and managing the commercialisation of their rights themselves. Instead of the traditional models where they gave all rights to one agency, they are now making deals more narrowly by category, by company or by specific assets. Where there are opportunities that require financial guarantees to rights holders we have access to capital, through George Pyne’s Bruin Sports Capital, with whom we have an excellent relationship. If you know WPP you’ll see other areas where they are investing in the sports space. WPP has a minority stake in CSM, which is moving more into the acquisition business, and in Mediapro too. We would look at certain things with a manageable risk threshold and have had discussions on minimum guarantees, but a lot of the time our affiliate agencies might take that risk - we are ‘frenemies’ with a lot of people. Wherever someone has invested to acquire the assets, we can work with them.

SSI: How do you appraise Fifa as a property in 2016?

JK: With a new president and all the changes that have been occurring, it’s still a very attractive property. But there are also challenges right now. I was one of the first of many to say that there was very little that could impact on Fifa partners' willingness to engage with Fifa, despite all the news and static because the asset was just so strong. I have been surprised in terms of how much negativity has grown around the proposition and it has scared people. The biggest challenge is less the renewals because companies who have been around the property know the value once the ball is kicked, but it’s trying to find new companies who are willing to step in and associate themselves with Fifa. They’ve lost so much momentum because of the negativity, they’ve now got to take clear steps to show they are getting back on the right course with the new president very much focused on reforms. Fifa also has a challenge in in terms of what assets it can give to sponsors. It has to protect the ‘golden goose’, the broadcast partners, but is recognising that traditional models of sponsorship are not necessarily enough to drive engagement for these brands in the future, so Fifa is definitely looking at ways to add more assets that are going to entice new brands.

SSI: What are the growth prospects for ESP Properties?

JK: I believe the property side has already eclipsed the brand side in terms of revenue. We are one-year old and to me the premium sports market place is going to continue to growing. We would not have launched this entity within an organisation of the scale of WPP if we did not think we could scale quickly with it. The biggest thing for every rights-holder right now is looking at all the different platforms and ways to reach fans and audiences directly, and grow that. Traditionally, rights-holders sold logos, pitch advertising, designations and tickets, but are now transitioning to deal directly with consumers and sell audiences. Where we’re unique is bringing all that together. We understand where sponsorship has come from and where it’s going.