- By Alex Bidwell
As we continue to navigate through the uncertainty and immense realities brought by COVID-19, the pandemic has engulfed us all and affected many industries. No sector will remain the same, and the realm of sports sponsorship is no exception. But despite the negative headlines, there is optimism behind the scenes in which COVID presents itself with an opportunity to reinforce the sports sponsorship sector and its transformation growth towards innovation.
Image: European Healthy Stadia Network
Sports sponsorship is fundamentally the key component to unite sports right holders at all levels with brands of all sizes in mapping out a marketing route to large-scaled audiences, culminating in a symbiotic relationship. The unprecedented landscape caused by COVID has encouraged brands to either re-evaluate their existing exposure within sports or venture into the space for the first time, all of which could result in rights holders emerging from this pandemic stronger than ever.
The economic impacts of COVID are hard to escape and statistics published by Two Circles in April, predict there could be a global sports sponsorship rights-fees fall from $46.1 billion in 2019 to $28.9 billion in 2020, a 37% decrease. However, to offset a drop in revenue both rights holders and brands have used this time efficiently to explore and secure mutually beneficial agreements.
Just last week Everton confirmed a new multi-million-pound partnership with British-owned company Cazoo, an exciting new online car retailer, and the ICC have permitted additional shirt sponsorship during Test matches to provide national boards with additional revenue, for the time being.
Evidently, both brands and rights holders are strengthening ties with one another and have different motives when kickstarting a conversation. Any brand currently engaged within a sports sponsorship contract is actively using the pandemic as a means to adjust their current contracts, to obtain further value from those marketing assets that are tried and tested.
Whilst on the other side of the table, sports rights holders are using this period to present brands with more comprehensive rights packages based around the brand’s needs. In addition, those brands venturing into the sports sponsorship sector for the first time are finding that costs are becoming increasingly attractive as rights holders seek to lure and onboard new partners.
Partnership agreements are growing (albeit at a cheaper price) and flourishing, as more opportunities are being made available to brands as rights holders adopt a route of full transparency and positivity towards post-COVID future. These deals make sense given the imminent resumption of top-level live sport, and if the Bundesliga is anything to go by then they are astute deals, as levels of viewership is expected universally. If anything, this combined with low-cost offers available to sponsors make it an ideal time to venture into the world of sports sponsorship.
Another opportunity blossomed by the pandemic is for the sports sponsorship sector to further embrace the digitalisation of marketing. Although digitalisation is no news to the industry, its tendency has been traditionally more of an afterthought than a key asset. Having relied for so many years on physical marketing channels, the potential for digitalisation in the market of sports sponsorship relating to bigger rights holders is largely untapped, with only 9% of sports advertising being delivered through digital channels. As a point of comparison, in 2019 the US and UK markets saw a commanding majority of their traditional advertising bought digitally, 54% and 61% respectively.
Where sponsorship may struggle to prosper from physical assets, it does not mean it cannot benefit via digital assets, whilst also focusing on locking in longer-term partnerships. Ensuring a stream of valuable content is produced for brands, fans and rights holders alike in a socially distanced world.
Moving forward this is an area sports will look to utilise more, as during the pandemic brands and rights holders have understood that it is not the right time to aggressively market themselves, but rather aid the efforts towards beating the challenges it presents. Brands and rights holders are envisaging a new era in which they guarantee prolonged value to one another and their communities through continued liaising, new digital channels and interactive interfaces.
The Philadelphia 76ers and Stubhub partnership has demonstrated this. A partnership aligned along the mutual goal of creating wonderful moments, they have used time in lockdown to show they are a driving force of their community and have looked to increase fan engagement in an innovative fashion through virtual media days on social media with players discussing their life during lockdown.
Despite being affected by the pandemic, the NBA teams and their brand partners are continuously working together to maintain and strengthen relations, allowing them to adapt and continue to produce strong social media content that is valuable to their partnership and the communities at their foundation.
The European Sponsorship Association have also released positive reports that 48% of sponsors have used this time to explore new avenues that can allow them to maximise their contracts value, with the metric of ‘fan engagement’ being the key motive.
The focus on fan engagement, primarily through rights holders’ social media channels, allows sponsors to continue to market themselves in a tasteful manner, throughout times when sport is not played. BOSE recently exemplified this during the NFL virtual draft, where all participants used BOSE headphones, they saw a 420% increase in adjusted ad value.
Through these social media brand activations, brands gain increasing amounts of useful live data giving them a crucial insight into which demographics they are resonating with and whether or not their marketing is producing fruitful results, empowering future negotiations for both parties.
For rights holders, the value they offer is clear as traditional sports resume, but strategies adopted throughout the pandemic should be maintained moving forward. The offers of innovative digital marketing opportunities, ensuring clearer ROI for brands, and being receptive to more long-term and realistic contracts with brands, to name a few, will be crucial in the effort to continue enhancing their appeal.
Ultimately, this time has offered brands and right holders the opportunity to take stock of their partnerships, reassess their strategies, evolve their businesses, embrace digitalisation, be more collaborative and negotiate stronger agreements. Slowly but surely, the industry is learning from the all-consuming storm that is COVID. Sports is now ready to return in a stronger position having created more cooperative, efficient and sustainable partnerships in the process. There is definitely a silver lining to COVID-19, and a bright future lies ahead for the industry of sports sponsorship.