The future of sports sponsorship: what are tomorrow’s winning strategies?

A few weeks ago, the executive director of an international sports federation bluntly told me that while I see the industry growth as ongoing, that was not what he was experiencing: “In fact”, he told me, “it’s getting much tougher to get sponsors and deal values are flat if not decreasing.” I hear this viewpoint more and more, especially among those involved in the sponsorship of second- or third-tier sports.

Over the past decades, the development of sports sponsorship has been driven by brands’ ability to reach the masses via linear TV distribution and associate with the values of the specific sport and its athletes for effective activation. As a result, multinational brands have been flocking to global events, as have national brands with local events. Only a few brands – with Red Bull leading the way – have been able to take sponsorship to another level, seeking direct access to content by sponsoring athletes and creating own events, often outside the framework of traditional sports.

What is happening today? With the rise of the mobile, millennial consumer, the priorities of brands engaging with sports are changing significantly. There are three main drivers behind this change:

1. Millennials interact with brands very differently, with authenticity and identity being top of their agenda. While exposure through mass media continues to be important, brands now have to consider a wide variety of factors to ensure that their sponsorship decisions result in authentic engagement across multiple dimensions.

2. Millennials are active consumers seeking high levels of engagement, often becoming the broadcasters themselves. User-generated content is leading and shaping opinions. Brands are capturing this by treating millennials not only as consumers, but also as content creators.

3. Media consumption is also changing, with growing fragmentation across channels and devices. Consumption of linear TV is giving way to digital consumption, which is reinforced by the proliferation of the types of media that can be consumed on demand (e.g. highlights, data/statistics, behind the scenes content, personal posts of athletes and fans). Brands can now choose from a plethora of channels to drive their messages home.

How does this change in priorities translate into concrete sponsorship opportunities? We will increasingly see three clusters of sponsors:

1. Those that (can afford to) secure big-ticket sponsorship deals will continue to push for the mass exposure delivered by global premium events, while in parallel demanding for increased integration within the property, acquiring special rights to access content and drive engagement. Their campaigns will be fully CRM-enabled, highly dynamic and targeting fans with the right content, through the right channels, at the right time.

2. Those that have typically been engaged with second-tier properties will increase their demands on rights owners. They will demand guarantees or negotiate variable compensation models depending on exposure, which will be difficult to provide as linear programming continues to dwindle. They will also require increased digital reach across channels as well as ready-to-use activation strategies and content, facilitating their engagement with fans.

3. Those that opt out of sponsoring traditional events, as Red Bull did decades ago already. These brands will consider the opportunities presented by the decreasing costs of producing engaging, authentic content (e.g. via a GoPro or even an iPhone camera), striking the right “storytelling” tone by building relationships with a new set of digitally native opinion leaders (athletes, teams, bloggers, etc.), and the ability to segment and reach their audience directly via social media channels.

What does this mean for sports properties and event organisers?

Premium sports properties and events will continue to thrive as they continue to deliver mass audiences through linear TV. Nevertheless, they will also have to evolve their media distribution strategy to maintain the edge over the long term, considering the current transition from linear TV to digital/mobile/OTT solutions. This will require a more professional and analytical approach to distribution, with bespoke commercial strategies and implementation that no longer fits into the box of traditional agency-style media rights sales.

Second- to third-tier properties, however, will be under growing pressure, requiring a greater effort to develop effective strategies. Various options present themselves:

• Adopting a niche strategy that aims to fully dominate a specific target audience across geographies. This will require event organisers and governing bodies to make hard choices by focussing resources on fewer and clearer segments, tailoring event formats to their selected target audiences. To boost such a strategy, we expect properties to strive for greater control on activation rights related to athletes and teams.

• Placing their bets on geographical expansion, most particularly towards Asia, with public investments and infrastructure developments acting as a compounding force. Such strategies will be a high risk, high returns exercise, as they will require a significant effort in developing sports participation at a grassroots level before an effective commercial strategy can bear fruit.

• Developing partnership strategies with other properties to increase critical mass and boost synergies. By transforming their fragmented single-sport events into a coherent multi-sport festival, these properties will engage with host cities, spectators and media followers with a broader proposition.

To conclude, irrespective of the strategy adopted, properties and sports will have to change their approach to content management across the board. Simply producing engaging, linear content, even if live, will no longer be sufficient to keep the attention of increasingly demanding audiences. For brands, it will be essential to refocus attention on building a strong, coherent and authentic brand identity. This will require a greater ability to gain more control and access of the core assets of the sport: athletes and teams, their personalities, their stories and their values. Ultimately, that is what sports sponsorship is increasingly all about.

Contacts:

David Dellea
Advisory Director
Tel. +41 58 792 2406
david.dellea@ch.pwc.com
https://www.linkedin.com/in/daviddellea/

Lefteris Coroyannakis
Senior Associate
Tel. +41 58 792 1578
lefteris.coroyannakis@ch.pwc.com
https://www.linkedin.com/in/lefterry/

Published by

David Dellea

David Dellea

PwC
Birchstrasse 160
Postfach, 8050 Zürich
+41 58 792 24 06

David Dellea leads PwC’s Sports Business Advisory for Switzerland and is a founding member of PwC’s Global Sports Mega-Events Centre of Excellence. With over 10 years of experience in sports marketing, David focuses on supporting international governing bodies and rights holders with their strategic, organisational and commercial questions.