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SBJ/Oct. 21-27, 2013/Opinion
Consistency, sponsorship lessons from Leaders Sport Summit
Published October 21, 2013, Page 32
> SORRELL ON IMG: Martin Sorrell, head of WPP Group, began his career at IMG, working for Mark McCormack in Cleveland in 1969, the summer the Cuyahoga River caught fire due to pollution. This backstory has led to the oft-repeated industry gossip that Sorrell would one day go back and buy his alma mater and take IMG under the wing of WPP. Like the fish in the Cuyahoga, however, that story is dead in the water. Sorrell told the audience at Leaders that he wasn’t one of the bidders going in to the second round in the great IMG auction. The cost is too high, he said; $2 billion to $2.5 billion is “nosebleed territory.” Asked who he thought would walk away with the prize, he answered, “If I was a betting man I’d say it will be Silver Lake and William Morris Endeavor.”
> CONSISTENCY: The hobgoblin of inferior minds, and the secret of marketing: Turning up; being seen around the same place for a long period of time; making sure the brand is a familiar and reliable presence in a fast-changing world. These are underrated values in the “wham bam thank you ma’am” world of sports marketing, where the eye is caught by the next big thing and the average tenure of the CMO is dipping below two years. Consistency, Sorrell said, is not exciting; it rarely makes headlines and so it isn’t what gets taught on the Harvard marketing MBA. But it works.
> CONSISTENCY, PART 2: Deutsche Telekom’s relationship with Bayern Munich is the story of sponsorship. When the latest contract is up, in 2017, Deutsche Telekom will have been on the famous red shirt for 15 years. The German telco is routinely cited as the most-recognized brand in German football. Last year, Bayern won the triple of the Bundesliga, German Cup and UEFA Champions League, and the club has emerged as the business model du jour in European soccer.
From the outside, not much seems to have changed since 2002. The logo is still on the shirt, and the Germans are still good at football. But in other ways, said Henning Stiegenroth, head of sports marketing for Deutsche Telekom, it’s a different world. The initial cookie-cutter shirt, tickets and hospitality deal is today all about content mixed in with some heavy-duty joint ventures in the mobile and digital space.
Given the nature of the partnership, what price the logo on the shirt? Has the Bayern jersey done its job in terms of anchoring the Deutsche brand? Not yet, Stiegenroth said, suggesting that without the logo on the chests of the players, there is a fear that Deutsche Telekom would become “just one of the 16 commercial partners,” each vying for some association with the club. This is pleasingly counterintuitive. Shirt deals have become unfashionable in certain circles. They are old-school, moving billboards and great for basic awareness but do nothing for engagement. The Deutsche Telekom case study suggests a different future for the jersey sponsor. Like German cars, the badge on the bonnet is just an indicator of the power that resides within.
> OFFENSE, DEFENSE: Stiegenroth’s comment was a theme for the week. We in the media often buy the line that a brand’s motives for spending money in sports are all about attack. That’s the sexy story, of using a sponsorship to tell new stories, to reposition the brand and to build new business. But there’s fear there, too, which goes underreported. Some brands just can’t afford not to be in sports. Look outside the bubble of the sports market and you’ll see companies seeking to defend their position. Whole industries are being eaten up by digital heavyweights such as Google, Apple, Facebook and Amazon. “Apple brought out its iMessage, and that pretty much signaled the end of our MMS service,” said one telco brand. “A business that one day was there, and then it wasn’t — it’s brutal out there.”
> BT SPORT'S BILLION-POUND BET: When virtually every brand is converging on mobile digital content, how do you stand out from the crowd? One answer: The high-risk, potentially high-reward solution of going big and becoming a major television broadcaster. BT was formerly the state behemoth that supplied the domestic phone lines. As a result, the brand resonated with the British public on two occasions: when the phone lines went down and when the bill came through the door. That’s a rough guide to the first 30 years of BT’s brand heritage.
Compare that to the new, shiny BT Sport, which has spent north of 1 billion pounds in sports rights over the past year and gone up against Sky Sports. The message from Gavin Patterson, BT’s chief executive, was that this is not a TV subscriber play in the Sky mold. “Our business is a network business,” he said. “We sell fiber optic cables.”
These will allow viewers to run multiple HD feeds via broadband — screens within screens — with enhanced picture quality. The real triple play battle — TV, broadband, mobile — has begun, said Patterson, whose company has deep pockets. The billion pounds spent on sports rights, he said, represents just 10 percent of the company’s available cash flow. An audience of sports rights holders rubbed their hands in glee.
> PHRASE OF THE WEEK: Sports rights holders are about to face “a tsunami of data,” said John Dougherty, head of marketing at Microsoft Windows, who offered an inside peek at how Microsoft views its MLS relationship. The issue for sports teams and leagues is how to deal with the new information to offer more to the fans. This is where a tech sponsor is useful beyond just signing the check. “We know what sports fans want and we can help them get it,” Dougherty said.
> ECONOMICS OF THE ONE-MINUTE CLIP: As BT goes for the big screen, most sponsors are converging on content for the phone and tablet. Specifically, this means the value of the one-minute goal and highlight clips is soaring. “One minute is the hot spot; any longer, and engagement drops off like a stone,” Dougherty said.
Newspaper publishers in the U.K., Germany and beyond are erecting pay walls around goal clips to test whether they can build a sustainable business model that helps pay for their news operations. Whether it works may determine the future of news journalism.
Richard Gillis writes the Unofficial Partner blog and covers the sports business for The Wall Street Journal in London. Follow him on Twitter @RichardGillis1.