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Marketing and Sponsorship

Amid banner year for agencies, sponsorship model evolves

In what looks to easily be the best year for sports agencies since the recession, revenue concerns have been replaced by a number of other issues. A quick voyage across agency-land last week helped remind us of some of their larger concerns.

First, the good news. As evidenced by the recent NBA windfall, sports rights fees aren’t going anywhere but up. “Rights fees continue to go up, the cost of playing in the space does also and the roles of agencies to leverage and create value in that will also continue to rise,” said Chris Weil of Momentum, which has a client list that includes Anheuser-Busch, Coke and AmEx.

Even with a buoyant economy filling agency coffers, there’s concern among a number of agencies that the sponsorship model needs to be changed.

Clients now want their sponsorships to provide them with social media solutions and content plays. All too often, the deals are still being packaged with venue signage and 30-second avails. It’s an analog offering in a digital world.

Photo by: SHANA WITTENWYLER
“On the property side, there’s still too much of a ‘here’s how we’ve done it, here’s how we’re doing it’ mentality,” said longtime GMR marketer Greg Busch, who this summer founded Bespoke Sports & Entertainment with Mike Boykin, also formerly with GMR. “The hope is that’s beginning to change. I’m even seeing properties engaging agencies to try to help them sell in a more solutions-based approach.”

Sports consumption has changed radically. Research from Octagon’s Simon Wardle found that fans now consume sports in no less than 33 different ways, including latter-day

developments, like social media, second-screen consumption and fantasy. Agencies are tasked by their clients to keep up with that shifting landscape. Shouldn’t properties?

“Clients are now really looking at sponsorship as a content vehicle, whereas it has always been a reach play,” said Woody Thompson, Octagon executive vice president. “Of course, that’s put everyone in the content business, but it also means that the way properties are sold needs to change.”

That sort of change won’t be easy, for the simple reason that while the old model of pricey 30-second TV ads is seen as a dinosaur elsewhere, big-time sports and its unmatched ability to gather eyeballs are its last bastion. Welcome to the home of the 1957 Chevy, still in perfect condition, despite all the miles.

“The NFL keeps the entire live TV ecosystem up and running,” laughed Weil.

Technology is behind much of the new money in sponsorship, and for those brands “it’s all about proprietary content, which will often put them in conflict with [that same property’s] media rights holders,” said Andy Pierce, Lagardère Unlimited president and CEO. “If we can’t deliver proprietary content to them, their idea of that sponsorship’s value is really diminished.”

So will exclusivity, long a bread-and-butter offering in sponsorship, yield to some new delineation of content rights? “With the proliferation of technology, lines are blurring, making it more complex for properties and sponsors relative to category exclusivity,” said Greg Luckman, head of consulting at CAA Sports, with clients including JPMorgan Chase and Bose.

Figuring out what’s effective in social media, as well as developing ways to measure the impact of it, are of great concern at every agency. With those issues becoming critical to many clients, CSE President Adam Zimmerman sees it as a catalyst for agency change, to enable the much ballyhooed “real-time marketing.”

“Social media is the new talk radio and we need to be nimble enough to mine that,” said Zimmerman, citing examples of ticket upgrades to fans posting or tweeting about the game they will go to or AT&T U-verse upgrades for those who complain on social media about their TV or Internet provider.

“A lot of disruption needs to happen still if we’re all going to activate in real time,” he said. “One of the most basic things are multiyear deals with properties in a real-time world. The landscape is just changing too quickly for those dollars to be locked up that long.”

The monster in agency closets continues to be clients’ increasing reliance on procurement departments, selecting agencies the same way they buy pencils and copy paper.

“The agency selection is often completely out of the hands of the people you hope you’ll be working for,” said Dan Belmont, president of The Marketing Arm, whose clients include Pepsi, Wal-Mart and Hilton.

Belmont and others cited “unfavorable” terms, like payment to the agencies in the unconventional lengthy rate of 45 to 60 days as being a routine part of procurement.

“It’s a battle we fight every day and the biggest concern we face as an industry,” Belmont said.

Even outside the procurement process, delayed payment seems a recessionary remnant that has not disappeared. Clients are also still cautious about anything new. “We’re rarely getting brands that are diving in head first,” said Brian Corcoran, president of Portland, Maine, property rep firm Shamrock Sports & Entertainment. “Their first year is normally some sort of a test.”

Many agency types predicted there will be an attempt at an agency rollup within the next months, as a reaction to WME’s acquisition of IMG. Whether that attempt is anything more than a financial play is open to debate.

“Size will help you attract global clients, but agencies, by their own right, are not scalable,” said Chris Lencheski, now relaunching his Phoenicia Sport & Entertainment Marketing after a shake-up at the Comcast-owned Front Row Marketing, where he was president. The most renowned sports agency rollup was by Robert Sillerman and SFX in the late 1990s. “SFX was a successful financial play, not something that added value to any clients.”

The most common agency concern was one that has been around for as long as there have been agencies. Will growth come from adding more services or more clients?

“You’re always wondering about using resources to expand your offerings and possibly losing focus, or directing efforts at adding new business in the areas where you have expertise,” said Marc Bluestein, whose Aquarius Sports & Entertainment handles sports marketing for AAA and Target. “I still see growth as our agency proposition gets better known. No brand would launch a campaign without first hiring the big creative agency, but there are still lots that dive into sports without our [kind of] expertise.”

Terry Lefton can be reached at tlefton@sportsbusinessjournal.com.

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