SBJ/May 8-14, 2017/Technology

Octagon CMO: Tech and tech-related companies are sports’ ‘new endemics,’ offer biggest room for growth

When marketers at the largest sports properties think about how to increase sponsorship revenue these days, it usually becomes an exercise in further dividing the burgeoning technology sector. At the NFL and NBA, close to a third of sponsors are technology providers of one form or another; at MLB it’s around 25 percent.

So, no surprise that Octagon Chief Marketing Officer Lou Kovacs calls this group of tech and tech-related sponsors “the new endemics” in a white paper issued by the agency late last month.

“Predictions here aren’t ready, but it’s obviously growing so I could see these kinds of companies eventually representing something less than 50 percent” of league sponsors, said Kovacs, who presented his work to a group of sponsors and rights holders local to Boston, in association with the Sports Innovation Lab there.

With more technology companies looking at sports, the question is how thinly the category can be divided. Or just as importantly, if tech brands will be as insistent on category exclusivity as packaged goods sponsors.

“There will be opportunities for [more] sponsorships from this group and opportunities to sell these [tech] products and services to leagues and teams,” Kovacs said. “Certainly, there are a lot of ‘frenemies’ in this space. … Fans want to create their own content, especially around sports, so whichever companies can provide that will emerge.”

There are several associated technology issues that are intriguing for an industry already facing a generation not very accepting of the two- and three-hour blocks of linear TV consumption that has long been sports’ cash cow.
Many of those new endemics will need to provide new means of content, delivery and fan engagement.

“As we move beyond traditional linear media into other forms of fan engagement like biometric performance data, models will have to change,” Kovacs said. “Wearable technology providers will require collaboration from all sides to fulfill their potential.”

As for the rights fees on which teams and leagues have long depended?

“Younger fans often seem more interested in what goes on off the field than on, so the question is how the value of those rights will grow relative to on-field rights,” Kovacs said.

He also predicts greater investment in esports, more and different platforms, and the possibility of these “new endemics” funding new leagues or events.

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