It’s the time of year when every sports agency chief is either trying to assess 2012 prospects on his own or is being asked to do so by his shareholders or parent company.
For most, 2011 was The Big Sigh: a year of relief after some recessionary years when clients pared budgets instead of building marketing programs. This year, coming into a Summer Olympics year and out of a dark economy, nearly every agency reported generous growth for 2011, as clients returned from the sidelines.
So in many cases, there’s an unfamiliar feeling of optimism.
“I feel better than I have going into this year than any since 2007,” said Rick Dudley, president and CEO of IPG’s Octagon, which had North American revenue growth of around 15 percent for 2011. “The Olympics are driving a lot of business, Brazil is on fire, and the corporate sector in North America is very positive when it comes to marketing investments, old and new. So all in all, I feel very good about it — which worries the hell out of me,” he chuckled.
Added Dan Belmont, president of Omnicom’s The Marketing Arm, “You’re talking about a year [2011] where there was not a lot of bad news at all,” he said. Based on business like Wal-Mart’s NASCAR program and expansion of existing relationships with AT&T and State Farm, The Marketing Arm in 2011 saw low double-digit growth, hired 150 additional employees (though not all sports-dedicated) and is planning to hire another 100 with around the same level of growth forecast for 2012. “So we all worry to some degree,” Belmont said, “but by comparison …”
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"Sports marketing continues to demonstrate value, consistency, predictability, and in an environment where most other business lacks all three of those things. So with an economic recovery, you’re seeing more investment."
— CASEY WASSERMAN
Wasserman Media Group
Photo by: GETTY IMAGES
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Call it the new era of good feelings. A few years after sports marketing as a discipline was called into question by politicians eager for a political football, there’s talk about coping with growth.
“Sports marketing continues to demonstrate value, consistency, predictability, and in an environment where most other business lacks all three of those things,” said Wasserman Media Group chairman and founder Casey Wasserman. “So with an economic recovery, you’re seeing more investment.”
IMG Consulting chief David Abrutyn is also reporting double-digit growth and says that the stature of agencies has been elevated.
“If you accept the premise that the business is healthy because of sports’ ability to cut through an extremely cluttered environment and deliver meaningful audiences at venue or on TV, then I look at the increasing complexities and dollars involved and say only a bit tongue-in-cheek that the sports agency guys are the ‘Mad Men’ of today,” he said. “As long as that is true, the future is going to be good for this business.”
Working one’s way down the agency food chain, growth rates are even larger.
Marc Bluestein at boutique shop Aquarius Sports & Entertainment, Fulton, Md., saw a 30-plus percent bottom-line increase, helped in large part by the holding company of a regional AAA business merging with another, meaning his AAA business grew from six states to 21 states. “There’s a willingness from clients to try something new now that had almost disappeared,” Bluestein said.
At Richards Sports & Entertainment, Dallas, which took MetroPCS into a new UFC sponsorship, the 2011 books aren’t closed yet, but principal Kern Egan points to 30 percent growth and increased hiring for 2012. “As an industry, we’re better at setting client objectives and showing return,” he said. “Without that, you just become the ticket and hospitality provider, which can be limiting.”
The Olympics have always fueled sports spending. Mike Reisman, principal at Aegis Group’s Team Epic, says even that anticipated spend is growing.
“Everyone had a good run-up in 2011, and Olympic sponsors will be getting out of the gate earlier,” said Reisman, adding that his agency had 25 percent top-line growth in 2011. “From an industry perspective, these will be the first real digital/social Olympics, so you should see new kinds of activation.”
Greg Luckman, who left GroupM ESP in August to found a consulting practice at CAA Sports, said that as the year changed, he saw some of the old rules changing.
“Category exclusivity within a specific sport is an outdated notion,” he said. “There are so many ways in: leagues, teams, talent, media, content. Our clients are no longer briefing us to develop a ‘sponsorship’ strategy, but a ‘sports’ strategy that may or may not include traditional sponsorships.”
The search for new categories is unending in good times and bad.
Agency types suggested energy and alternative energy, health care, and online educational institutions as growth areas. Randy Bernstein, whose Premier Partnerships reported its best year yet, with 30 percent growth, suggested that as the recovery continues, “luxury goods should come out of hiding where they have been for the last three to four years, when it comes to marketing.”
Asked about pressing issues for 2012, executives spoke of the need for additional bandwidth at sports facilities as well as the need to develop applications for smartphones and tablets in a way that would help the fan experience at those venues and give the wireless marketers that are heavily invested across sports an enhanced consumer connection.
“We’re all trying some interesting things with social media, but the opportunity at sports venues is real and immediate,” Belmont said.
Elsewhere in the digital space, with content giants like Apple starting to look at valuable rights, like the EPL, and the advent of “smart TVs,” which combine broadband with regular TV content, many are asking if mainstream TV’s influence on sports could be waning — even as top-tier rights fees continue to hit record levels.
“Companies like Google are coming into sports,” said Reisman, whose agency handles myspace.com, “and that’s the ultimate game-changer for networks.”
Terry Lefton can be reached at tlefton@sportsbusinessjournal.com.
