Movement toward content changes strategy for sponsors
Across the sports media and marketing businesses, the content imperative and changing media consumption patterns are dramatically transforming the landscape. Every sponsor is now a content producer. Every property is or wants to be a media company, and most of them are producing content for their sponsors for digital and social channels.
If the biggest question facing the sports industry is how it transforms from a business based on TV rights to one based on new forms of media consumption, then the second-biggest industry question is how its supporting sponsorship industry changes with it.
Up to now, the line between sponsor content and most of that produced by traditional rights holders has been an on-field/off-field boundary. For example, most New York Jets games are on CBS, while travel gear brand Victorinox sponsors a weekly “What’s In Your Bag?’’ short-form video on the team’s website with appropriate product placement.
Still, as consumption changes, won’t those boundaries inevitably blur? “That’s happening already,” Jets President Neil Glat said. “The size and scope of future media rights deals will ultimately determine that, but every sponsor wants an ownable experience whether that’s digital and social content or a [branded] stadium area.”
Adam Dettman, MillerCoors director of sports and entertainment marketing, calls this a time of aggregation and fragmentation.
|American Express supports its NBA sponsorship at an event with Shaquille O’Neal and Alonzo Mourning 25 years after they went 1-2 in the draft.
It’s a drumbeat that some in the industry heard coming a long time ago.
“The business has always been moving away from hard assets like signage toward what properties can do from a content perspective,” said San Jose Earthquakes President Tom Fox, whose more than 30-year career also includes buying and selling sponsorship assets for Gatorade, Nike, the NBA, and EPL clubs Arsenal and Aston Villa. “Looking forward, brands will increasingly be differentiated by the stories they tell with their sponsors.”
Among mainstream brand marketers, the word “authentic” has become second only to content. Within sports, the struggle will be for sponsors to maintain authenticity while delivering a brand message that those consuming on mobile devices won’t skip. So, what content is appropriate as consumption and rights holders change? So far, marketers know only that a 30-second ad ported to mobile is about as effective as crutches on the beach.
“We’re not looking to replace ESPN,” said Deborah Curtis, vice president of entertainment marketing and sponsorships at American Express. “Our content has to be additive,” she said, citing a video piece produced earlier this year to support the company’s NBA sponsorship that paired Shaquille O’Neal and Alonzo Mourning 25 years after they were picked 1-2, respectively, in the NBA draft. “The future of sponsorship has to be less about singular, transactional moments and more about meaningful connected moments.”
But as boundaries separating media content and that of traditional rights holders blur and digital/social becomes even more of a marketing imperative, isn’t there an inevitable conflict? Some say it’s already happening.
“Properties are more broadly defining their content rights, so those are the battles I’m starting to have,” said Elizabeth Lindsey, managing partner of the marketing division at Wasserman, with clients including Microsoft, Nationwide and AmEx. “I’ve had a number of occasions this year where brands trying to do something that five years ago never would have been considered an infringement — this year, I’m having broadcast rights holders and leagues complain.”
With more disparate kinds of media owning more and different rights, things will get even more complex.
“As the CBAs and property rights deals come up for renewal, I’m very curious to see what significantly changes in terms of the rights of teams, leagues and players,” said Ron Skotarczak, executive vice president of marketing partnerships at Madison Square Garden. “We’re seeing athletes much more sophisticated about promoting their own brands. How will that and alternative distribution of rights change things in sponsorship are two of the biggest industry developments we’re watching.”
Former NBA Commissioner David Stern suggested that a parade of digital apps, extensions and sponsored data from wearables (envision the “Aquafina Hydration Report,” based on real-time data) are the future of sports sponsorship. “We’re about 18 months away from a landslide of mobile content like that,” Stern said. “Sponsorship opportunities are only going to be increasing, because sports are the canary in the digital coal mine.”
Analytics and big data are also expected to affect sports sponsorship, as they will all forms of marketing. “Livestreaming of sports is a seismic shift, so of course, we’re tracking that closely,” said Pam Hollander, vice president of consumer marketing at Allstate, whose portfolio includes sponsorships and branded goalpost nets at more than 90 colleges, and title sponsorship of the Sugar Bowl. “For us, sponsorship is no longer about brand awareness. As we all become more sophisticated with big data and precision targeting, access to that data is something we look to negotiate in our deals.”
Looking further down the line, the power of big data and analytics will lead to a more customized experience — and a potent fan engagement tool.
“Attending a concert or game may be communal, but soon it’s going to feel individual and exclusive,” said Scott Becher, vice president of partnership and loyalty at Carnival Cruise Lines. “When I arrive, the food I like, the merchandise offers I want and even seat upgrades, will be pushed to me. That’s a powerful sponsorship platform.”
Category or content?
Sponsorship has long been sold on the basis of rigidly defined category definitions. Accordingly, exclusivity has always been easier to acquire with sponsorship rights than with a pure media buy. As the business matures and categories become increasingly impossible to distinguish from one another, many see the business morphing from one in which category exclusivity is paramount to one where platform or content exclusivity is the principal concern.
“Its just become harder to define what any particular category is — that’s a constant and lengthy discussion on every deal,” said Harlan Stone, managing partner of SJX Partners and chairman of CSM North America.
Jim Schwebel is a principal at Apel, New York City, where his sponsorship clients include the Varsity Spirit cheerleading property.
“With every sponsor looking for a unique platform, content is becoming more important than exclusivity and it will become even more so, inside and outside of sports,” said Schwebel, who sold NFL sponsorships for 20 years before joining Apel.
That’s especially true as categories impinge on one another. Since cellphones are now a payment option, AmEx is right to consider them a competitor. But it doesn’t make sense for AmEx to buy out two categories, so “as you see categories merging and converging, I definitely see a future where content has the upper hand,” AmEx’s Curtis said.
“A lot of the future will be about telling stories through content and distributing that content, instead of the traditional ‘I’ll pay you money for rights and signage,’” said NBA Deputy Commissioner Mark Tatum. “It’s about the story you can tell together and how that story can be aligned with your brand. That’s how our jersey badge program has been able to attract new sponsors like Harley-Davidson, Rakuten, and Disney. Yes, it’s a new piece of [ad] inventory, but it’s a great connection with the team beyond that.”
Added Meredith Starkey, T-Mobile’s vice president of sponsorships and events: “We’re already wrestling with how important exclusivity should be.
“How we engage with fans is already more important. If we can add value to their experience as fans, I don’t know how much exclusivity matters … there’s more value in how we engage and less with exclusivity being the deciding factor” in a sponsorship.
Pay to play model
Sponsorship sellers throw around the word “partnership” as if there’s actually financial risk on both sides of a deal. Ratings and business guarantees are old hat, but will the sponsorship industry ever reach a point where performance guarantees are expected?
“Clickthroughs are so easy to track, the old model is changing already,” Stern said.
Still, there are divergent opinions.
“It would be really interesting if that ever happened,” said Allstate’s Hollander, “but I think that’s pie in the sky.’’
There are some current examples. T-Mobile’s Starkey said that her company’s arena naming-rights sponsorship in Las Vegas includes performance metrics and adjustments, based on the number of events per year and the number of televised events.
After 37 years of selling sponsorships, Stone said that “those kinds of pay-for-performance models are the exception, but they are coming.” Stone, whose sales portfolio includes Little League Baseball and the U.S. Tennis Association, said he’s currently negotiating a deal with an emerging property in which 25 percent of the fee is “at risk” either way, depending on attendance, TV ratings and sponsor recognition numbers.
John Slusher, Nike’s executive vice president of global sports marketing, said many of his company’s team/arena sponsorships call for Nike to pay more or less, based on both sales and team performance measures. “The basic formula is ‘the better we do, the better they do,’” said Slusher, “but it’s all done on price/value.”
|T-Mobile’s naming-rights deal in Las Vegas includes performance metrics based on number of events and TV events.
“Normally, we’re trying to generate product trial or website traffic [for sponsors],” Jets President Glat said. “Those are the kinds of deliverables we’d want to be measured against.”
New York Mets Chief Revenue Officer Lou DePaoli said he’d seen various forms of sponsorship deals with guarantees over his 20-plus years of selling for the Mets, Atlanta Hawks, NBA and Florida (now Miami) Marlins. Some even included guarantees for wins and playoff appearances. “Those make me cringe,” said DePaoli, coming off a record year for sponsorship sales but noting that it was followed by an “anything-that-could-go-wrong-did” year on the field of play.
DePaoli would prefer to guarantee retail traffic or sponsorship awareness. A few years back, a big Mets sponsor looking to renew was insisting on an attendance clause with rebates if attendance declined. DePaoli said that was fine, as long the sponsors would pay more if attendance increased. That demand disappeared.
More, more, more
The easiest prediction to make about the future of sports sponsorship is that it will be filled with an inexhaustibly increasing supply of more camera-visible advertising, both on the field of play and on uniforms.
“If there’s a blank space, someone’s going to figure out how to sell it,” Hollander said. “The problem is that most of that kind of inventory is just not ownable.”
Momentum Worldwide CEO Chris Weil, whose sports-heavy client roster includes Verizon and Coca-Cola, said the question of overexposure gets down to a more universal understanding of a single principle. “Properties have to get to a point that seems simple but isn’t — exposure doesn’t equal impact,” he said.
There’s a line somewhere between stick-and-ball sports and NASCAR when it comes to commercialism. However, determining where that line is seems akin to the Supreme Court’s 1964 obscenity ruling, in which Justice Potter Stewart explained that while he could not precisely define pornography, “I know it when I see it.’’
Opined former Commissioner Stern: “There will be judgment calls to make as to how much you want to make it look like a carnival, but it goes to the soul of the commissioner and Adam Silver has a basketball soul.”
For inventory like uniform ads and other camera-facing signage, “the momentum has started and it will continue,” said MSG’s Skotarczak. “What leagues and properties need to be cognizant of is whether they can create enough value to grow their businesses without pissing off the sponsor community.’’