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Sports sponsorship moves into the fast lane

25th January 2012

By Michael Barnett - Marketing Week

The cash it generated from sport sponsorship will soon overtake ticket sales, however brands now need to form commercial relationships and strategic partnerships on the basis of shared objectives rather than awareness.

Sports sponsorship is at a tipping point. The cash it generates worldwide will soon overtake the amount of money made from ticket sales, becoming a £29bn industry by 2015, according to PricewaterhouseCoopers.

At the same time, sports-rights owners and sponsor brands claim that too many deals are conceived using outdated ideas. Manchester City FC’s head of partnerships Luis Vicente says that the industry needs to adopt an entirely different model.

“Sponsorship in its traditional form is dead. You have to come up with something that is an embedded, engaging experience with your partners,” he argues. He says that brands should be talking about strategic partnerships, rather than sponsorship.

The need for a new model comes at a time when those involved with sponsoring sports say they are under pressure to prove the value of the deals. More than 80% of sponsorship heads say that accountability for their spend is greater than ever, according to a survey by IFM Sports Marketing Surveys (SMS), seen exclusively by Marketing Week. Sixty-seven per cent expect their investment to stay the same or grow this year. However, 85% of sponsorship heads say sports events need to be more inventive when trying to engage with fans (see figures focus, below).

Manchester City has overhauled its approach to brand partnerships since being bought by an Abu Dhabi sheikh in 2008. Its current deal with video game developer Electronic Arts (EA), maker of the FIFA series of football games, is an example of the new regime in action.

EA has two staff dedicated to producing game-related content for Manchester City, while the club’s Etihad stadium is home to permanent installations of PlayStation and Xbox consoles, where fans can play the latest FIFA game on club match days in tournaments organised by EA. So both brands are linked physically, digitally and through marketing.

The club now seeks commercial relationships on the basis of overlapping business objectives and the potential for collaboration, Vicente says: “When we rewrote the commercial layer of Manchester City, that for us was a critical point. For us it is not about where you place the logo of your partner. It is not about the size of the financial commitment with us. It is about how we can find a fit. Then we translate that fit into a relationship.”

But relationships take time to develop, says EA football business lead Nick Harford, who calls the partnership a “proving ground” for the game developer.

He accepts that not all of the potential collaborations between the two brands have yet been realised, or even identified. Manchester City obviously provides a promotional platform to help FIFA 12 reach a new audience, but the brands will also need to show how widely their new model could be applied elsewhere in the EA business, he admits.

“From the start we have got to get it right, in how we work with the club and get close to the way they operate, and from there you can start to see opportunities.

Similarly, people within the broader EA business need to have sight of what we are doing and why, and where it can have an impact for them in their territory.”

While EA’s partnership with Manchester City is driven by content and live fan experiences, professional services firm Deloitte’s involvement with London 2012 Olympic organiser Locog is based on a different kind of shared strategy. Deloitte is responsible for supporting the organising committee in areas such as finance, human resources and procurement.

According to Deloitte London 2012 sponsorship manager Catherine Bayley, the only product the firm has to showcase is its ability to solve problems, so its main objective is to ensure that all of Locog’s own management objectives are met.

Deloitte has formed a partnership with sports charity SportsAid for similar reasons. It uses its problem-solving skills to assist young athletes to train while remaining in education, with the ultimate aim of winning Olympic medals (see case study, below).

Law firm Eversheds believes that shared strategic objectives are enough of a reason to support SportsAid, but not the London 2012 Olympics. Eversheds head of marketing Sadie Baron explains that it was approached by Locog for sponsorship before Lloyds TSB signed up as the first sponsor in 2007.

But even though it is not a sponsor, the legal brand has still worked on Olympic projects: “We did a lot of work for Locog, particularly around the planning aspects of the Olympic Park and we are still involved very heavily. We looked carefully at sponsorship but we just felt that 2012, in its isolation in London, did not quite sit with what we were trying to do as a firm in terms of international aspirations,” says Baron.

Rival firm Freshfields Bruckhaus Deringer ultimately became the official legal services provider of London 2012.

For organisations such as Deloitte and Eversheds, whose customers are primarily businesses, opportunities to forge strong relationships with clients are a particularly important part of choosing partners in the world of sport.

According to Baron, SportsAid provides the opportunity for Eversheds to give its top clients a unique entertainment and networking experience at its annual SportsBall, a fundraising dinner featuring charity auctions and awards recognising the progress of developing athletes. At the most recent event, organised by agency Gyro in November and hosted by BBC presenter John Inverdale, attendees rubbed shoulders with sporting stars including numerous Olympians.

Indeed the event itself proved the catalyst for one of SportsAid’s current partners, casino operator London Clubs International (LCI), to become involved with the charity. After attending in 2010, LCI compliance director Roy Ramm says the company was inspired to become involved in supporting SportsAid’s athletes.

Forming and developing client relationships is an objective of almost all brands that engage in marketing through sport. Obviously, shared passions and interests among businesses and the decision-makers themselves can be exploited without necessarily committing the resources for an expensive sponsorship or a deeply integrated commercial partnership.

Deloitte is moving away from what Bayley calls “traditional hospitality”, yet this is by no means a universal trend, as LCI’s Ramm points out: “We are constantly taking people to football, rugby and cricket matches, horse racing and boxing, and a whole variety of sporting events. Sport is part of the DNA of our business, although we do not actually do sports betting.”

Yet according to Michael Wells, staging director of golf’s governing body the Royal and Ancient Golf Club, which runs the Open Championship, hospitality customers are becoming more selective. He suggests that companies are now more careful about where they invest money in sports hospitality and about which clients they are likely to take.

“Throughout the industry in the past ten years, we have been nowhere near where we used to be in terms of volume, but the quality has got better. Companies are bringing fewer people, but they are bringing very valuable clients. They would be their top customers or suppliers, people that they are trying to keep on-side.”

Picking a sporting event to attend with clients is therefore a much more important strategic decision in terms of relationship marketing than it might previously have been. Events have to target their appeal accordingly.

For example, Wells says the stereotype of business being done on golf courses holds true at the Open, where customers can book a chalet for meetings and conference calls during the four-day tournament, in-between watching the golf.

Other brands still need a strategic reason to make a sporting partnership worthwhile, though the ways they define success will vary. Lloyds TSB uses measures of customer recommendation resulting from its Olympic involvement (see viewpoint, above below), while Coca-Cola will gauge its support for the Games in terms of young people’s perception of the brand.

As the longest serving partner of the worldwide Olympic movement, the drinks manufacturer renews its Olympic marketing approach for every Olympiad. For London 2012 its objective is to help the organising committee inspire young people in a way that will leave a legacy after the Games. It is doing so by running its music-themed Move to the Beat campaign.

As part of this, it is building the Beatbox pavilion in the Olympic Park, designed by two young London architects. By manipulating the furniture, visitors can use the building itself to play and remix Coca-Cola’s Olympic theme music, created by producer Mark Ronson.

Coca-Cola Olympic portfolio director James Eadie says: “We feel that by giving two emerging architects the opportunity to design the pavilion that will be part of the Olympic Park, we can inspire and excite millions of other young people in the spirit of the Olympics and Paralympics before, during and after the Games; as well as encourage them to follow their own passions in life.

“In terms of the pavilion structure, we are exploring how elements of it can be used by communities after the Games.”

Even with all the opportunities for integrated partnerships open to brands and sporting organisations, advertising may still be the most effective way for some brands to use sporting associations in their marketing. Many will be keen to emphasise the natural links between their businesses and the world of competitive sport - and indeed their customers’ passion for it - without the expense of sponsorship.

Although only 13% of sponsorship heads say advertising provides a more cost-effective return than sponsorship, 64% admit that broadcast sponsorship is no more effective than advertising, according to the SMS research.

As Wolverhampton Wanderers FC head of commercial affairs Paul Lakin notes, perimeter advertising within a football stadium allows messages to be targeted more selectively than a long-term sponsorship or partnership would.

Wolves sells its inventory through sports agency Sportfive and also runs its own house ads on the hoardings. Lakin claims the ad format retains impact in an age of digital TV recorders, as viewers are unlikely to miss the ads by fast-forwarding through the actual game footage, as they might with TV ad spots.

The hoarding ads can be animated using LED technology, while Lakin also says the impacts of this form of advertising are measured according to widely accepted metrics. Analysis of how prominently a message features on TV screens and for how long can put a value on the exposure gained in terms of the cost of equivalent exposure through a TV advertising spot.

Another option allowing brands more flexibility than sponsorship or full commercial partnership is making image rights deals with individual talent. Such deals can be arranged through sportspeople and their agents, although at the top levels of football they are increasingly brokered through clubs and sports agencies. Earnings are then often passed on by clubs to a company set up by the player.

Part of Deloitte’s Olympic sponsorship has been taking on a brand ambassador -Paralympian Sarah Storey, who has won gold medals in swimming and cycling. According to Deloitte’s Bayley, Storey sold herself on the strength of her record and personality, even though the sponsor was not originally looking to make this kind of deal.

“We were not in the market for an ambassador - in fact, we had done quite the opposite and turned down a lot of offers and meetings with agencies,” Bayley says.

Image rights deals do have their risks. For example, Coke Zero ended its association with Manchester United footballer Wayne Rooney last year after he repeatedly attracted press criticism for his behaviour, while Chelsea defender John Terry and Liverpool striker Luis Suarez have both been accused of using racist language on the football field - charges they both deny. Sponsors Umbro and Adidas have so far stood by their respective players.

But as with any sport-related marketing, potential PR mistakes could be averted through careful consideration of which sporting talent best matches the brand’s values and objectives.

So as the marketing spend pours ever more quickly into this global entertainment industry, there is no excuse for not thinking strategically about how sponsorship must now really be a partnership.

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