Wednesday, 25 November 2015

Sponsorship-With-Conditions: A New Way To Drive Value?

wrote a piece recently about the dearth of leading brands investing into Premier League football.  Not one of the world’s top 100 companies – as defined by their Market Capitalisation – currently resides on the shirt of one of the 20 clubs that comprise the world’s leading year-round sporting property. In stark contrast, at a time when the sport needs more than ever to engage with young fans, 7 of those clubs are happy to turn out each weekend advertising betting companies.

In that piece I argued that this could be attributed to a lack of understanding of sponsorship’s potential by many rightsholders. Most have the view that it is simply a revenue stream in return for inventory, to be sold to the highest bidder regardless of their identity or possible value-add over and above the rights fee.

Of course – as with all businesses – there is a pressure to bring in revenues and many rightsholders just don’t have the bandwith to consider “value add”, it’s all about the money, money, money. But imagine what kind of revenues could be attracted by offering a completely different proposition to sponsors.

It’s not unreasonable that amongst the world’s top 100 businesses there sits some of the world’s top marketing budgets. The question is how to unlock those budgets. My suggestion is that it’s not just doing the same thing we’ve always done. When 4 or 5 shirts come up for renewal at the same time it quickly becomes a buyer’s market and because most of those clubs are selling the same commoditised inventory – media value – there is no premium attached, the buyers don’t care which club they partner with and it becomes a race to the bottom. No value add & undersold into the bargain.

Sport can offer brands incredible benefits. At the top of the tree, the big brands still pay huge sums to be involved with premium properties. It’s when you dip below the (increasingly high) bar that trying to attract blue chip brands has become more and more difficult. The model is imbalanced: too many brands wanting to associate with the elite; not enough looking at the smaller properties. Instead of sponsorship, many utilise new technologies and marketing techniques that enable them to connect with customers without having to pay a rights fee.

The key is finding the time and space to consider that it doesn’t need to be this way. Each property has its own customer footprint that can’t be bought anywhere else. Brands want access to these people and they are willing to pay for it, if only the properties could tell them who they were, who was in their network, how they behaved and to what they aspired. Of course, that takes time and money, but, money well spent. Money in sport – as we know – tends to flow out as quickly as it comes in, paying the “talent” a constant source of pressure on the business model. A tiny proportion of that money could be spent on creating something that top brands actually want to buy.

There could be an alternative way of looking at this. Is there room for a sponsorship model in which the sponsor dictates how their rights fee should be spent? Utilising specific sponsor spend to build value in the rightsholder’s business: developing CRM methodologies, genuine content strategies, connecting venues etc - all platforms through which the sponsor can better connect with those customers. Even when the sponsor decides to call it a day, the righstholder’s business will be more robust and be more attractive to other sponsors. It seems to make a lot of sense, notwithstanding the traditional aversion to change. The question is, who will make the first move?