Companies spent more than $65 billion worldwide last year to sponsor sporting events and teams, a trend that’s gone nowhere but straight up for more than a decade.
In an increasingly fragmented and saturated entertainment advertising market, live sports represent one of the few forms of premium content that can consistently deliver a guaranteed and captive audience across multiple screens.
Unlike serialized television programs, movies and YouTube videos, there’s an element of timeliness about sports content that appeals to advertisers and corporate sponsors. A person can always go back and skip through commercials – or opt out entirely – to watch something that’s available forever on their DVR or streaming service. Good luck trying to avoid finding out the score of the Super Bowl or the results from the Olympics, especially if you’re online doing anything and everything else.
The content is rare, priceless and perishable and so is the audience these companies are desperate to reach.
Over the course of the next few months, this blog will focus on how some of the biggest players in the imaging channel, including OEMs, dealers and vendors, are leveraging their associations with teams, players, leagues and major sporting events to amplify their branding messages to generate a return on their sponsorship investments.
IEG, a global consultancy specializing in partnership strategy, evaluation and measurement for sponsors and rights holders, found that spending on these sports sponsorships has surged more than 50 percent (roughly $43 billion to $65 billion) in the past decade. North American spending in 2018 accounted for just north of $24 billion on this ever-growing pie.
Whether it’s the Olympics or the World Cup or the National Football League, companies are expanding their advertising and marketing budgets to get in the game – even if it’s not immediately clear exactly how these sponsorship deals are actually impacting their financial performance.
There are myriad variables that complicate ascertaining a direct return on investment from sponsorship spending. Often, competitors in the same product category – beer, soda, automobile, telecommunications, etc. – are simultaneously sponsoring a team, league or event. Determining how one or the other or perhaps even all the sponsoring companies are benefiting from this relationship is more art than science.
Not only how, but when do you measure the impact of sponsoring a major sporting event, team or league? The Olympics take place over a couple weeks and the World Cup is a month-long event. Baseball and football consume fans’ attention for half a year or more. It’s almost impossible to draw a straight line from advertising impressions to sales conversions before, during or after any given sports season or event.
A McKinsey report surprisingly concluded that one-third to one-half of all participating companies still don’t have a methodology in place to measure sponsorship ROI in any great detail. It’s something that some companies and their consultants are working to fix.
“In our experience, executives who implement a comprehensive approach to gauge the impact of their sponsorships can increase returns by as much as 30 percent,” the report concluded.
Getting to the heart of why so many companies are throwing millions and billions of their marketing budgets at sports sponsorships is complicated. For some, there’s an element of legitimacy inherently attached to being a prime sponsor of these elite athletic competitions. For others, it’s a more regional or civic sensibility. Supporting the local professional hockey or baseball team – and the perks that come with that relationship – also provides an attractive entertainment option when clients, partners and industry bigwigs are in town for business.
However, just how much actual “business” is conducted and completed during these events is an open question. For some companies, it might not even be the point.
“Although many businesses continue to change, I would focus on how my prospects category has benefitted with the explosion of social and digital media,” a marketing executive said in an anonymous survey of top-tier sponsorship corporations conducted by the National Sports Forum. “I know that sport properties will always get a look because of their cache in this area.”
Whether it’s boosting corporate morale (tickets to games and events are always nice) or maintaining a consistent presence to reiterate their brands, companies aren’t slowing down their investments in sports sponsorships. The NSF survey found that 72 percent of executives surveyed planned to spend as much or more on sponsorships in the coming year.
Respondents from the 25 companies surveyed – including Anheuser-Busch, AT&T, HP, Gatorade, Ford and Coca-Cola, among others – said that 83 percent of their collective sponsorship budgets are currently allocated for professional and collegiate/amateur sports.
With this reality as a backdrop, we’re going dig a little deeper into what the hard and soft ROI on sponsorship deals is in the digital age. It’s time to look beyond the scoreboard and the standings to better understand how companies are winning the game within the games.