After hosting an event in February 2020 looking at how rights holders can maximise their partnerships, Stephen Hutchison, MD, Fuse, and the agency's Head of Strategy, Alex Charkham, take a look at how rights holders can gain a competitive edge when it comes to partnerships.
Speaking before the current coronavirus pandemic, the pair identifed three key themes for rights holders to bear in mind under normal circumstances.
Balancing short-term performance with long-term growth, closing the widening digital gap, discovering ever-smarter uses of data: these are just some of the big themes that are increasing pressure on clients to think and act in a different way, which is having knock-on effect on the sponsorship industry.
We’ve identified three key themes where rights holders should look to take action to future-proof themselves and generate more sponsorship revenue.
Better anticipating partner challenges to accelerate conversations
The sponsorship industry has historically traded on metrics that don’t completely quantify success e.g. media value, reach, frequency. At the same time, many brands are seeking new ways to validate their investments. As a result, there’s an increasing expectation that rightsholders should provide a more consultative approach that shows how sponsorship could solve a genuine business problem.
We’ve recently undertaken a project with easyJet to commercialise their assets, allowing them to become the UK’s first travel rightsholder. Andrew Middleton, Commercial Director, easyJet, explained how data can be used to create compelling bespoke partnership proposals, “Our work to identify relevant categories is rooted in data and insight," he said.
"In the tech category, we discovered that easyJet customers are 1.6 times more likely to visit a technology website, five times more likely to state technology as a passion and five times more likely to spend money on technology in an airport than the general population. This tells us we have a compelling proposition for tech brands. Fuse then helped us build bespoke proposals which translate our category insights into quantifiable ROI for prospective brands. This level of rigour gives us the ability to have credible, robust conversations with potential partners.”
Forecasting the business impact of a partnership is one way of accelerating brands’ needs for validation. Typically, this involves answering the following questions from the outset, using a balanced source of data and insight sources as well as smart analytics:
- Why the property is the right fit?
- How can it deliver against key objectives?
- How much of the audience is, or could be, in a position to buy the partner’s product?
- What’s the revenue potential?
Speaking the language of short- and long-term effectiveness
Despite commanding global investment in excess of $66 billion, sponsorship has fallen through the net and is far behind more traditional forms of marketing when it comes to measurement and ROI, with only a quarter of sponsorship practitioners understanding the business return of their properties.
By reviewing the existing measurement tools and available data in combination with the ground work undertaken by marketing analysts on the wider marketing mix, we have begun to map the steps needed to enable advanced sponsorship measurement and the ways we as an industry can begin to uncover business impact across the short-to-long-term:
1. Start with your objectives and ensure you have a focused set of KPIs to measure success
Having an excess of 20 KPIs can be a real information overload and a detriment to measurement and wider sponsorships success. Both thrive when there is a more single-minded focus on two or three ‘core’ KPIs that alone represent success if achieved.
2. Have a good understanding of your sponsorship data
There’s currently a mistaken belief in the industry that ‘good and meaningful’ sponsorship data does not exist. In reality, the rightsholders, research, sponsorship and media agencies together will have a comprehensive list of data streams which, when combined, will enable advanced analytics and uncover business impact.
3. Integration and breaking down silos is key to measurement success
By encouraging integration, marketers can use existing expertise, analytics techniques and approaches to prove sponsorship’s business value. Perhaps most importantly, integrating sponsorship measurement into existing approaches and teams, can allow direct comparison to other marketing channels.
Closing the ‘Digital Gap’
According to Johan Boserup, Global CEO, Investment, Omnicom Media Group, “since the financial crisis, advertising spend has almost doubled. Today, digital is more than 50% of global ad spend, but TV spend hasn’t decreased since 2009. Almost all of the new money coming into the advertising industry is going to a digital vehicle.”
The importance of digital in sport is no different, for example 13% of all UK Google searches being sport-based. However, there’s a growing disparity between the digital rights offered through sports sponsorships and the increasingly influential role of digital in a brands’ marketing communications. Analysis by Fuse on sponsorship inventory from 35 rights-holders has suggested that only 18.5% of rights packages are digital.
Most digital rights in sponsorship packages come through traditional display advertising and organic social. Both of which have limitations. Display advertising is primarily used in response campaigns and is increasingly bought on a performance or programmatic basis. Whereas organic social post for sports content will only reach a small proportion of a sport’s total audience; around 2.7% on Facebook, 16% on Instagram and 2.1% YouTube. In fact, organic social content is so ineffective that two of the biggest sports brands in the world, Nike and Adidas, didn't post anything without spend in 2019.
If rightsholders don’t adapt to these changes in the broader ad market by offering more compelling digital marketing solutions to their partners, it is likely that overall sponsorship investment will slow-down in the long-term. Moreover, if audiences do continue to make this shift online then it is unlikely that broadcast rights will see the same dramatic rises in value that they have in recent years.
In an increasingly highly cluttered and competitive category environment, one way to break out is through innovation. The more that rightsholders can innovate, the more they can demonstrate performance, the more flexibility they can put around any deal, the more attractive they will be to brands.
In order to continue to attract high levels of brand investment, sports will need to embed new digital inventory, explore innovative content formats and deliver more consistent and accurate performance analysis.