Opportunity and Threat in Sponsorship

This article was originally published by the Irish Sponsorship Summit 2017
We’re all online now. On average, UK adults will spend more than 4 hours each day on their smartphones, tablets and laptops. In Ireland, and both North and South America, the average person will spend 5 hours and 40 minutes a week on Facebook alone. Compare this to just 12 years ago, when we ‘only’ spent 10 hours total a week online.

Three great digital shifts have happened over this time, more or less at once: we spend more time online; we spend more time on mobile devices; and we spend more time on social media. There has always been a battle for attention, but this battle has heated up as the number of players has increased. And, as the traditional lines blur, social platforms have themselves become publishers and media owners.

Sport remains one of the last bastions of ‘live’ content and, as we know, can turn a city’s or an entire country’s attention to the same place. It has an interesting role to play in this changing landscape, with sports properties garnering huge digital audiences. Sports stars such as Cristiano Ronaldo and LeBron James have huge online fanbases, with hundreds of millions of followers across social channels. Sports rights owners are seeing this trend too – the average number of Facebook followers for an English Premier League club is now at 12 million, while last year IRFU broke 1 million followers across Facebook and Twitter.

As customers have moved online, brands have followed suit. Their focus has shifted, and so have their budgets. In 2016, UK digital ad spend grew 12% and made up 55% of total media ad spending. In Ireland, the trend has been even more aggressive with the first half of 2016 seeing digital ad spend grow 33%, as the market saw strong growth across social platforms. But brands also want a way into sport’s audiences.

The sponsorship industry has long been built on rights owner providing rights and assets to build connections between brands and audiences. However, while brand and consumer behaviour has changed, the sponsorship industry is largely doing what it has always done.

With their partners and audiences both online, rights owners need to adapt or risk being left behind. Selling the same assets to the same kind of brands, while deriving value through broadcast exposure is no longer good enough. Brands are getting smarter, recognising that they can leverage the hype around sport events while cutting sports rights owners out of the equation and going direct to the audience. If rights owners stand still, brands will move away and it will be increasingly difficult for ‘traditional’ sponsorship to compete in a brand’s marketing mix.

Rights-Holders Acting Differently

There are few examples of sports rights owners who have identified this move. The progressive rights owners, who are showing how it can be done differently, have responded to the changing landscape and are starting to realise the rewards. In the English Premier League, Southampton F.C. continue to make waves both on and off the pitch. Their data-led player development programme produced Gareth Bale and brought a crop of talent through the youth system, who have subsequently been picked up by the world’s leading clubs. All of this while continuing to challenge in all competitions. The Club is now applying the same forward-thinking approach off the pitch – investing in new digital platforms, buying back their digital rights and using data to build a best-in-class user experience for their fans. All of this has translated into significant commercial uplift.

Southampton’s new website offers fans a more tailored, content-led experience, setting new benchmarks for how clubs engage with their fans online. Partnering with innovative brands such as Under Armour, Virgin Media and Garmin, the club has shaken up their sponsorship model, re-thinking the role of digital and generating new revenue streams through previously underleveraged content. Southampton’s fan-first strategy has put new digital rights and activations at the heart of it, delivering for both fans and brands.
As brands’ spend gets eaten up by digital, sponsorship has to respond. We expect to see more of this from rights owners.