Sports sponsorship moves into the fast lane

Michael Barnett

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At the same time, sports-rights owners and sponsor brands claim that too many deals are conceived using outdated ideas.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.

Case study: Manchester City & Electronic Arts

The marketing partnership between football club Manchester City and games developer Electronic Arts (EA) is one with an unusual level of collaboration. The relationship is so deeply integrated into both businesses that EA now employs two people dedicated solely to producing content for the club using its software.

Examples include a virtual launch of the club’s kit for the current Premier League season, sported by a computer-generated Manchester City squad. And on the club’s signing of striker Samir Nasri, EA had already prepared an in-game image of the player scoring a goal wearing the team’s sky blue shirt, to the amusement of its fans and the chagrin of its rivals.

EA has fully motion-captured all the Manchester City players so that their game avatars’ appearances and movements are as life-like as possible. This has opened up a variety of possible uses for content created within EA’s latest FIFA 12 game software. According to Manchester City head of digital Richard Ayers, the club is working on ways in which this could be delivered via smartphones, for example using the personalised QR code and RFID chip included on each of its fans’ membership cards.

By scanning the QR code in Manchester City’s smart phone app, Ayers suggests that unique content could be ‘unlocked’, for example, player avatars created in FIFA 12, which could be swapped or played with like trading cards. The aim is to transport the fan’s relationship with both the EA and Manchester City brands out of the stadium or TV and into a more social setting.

He adds: “What we would really like to do is have interaction between the membership cards, because the phone’s sensor picks up multiple cards. What if that player is a trigger for exclusive content that only my membership card gets me? I can show my mates in the pub a selection of content that only I can access.”

The club is also exploring how data from the FIFA 12 game, including team and player statistics, could be used to simulate upcoming matches, or be put to other applications for entertainment purposes.

It is a concept Ayers calls “datatainment”, and is another aspect of the EA partnership that Manchester City is seeking to exploit in its efforts to become a “global entertainment brand”, he says.

For EA too, the partnership provides a platform on which to promote its games. According to EA football business lead Nick Harford, online players of FIFA 12 around the world choose to play matches both for and against Manchester City more than any other club or national team represented in the game.

As well as providing exposure for the game through the EA content that Manchester City pushes out, the club also hosts permanent installations at its Etihad stadium, set up by The Circle Agency, where fans can play FIFA 12 on PlayStation 3 and Xbox 360 consoles.

Harford says the partnership forms part of EA’s strategy to attract new consumers to play FIFA 12, with growth of the category being necessary since it owns a 96% share of the market. To do this, he says EA needs to be an integral part of Manchester City’s own expansion plans.

“It is about how EA Sports and FIFA as a product can be relevant in a business context - the way it works for fans, the way it works for players, the way it works for staff.”

Viewpoint

Gordon Lott
Head of group sponsorship
Lloyds TSB

When you become an Olympic sponsor, you do not buy a media package like you might at the football or rugby world cups. It is a clean-venue scenario [where no branding is allowed in the arenas]. You have to find other channels and you have five years to leverage the opportunities, the marques and the values of the Olympic association.

Advertising, the way I relate to it, tells you the price, the product and where to buy it. At this point, our sponsorship will probably not tell you any of that. It will tell you this is the brand, this is what it stands for, this is how it relates to you and your community.

When we became a sponsor, it was seen as part of our marketing. It was a five-and-a-half-year deal and the costs and the return were seen as part of a marketing strategy over that period of time - part of the whole advertising mix above the line and below the line. We do not relate to sport as a particularly special asset, versus the arts or any other sector. We are at the moment looking at our strategy for 2013, and beyond, and that includes all sectors. It is not limited to sport.

 

Lloyds TSB Olympic stats

Source: Lloyds TSB

Case study: Deloitte

Despite being an official supporter of the London 2012 Olympic and Paralympic Games, professional services firm Deloitte does not approach its involvements in sport like a conventional sponsorship.

Simply attaching its logo to a sporting organisation or earning a namecheck would provide low impact for the firm, since consumer awareness and sentiment are of little consequence to its business.

Deloitte’s London 2012 manager Catherine Bayley says: “It is not about having Deloitte mentioned a hundred times. It is not about having partners even acknowledge Deloitte. We are a business-to-business professional services organisation, so we do not have a product to put on the shelf or something for somebody to hold. We have to showcase what we do best, which is solve problems.”

Deloitte has been providing consulting services to the London 2012 organising committee, Locog. As Marketing Week reported in 2010, Deloitte has also been doing quarterly measurements to assess what other work has been won as a result of mentioning Olympic credentials in bids for contracts.

“We know that bids that include the London 2012 credentials have a higher win rate than those that do not,” Bayley said at the time.

As part of its Olympic involvement, Deloitte has also partnered with charity SportsAid, which provides support to young and developing athletes. Again, Bayley says, the objective is to provide a solution to a problem - namely, helping prospective Olympians and Paralympians to compete at the highest levels of their sport while also surviving financially and staying in education. Success has a tangible measure in the medals the athletes win.

Bayley adds: “We are taking what has been an under-funded and under-promoted part of sport and dragging it to the fore as best we can. We could have sponsored a football team or the World Cup, but what we chose to do is go in for the long-term and develop something that was a five-year programme.”

Developing personal relationships with clients is also a crucial component of Deloitte’s sport-related marketing. The SportsAid partnership provides such opportunities through SportsBall, an annual fundraising dinner organised by agency Gyro.

SportsBall offers Deloitte’s clients an experience that could not be replicated in any other setting, and it forms part of the firm’s move away from “traditional hospitality”, Bayley claims. Rather than playing 18 holes of golf, for example, Deloitte is far more likely to invite clients to spend a year training with its staff to walk the 874 miles from John O’Groats to Land’s End.

Figures focus

Source: IFM Sports Marketing Surveys. Respondents are sponsorship decision-makers.

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