By Phil Parrish on January 13th, 2021
Digital Sports Sponsorship Trends in 2021
Above: Empty stadiums have forced sponsors and properties to reconcile and reinvent sponsorship engagements
The impact of COVID-19 on spectator sports and other live events has been staggering, and there are many unknowns as we head into 2021. Hundreds of games have been cancelled or rescheduled. Professional and collegiate athletic programs continue to operate in constant uncertainty. Sports fans are clamoring to return to the stands, but even after that process begins, there will likely be new protocols to follow and some sports enthusiasts may avoid live events altogether.
With no fans in the seats, the pandemic has had a huge impact on the sponsorship industry. Sports sponsorship investments range from $50 to $60 billion per year. Sponsorship dollars are often allocated in advance of games being played and oftentimes over multi-year engagements, so the pandemic has raised concerns among sponsors who believe they are no longer getting the same value out of their sponsorship activations. As such, the strain on sponsorship relations has forced properties to renegotiate contracts while scrambling to find alternative ways to drive value for their corporate sponsors.
The Impact of Empty Stadiums on Sports Sponsorships
Without fans, in-stadium signage provides only a small fraction of viewable impressions compared to a “normal” year of attendance. Properties have come up with creative ways to increase visibility for sponsors during broadcasts, but engagement and brand recall is always stronger in person.
In addition to traditional signage, sponsors also can’t engage with fans through sponsored sections, booths, or fan experiences at the stadium or arena. Without opportunities to provide product samples, demonstrations, or other on-site activations, brands struggle to engage fans beyond their limited visibility during broadcasts.
Lastly, there are no hospitality options for sponsors where they can leave a lasting impression on fans who partake in food, drink, or giveaways. Considering all of these aspects, you can understand why sponsors are concerned. On the other hand, you also feel for sports teams and athletic departments who have lost substantial revenue over the past 10 months (and counting).
Above: Sports venues have converted seats into large advertising placements to salvage sponsorship revenue
Financial Impact of COVID-19 on the Sponsorship Industry
IEG estimates that over 120,000 sponsorship agreements have been impacted due to the pandemic. Their recent survey findings show that an estimated $14 billion in sports and entertainment sponsorship value will need to be made up due to the shutdown caused by COVID-19. This number of “make good” value will likely increase each month until more fans can safely enter stadiums.
As a result, sponsorship structures will change and there will be an increased reliance on digital sponsorship activations through social, branded video, and programmatic media channels to increase value until we can get back to normal. And once stadiums and arenas are packed again, which may take a few years, we believe that digital sponsorship activations will be a far more integral part of sports sponsorship engagements.
Digital Sponsorship Case Study: Anheuser-Busch
As one of the leading global sports sponsors, Anheuser-Busch (A-B) has been recognized for their incentive-based sponsorship model. Over the last five years, A-B has worked hard to restructure their sponsorship activations and have taken a very innovative approach whereby property partners are rewarded by driving additional value. How does A-B reward partners and how do they define additional value? A-B worked with some of its partners to create a model that is similar to performance-based incentives that pro teams structure for athletes, or athlete endorsement deals with brands, where players are rewarded financially for making it to the playoffs, winning a tournament, or reaching a higher world ranking.
Translating this to sponsorships, A-B has established a model where a boost in attendance or a playoff appearance triggers larger investments into the partnership. A winning team that makes the playoffs typically generates more fan attendance, but all this has changed due to the pandemic. Even though this incentive-based model works for both parties in normal years, it doesn’t make as much sense in the current landscape.
What other methods does an innovative sponsor like Anheuser-Busch leverage where its property partners can be rewarded for driving additional value and fan engagement? The answer is digital channels or platforms that engage fans and increase awareness wherever those fans live their digital lives. A-B sees the untapped potential of leveraging its property partners’ digital fanbases with co-branded content to increase engagement rates while driving direct response performance marketing results. This may sound cutting-edge at a high level, but most properties lack the technology and resources to understand the value of their digital fanbases and how to monetize this asset in a compliant and meaningful way with their corporate sponsors.
The Digital Transformation of Sports Sponsorship
As sponsors and properties renegotiate their deals and make tough decisions, it forces all stakeholders to innovate and test new ideas. All is not lost: The ongoing change in the sponsorship industry due to the pandemic can bring new opportunities.
Perhaps the most valuable opportunities for sponsors and properties to develop are ways to engage fans across their digital devices. To highlight the value of digital in sponsorships, this 2020 Wakefield Research article shows that:
- 97% of a pro team’s fanbase is reached outside of the stadium or arena
- A single NFL team’s tweet reaches 2x the number of fans versus single game attendance
- Monthly off-season web traffic to an NFL team’s website exceeds total season game attendees
The key takeaway from the evolving sponsorship landscape is that sponsors and properties need to be understanding, flexible, and collaborate on new ways to add value in the partnership. With $14 billion in “make good” value yet to be reconciled, going back to business as it was before the pandemic will not be sufficient. Relying on legacy sponsorship activations and traditional assets will also be less effective overall moving forward as the world shifts to digital. We will look back at this crisis as the necessary catalyst that changed the traditional sponsorship model and the way activations are planned, developed, and executed.
Brands and properties should begin to leverage digital fanbase data and work toward developing mutually beneficial co-marketing engagements by leveraging data-driven technology platforms. The emergence of innovative programs that extends the property’s reach beyond the stadium while engaging fans across all their digital devices will reinvent the sponsorship model for years to come.
Our next post in this series will dive deeper into how digital sponsorships can be developed and executed: We will look at data-driven strategies and unique ways that sponsors can engage fans beyond the stadium. Subsequent posts will also provide strategies for co-branded creative assets, landing page offers, and campaign measurement within the sponsorship industry. To learn more about our digital sponsorship service offering, get in touch here.
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