Breaking the Model
Sports marketing was invented in the US at a time when broadcast TV was most definitely king.  The problem is that shifts in audience behavior and technology have made the media environment much more fluid.  In a recent survey we commissioned with Deep Focus/Intelligence Group (our Sister Agency at Engine) questioning nearly 4,000 people on their sports consumption behaviors, a whopping 83% agreed that the way they are consuming sport has changed significantly over the past 5 years. Quite simply, the traditional sports marketing model hasn’t kept pace with this change – it’s time for disruption.

 

The fact that broadcast TV ruled the roost when the model was established meant that broadcasters were able to set the rules.  One of these rules was a precedent whereby broadcast contracts contained an obligation for the rightsholder to guarantee a minimum level of spend with the media owner.  This obligation, in turn, is passed on to the sponsors. In pretty much every sponsorship contract we see in the US, there is a significant “minimum media spend” clause. (As an aside, that kind of clause simply doesn’t exist in the UK, thanks to the non-commercial nature of the BBC.)

This arrangement clearly makes perfect sense for both the media owners and the rightsholders. The media owners significantly reduce their financial risk as the guaranteed income partially offsets their rights fee, while the rightsholders ensure a minimum level of activation from their sponsors.  Sometimes, the rightsholder is the media owner, which makes that clause particularly attractive!

 

The problem is, in this day and age, the “minimum media spend” clause is nothing short of a disaster for sponsors.  The only thing it guarantees a sponsor is a sub-optimal activation campaign.

Firstly, it can force sponsors into inefficient media strategies. For example, one of our clients is an asset management firm whose (significant) media budget is targeted squarely at Financial Services professionals. Primarily, that means advertising outdoor in financial centers (eg. posters, taxis, airport takeovers etc.) and advertising on TV, online and in print with the key financial channels and business titles. Forcing them to spend any of their media budget with the rightsholder’s media partners is literally forcing them to waste money. Of course this is a relatively extreme example. In most cases the sponsor will choose to use a portion of their media budget with the broadcast partners anyway as a means to reach the audience of the sport, teams or events they sponsor.  But, if that’s the case, why do we need the “minimum media spend” clause at all? That’s the kind of “protectionism” the US usually stands against.

The next consequence of the “minimum media spend” clause is that it leads sponsors towards advertising-heavy activation campaigns.  With so much cash committed and so much inventory to fill, it’s obvious that the activation starts with advertising. The problem is that with such a large chunk of the budget accounted for by the media obligation, the activation often ends with advertising as well.

Over 60% of US sponsors use their advertising agency as their lead agency on their sponsorship campaigns, but that just re-enforces the issue.  Advertising agencies might create great advertising campaigns – but great sponsorship campaigns need to be so much more, because the fact is that fans are consuming sport in a completely new way.

This was clearly demonstrated to us in New York recently, when we went to a sports bar to watch the Mets take on the Dodgers in the NLDS.  Clearly, the crowd were glued to the TV during the game, but it was a completely different story between innings.  While the TV played advertising (much of which was from official sponsors), almost everyone in the bar was looking at their phone – checking their social media platforms of choice for more information and opinion on the game they were watching.  So, collectively, brands were paying millions of dollars to be on TV – but no-one was watching.

 

In the same Deep Focus/IG study we discovered that around half the people under 35 are constantly checking their social media channels during a live game. The reality is that audiences are spending more and more time beyond the reach of traditional advertising, and sponsorship campaigns have to follow them.

This reliance on advertising also means that sponsors have lost the initiative when it comes to finding new and innovative ways to engage with the audience.  They are leaving it all to the rightsholders, who are coming up with an ever-increasing list of “micro-assets” for the sponsor to buy.  As this blog in April explored, there’s nothing wrong with the “FedEx Air and Ground Player of the Week” or the “Maytag Filthiest Play of the Day”, as long as there is a great campaign around it.  But, too often, there’s not, which is probably the reason why these micro-assets don't resonate with the audience.

We tested this theory in the Deep Focus/IG study by giving the audience a list of 30 micro-assets and asking them which ones they recognised.  The twist was that 21 of the micro-assets were real and 9 were completely made up.  The result: the 2nd most-recognised micro-asset was completely made up (Dunk of the Day presented by Dunkin Donuts) and there was no statistically significant difference between the average awareness levels of the real and made up micro-assets.

What we are left with is far too many sponsorship campaigns that consist entirely of advertising (to fulfil the “minimum media spend” clause) and “micro-assets” to tick the fan engagement box.  And if sponsors do look to push things through different channels like PR or experiential, then it is usually some isolated activity that is not connected to the central campaign idea.

There is clearly a better way to think about sponsorship campaigns.  One which is rights, media and channel neutral; which plays out one central idea through the very channels that the audience is actively using; which has no conflicts or vested interests; and which encourages rather than restricts innovation and creativity from brands. One of our favorite recent campaigns is the Madden '15 GIFerator.  Innovative, built on a solid fan insight, social at its core and not an ad or micro-asset in sight.

But this kind of disruption isn’t easy.  The fact is that there is so much vested interest already in play, as the existing players (from media owners to large agency groups) aim to protect the revenue associated with the status quo. So the only ones who can disrupt this market are the brands.  Brands who recognise that it takes more than an ad and some off-the-shelf micro-asset to connect with fans and who understand that they need to be driving creativity and innovation in this space. Brands who realise that we need to break the old model and replace it with something born in the connected era.