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Brands are rethinking sports sponsorships as fans and experiences make a comeback

How brands are rethinking sports sponsorships as fans and experiences make a comeback

Sports sponsorship was once a sure-fire way to raise brand awareness, create unique fan experiences and ride a guaranteed wave of passion. That playbook was ripped up when the pandemic threatened events, however, and conversations between organizers and sponsors now reflect that. As part of The Drum’s Experiential Marketing Deep Dive, we catch up with Kevin Wittner, vice-president of strategy at sports and entertainment Octagon, to understand the concerns brands have when entering the world of sports.

From Magners choosing not to renew its sponsorship of the Cheltenham Festival for 2022 and then pulling out of the 2021 Gold Cup in 2020 at short notice (it was, after all, considered by many as a super-spreader event in UK wave one) to brands in Japan showing an unwillingness to activate around a home Olympics for fear of actively helping to spread Covid-19, it has been unusual to watch a handful of top brands distance themselves from the very events they once helped deliver.

As such, the world of sports sponsorship has faced numerous hurdles in the last two years. Will it ever be the same?

The unknown

The common belief is that sports events were supposedly insulated from crises and recessions. Anecdotally, hardcore sports fans would continue watching the game even if their house was on fire – that there are odder tales of fandom out there is testimony to the power of these properties. Shy of stadiums being shut or fixtures cancelled, fans will be there.

Octagon’s Kevin Wittner admits that in recent conversations there “continues to be an element of the unknown”, but that, in the US at least, venues are starting to fill again. “We’re also seeing rights holder invest in measures to keep participants safe or prevent any kind of spread.”

He believes brands are once more starting to activate on their sponsorships after a muted year when experiential and hospitality were smothered. “From a hosting standpoint, many of the brands that went quiet over the last year are starting to come back, but at a more limited capacity to ensure everyone is comfortable and has a little bit more space.”

Many sponsorship discussions have dug into the dreaded terms and conditions that the average human would likely gloss over, with phrases such as force majeure and goodwill coming into play.

Events organizers need to keep sponsors – many of which have signed into multi-year deals – sweet. Those with a long-term view, anyway. Meanwhile, sponsors may have to take the hit, aware that if they cede their spot, a rival could sweep in and derive the benefits of an industry almost back on its feet.

Wittner acknowledges there’s was a shift in who is spending, with a flood of tech (like Airbnb into the Olympics) and B2B (like Zoom’s F1 partnership) brands entering the space – as the travel and hospitality, which were hit hard, retracted for business operation reasons. They're coming back now. And there could be more competition ahead with more sectors than before showing an interest.

How virtual is the return?

During the social distancing years, experience was focused on at-home and virtual activations, like meet-and-greets and the odd virtual reality activity. Wittner wonders whether these will last.

“It’s safe to say that brands are always looking for ways to innovate in terms of how they’re engaging with consumers and in the long term, whether that’s through something that involves touch is yet to be seen.”

He’s not the first marketer to tell The Drum that Covid-19 expedited trends we were already seeing. A lot of the technology we were talking about in 2019 matured these past two years – case in point, a huge augmented reality panther that filled the Carolina Panthers’ stadium, enhancing the arena experience and driving millions of views on social and in the press.

Could these lessons be replicated more broadly, and how could sponsors get in on the action?

The conversations

Wittner says early conversations in sports sponsorship were around whether organizers could actually deliver and distribute said event, and in 2020 the answer was rarely ’no’ but was a matter of when. Delays were common, as we most famously saw with the Olympics. On the other side of the coin, brands had to evaluate whether they had a business case to continue sponsorships.

There were a number of different ways that brands and rights holders compromised, including the ‘lift and shift’ where a contract was just extended by a year to make up for lost benefits.

Some organizers thought on their feet and developed ‘make good’ assets. Wittner says this often resulted in hospitality benefits being emulated in virtual or replaced with signage. Premier League football fans will have noticed make good signage in stadiums draped over unused fan seating. There’s a concern that this has led to ’clutter’ and made the existing in-stadium placements less effective – marketers such as Wittner wonder how this saturation is increasing the background noise and therefore reducing the value of placements.

There were also cases of reduced fees in instances where a clear under-delivery was measured. “We spent a good deal of time, particularly over last year, understanding the value of what was impacted or under-delivered, and what those make good assets and the value of that looked like.”

The entire industry is now in a better position to negotiate having had a good look at the effectiveness of the make goods offered up.

The negotiating table

You could imagine harsh words being exchanged during the disruption, with sometimes tens of millions of dollars tied up in these deals. But nastiness was actually uncommon, says Wittner.

Sports, even in its muted permutation, was still one of the best ways for brands to cut through with the public. “Rights holders have been willing to open up and think more creatively about what they’re willing to offer to partners that previously just was wasn’t an option.”

But organizers still have power despite the difficulties. “The opportunity to offer brands and clients priceless events and money-can’t-buy experiences is something that makes partnerships truly unique relative to the broader media and marketing landscape.“

In the fallow years, hybrid or virtual experiences stepped in as substitute assets – they proved useful, but “may not be why they got into the partnerships to begin with“.

Any slumps in marketing analytic dashboards can largely be weighed upon the missing element that makes sports special – the fans. “It’s really critical in a passion-based industry such as sports. It’s the social proof that gives the game a little extra meaning to you, as a viewer. It shows you that this is an important event that bears watching.”

So what’s changed? For Wittner, “eyes are now open“ and most top sponsorships will be planned with extra contingencies now that we know how fragile the whole system truly is.

From festivals to retail installations to unmissable activations, we examine the avenues open to marketers to reach consumers enjoying their newfound freedom in The Drum’s Experiential Deep Dive.

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