The COVID-19 pandemic has turned sponsorship upside down and it may be a very long time before it looks anything like it used to, if ever.
With so much uncertainty around the mid to long term impact of the pandemic, sponsors and rightsholders are having to revise their plans almost on a weekly basis.
For three months now, we on the buy-side of the equation (sponsors and their agency partners) have continued to look at recouping lost value over the short term. However, this becomes more challenging each day the sports and entertainment disruption continues.
At the start of the pandemic, sponsors and rightsholders were hopeful a brief stoppage would just be a bump in the road. Collaborating as partners, lost value could be addressed relatively easily via make-goods, term extensions, and activation funds. Games and concerts would return and so too would the fans that fill the seats.
With leagues now starting to return without fans, broadcast viewership is spiking as evidenced by the Bundesliga and EPL.
Larger broadcast audiences will certainly be welcomed by sponsors deriving value from broadcast exposure. This should begin to ease some of the pain experienced over the last couple of months as the value of broadcast visible assets will likely exceed pre-Covid levels.
However, it will only last so long.
As more and more games begin to be played, the live sports landscape in broadcast will only become more cluttered. In North America, for example, the summer sports schedule may be filled with MLB, NBA, NHL, MLS—and perhaps all—continuing into the start of the NFL season. Every major North American league will be competing for fans and viewers simultaneously.
And once fans are permitted to return to stadiums and arenas, there’s no certainty they will.
Recent research from IMI* and Seton Hall University indicates many fans won’t return to live sporting events until there’s a vaccine for COVID-19. Additionally, as venues open again to fans it will likely be at much smaller capacities with various measures put in place to socially distance attendees.
How long will it be until venues are at full capacity again?
And if fans don’t come back even when permitted, how will sponsors begin to recoup all of their lost value derived from in-venue activations and hospitality?
Value loss is going to continue for the foreseeable future and extend well beyond the current interruptions.
We’ve reached a point of no return when it comes to recouping value associated with many current rights and entitlements. This value may never be realized again.
Brands must begin to identify new value within the construct of their current deals.
As a marketing platform, sponsorship will become even more effective at reaching passionate and highly engaged audiences at scale. But brands and rightsholders will need to partner to identify what addresses the needs of both parties.
Together they must pivot and collaborate to build digitally led packages that effectively leverage IP. The creation of engaging branded content will keep sponsorship as an effective platform to reach key target audiences. Pushing rights holders to develop innovative assets at scale and distributing them across their owned channels is how brands will be able to capture and leverage untapped value. Additionally, how the actual live event is consumed creates opportunity that will last beyond the pandemic.
That is, brands will soon have new, innovative ways to engage with consumers and activate sponsorships—beyond screens and signage assets to AR/MR experiences and many things not previously thought possible. This is where we think an opportunity exists for brands to shift focus from ‘value lost’ to ‘value found’—a major turning point.
With innovation and new value will come an even greater need for effective measurement to validate sponsorship spend.
Measurement leverages rigorous methodology to prove out whether or not your sponsorships—and assets—are being successful against defined objectives.
As new value is created, it will be more important than ever to measure what these rights and assets are delivering. At Lumency, we advise our clients to focus on measuring what matters when validating investments both in terms of the value being acquired and the return being delivered to the brand and the business.
What matters to an insurance brand, an airline or a financial services company are all going to be different, even if they are all sponsors of the same property. For example, an insurance brand might want to measure the impact on lead generation with fans of a sponsored property versus non-fans in the same market.
We stress to clients the need to understand the differences—and correlation—when measuring outputs and outcomes.
Outputs are intermediary measures (media impressions, digital/social engagement, consumer interactions, attendance, etc.) whereas outcomes are the measurable impact of a sponsorship and its activation on your brand and business results (brand equity, advocacy and sales conversions). Outputs lead to Outcomes, but if you stop measuring outputs, you’ll fail to understand the real impact of a sponsorship on your brand and business.
Our approach to measuring sponsorship impact helps brands understand what outputs lead to or optimize specific outcomes. This understanding will become clearer the more you’re measuring. Right now, we would recommend a ‘portfolio approach’, measuring specific attributes of different properties then cascading the insights and learnings across like properties (for additional context around our measurement approach see our Measuring Sponsorship Impact blog post).
Because you won’t be investing the time, energy and expense measuring all attributes of every partnership in your portfolio, you’ll be able to focus on driving the outputs and outcomes that matter to your business and brand.
* Specific report: “COVID-19 Wave 6, Global Recovery”
By: Jeff Rothlein