Talent Endorsements Re-Imagined

Athlete endorsements have historically been leveraged by brands as a way to communicate directly with an endorsee’s engaged and loyal audience. The competitive pressures surrounding the more sought-after athletes has left brands with little negotiating power over fees and the entitlement packages that endorsees offer to their brand partners. This is primarily driven by their ability to completely deploy inventory such as content filming days, social posts, and appearances in a typical year with ease. 

Industry sentiment has indicated that the financial impacts of the COVID-19 pandemic will continue to be realized in the sport and entertainment industry in 2021. Budget constraints for brands and limitations on live events for properties and talent will mean that all parties will be striving to accomplish more with less. [1]

The pandemic has seen global sports sponsorship spend decrease by 37% in 2020 due to live event cancellations or modifications limiting fan attendance and the inability to execute rights including talent appearances. [2]

With athlete endorsements traditionally delivering a portion of their entitlement commitments in association with live events, new deal structures and means of activating rights in 2021 and beyond should be expected. Athletes and other talent will risk reductions in fees paid by brands if ROI realized in the run-up to the pandemic continues to diminish without in-person events. 

Uncertainty regarding if and when live events will return to their pre-pandemic form will likely continue into 2021. Brands and talent alike will need to explore new platforms and ways of activating endorsements to deliver the same level of value and ROI that has been historically realized.

The utilization of live streaming platforms such as Twitch to engage with fans and deliver entitlements typically provided in person has become a more viable option due to the increase in engagement with the platform since event cancellations began in March. In the past 12 months, concurrent viewership of streams on Twitch has doubled to an average of 2.4 million viewers at any time during the day. Most of those gains came after the March event cancellations. [3]

Due to the diversity of its followers and the malleability of its platform, several opportunities also exist to re-imagine previous in-person money can’t buy experiences such as meet & greets or private viewing opportunities and appearance entitlements on Twitch and other streaming platforms. Depending on the abilities of the talent, activations could be as simple as sponsored Q&A streams with talent on a brand’s Twitch stream. Or similarly, talent streaming games that feature themselves as players (e.g. NBA 2K21 or NHL 21) while playing alongside contest winners or Twitch streamers with large bases of followers.  

There have been a few impactful examples from 2020 including the inaugural ePremier League Invitational tournament which featured EPL stars playing each other virtually on FIFA 20. The tournament was broadcast simultaneously on Twitch, Sky Sports, Facebook, and YouTube and netted 150 million total viewers over the course of the tournament. Formula 1 also ran a similar contest with F1 stars, other athletes and celebrities alike taking part in the eSports Virtual Grand Prix, which pulled in 3.2 million viewers across Twitch, Facebook, and YouTube. [4]

Live music has also experienced some successful virtual activations including a digital concert on Fortnite where Travis Scott played for 12.3 million live viewers. The concert was viewed over 100 million times including replays on Twitch and YouTube. [5]

As brands begin to see properties such as the EPL, F1 and Fortnite experiencing success with digital activations, some will be eager to partner with or restructure agreements with existing properties or talent who are creating virtual events. Collaborating with properties and talent to provide behind the scenes access, branded streams, or exclusive interaction with talent on their channels during virtual events could also fulfill entitlements not received in 2020 due to the impact of the pandemic.  

With new and innovative opportunities available to brands, thorough evaluation of endorsements will become even more important in 2021 as brands deal with budget restrictions and predominantly digital platforms are used to capture value. Brands that did not evaluate sponsorship opportunities effectively before negotiating with rightsholders risk overpaying for assets deemed too important to lose or acquiring rights that don’t drive ROI. As many events have transitioned to a virtual model for the time being, brands will need to consider the differing costs associated with digital and social assets versus in-person assets as well as the audience who will consume these new events versus the old. 

Lumency’s approach to talent evaluation enables brands to strategically compare current and prospective agreements to determine the best value propositions available for their budget. Upfront analysis is completed to simulate the success of digital and social activations such as streams and branded content. Variables like newsfeed clutter created by other endorsements, organic engagement, and follower demographics are accounted for to predict the value partner brands can expect to receive. Measurement and assessment of the endorsee’s followers is conducted to ensure alignment with the brand’s target audience. 

The new normal of endorsements will allow talent with large digital and social reach who are willing to engage with fans virtually in new and creative ways to attract substantially more interest and revenue from brand partners than their peers. Talent with below-average followings or those who haven’t proven their capabilities in new verticals may need to accept variable compensation tied to the objectives partners use to measure success. For rightsholders, sponsorship investments by brands will be scrutinized far more than ever and the ability to deliver aligned and engaged audiences at scale will be the new reality.

By: Paul Macklam

[1] https://www.stout.com/en/insights/article/impact-covid-19-professional-athletes-brands

[2] https://www.sportspromedia.com/news/sports-sponsorship-rights-spend-2020-study-two-circles-coronavirus

[3] https://twitchtracker.com/statistics/viewers

[4] https://sponsorship.org/resources/the-future-of-the-sports-industry-in-a-post-covid-world-mediacom-se/  

[5] https://www.espn.com/esports/story/_/id/29532117/billboard-travis-scott-astronomical-drew-more-45-million-viewers

Talent Endorsements Re-Imagined