This is the second of two articles in a series where we share the ten Global Sponsorship Trends we’re tracking. Here we share trends six through ten. You can read about trends one through five in part one of this two-part series.
- Values Demonstration (Momentum)
We live in a low trust society. Consumers hold high trust with the sports, entertainment, cause, culture and music properties they follow and love. Increasingly important for brands is aligning with properties that, either through association or through association and activation, enable them to authentically demonstrate their own brand values.
Our client, Anheuser-Busch, activates its value of inclusivity through Bud Light’s support of LGBTQ+ communities across North America. Our client, Toyota, demonstrates its commitment to human mobility and its belief that anything is possible when you are free to move, through its global Olympic and Paralympic partnerships. And the values demonstration really comes through in the activation – the property provides the opportunity.
Brands require proof points for the positions they take on ESG. Properties can provide those. Properties help brands with the “say – do” around their values.
- Rethinking Exclusivity (Nascent)
Outside of the US, category exclusivity within a sponsorship was historically considered a foundational requirement for a deal. Anything different would have been a heretical idea.
In the US, the market evolved differently – in large part due to the Department of Justice’s determination in the 1980s that it wasn’t legal for beer companies to have exclusive marketing rights in sports properties. This carried over— not for legal reasons, but for practical ones —to other categories.
Now, outside of the US, sponsors are questioning the need for exclusivity against the cost of it.
Brands are being tasked to do more with less, requiring them to invest more in activation as a proportion of total spend. They are asking, “do we need exclusivity?”
Is exclusivity an ego play for brand marketers, or does it add value to a brand’s target audience and drive return for their business?
The playbook for non-exclusive deals is not complicated.
Buy ownable space – digital, virtual, or physical space that your category competitor or competitors who are also property sponsors won’t be in. Be ruthless at securing sponsorship assets within a deal that are most relevant for your category and most important for your marketing and sales funnel. You’ll be surprised how your category competitors that are also co-sponsors of the same property won’t do the same. Take most of what you have saved in rights fee spend and invest it in activation. The key in a non-exclusive deal is to out-activate your category competitor, making them unnoticed or irrelevant.
- Category Spend Shifts (Momentum)
Industry categories that have traditionally been big spenders in sponsorship include automotive, beer, airline, and FI (banking, insurance). For many properties, these categories were highly competitive and were reliable sources of sponsorship revenue.
The automotive, beer and airline industries are all in some phase of disruption or industry transformation. This has impacted how these industries are using sponsorship as a form of marketing pressure.
Most established players in these categories do not have an awareness problem. They’re looking for efficiencies by buying less visible assets as part of their sponsorship deals and are comfortably moving to lower tier sponsorship levels.
Emergent sponsorship categories, like sports betting, crypto (currently a risky category for properties), healthcare, direct-to-consumer brands – are more active in sponsorship. In most instances, these categories are not buying packages toward the higher end of the sponsorship package/spend stack.
Smart properties follow a “fewer/bigger sponsorship categories” approach. This becomes more challenging as traditional big spender categories are spending less. When a property has more sponsors at smaller spend levels any one sponsor has access to less share of voice, which means the value proposition for all sponsors participating can drop.
- Less Is More (Momentum)
“Sponsor less, activate more” is not just a trend, it is a mandatory requirement for success. Brands continue to see pressure on budgets and pressure to demonstrate return on investment. Logic states the imperative as: do less, better.
The pandemic has shown that when so much of the value in our sponsorship portfolios could not be optimized, we can, in fact, get by on less. We see fewer brands trying to be everywhere in sponsorship. Brands are prioritizing target efficiency and depending on the category and how mature the brand is, brands are prioritizing engagement over impressions.
- Terms Shrink (Momentum)
Sponsorship is long-term commitment relative to most marcom investments. Brands can shift media plans quickly. Trade channel activity is planned well in advance, but that timeline is months, not years.
As business needs change more frequently in a faster-moving business environment, the notion of being locked into a sponsorship that might meet needs now, but might not later as markets, business models, or priorities shift – seems less tenable.
We’re seeing sponsorship agreement terms shrink, even for naming rights. We’re not seeing 10-year deals anymore. Five-year deals are becoming three-year deals, and often then, two-plus-one-plus-one deals. We’re doing more one-year deals over the short term as economic uncertainty looms. However, a one-year deal norm will not sustain once economic times become a little more certain.
We have done a lot of one- or two-year extensions to expiring deals lately, giving both our clients and property partners some continuity, but giving our client brands some flexibility in the next 12 or 24 months.
By: Ian Malcolm