Sponsorship makes up 12% of a brand’s marketing budget on average. In 2022, global brands invested a whopping USD $97.4B in sponsorship, with projections soaring to USD $189.5B by 2030.
Dive into the dynamic world of sponsorship with Lumency’s Annual Global Sponsorship Trends Report on replay. Below the replay, you’ll find the full list of trends in text format.
We partner with clients to optimize the results from their sponsorship investments and help them make evidence-based decisions.
We work across 21 country markets; we touch a little over 300 Tier 1 Properties Globally, and over the last 10 years, we’ve evaluated over 3,000 sponsorship deals.
At the start of each calendar year, we publish our Global Sponsorship Trends Report. These are the trends we’re seeing through the lens of our global sponsorship practice. What makes a trend for us? It’s a combination of data points we have from our own client roster, and things we’re seeing and hearing in the marketplace, including when we’re engaging with prospective clients and including from properties, industry colleagues.
Each year, some of the trends that we identify are nascent, and some have momentum behind them. Some trends that we identified for 2023 aren’t on the list for 2024; for example, variable rights-fee compensation has taken hold—we first started using a variable compensation (VC) model in 2011. Not all sponsors are using it in 2024, but VC has become common practice. A couple of the trends we identified in 2023 are on this year’s list as well because they have gained momentum.
Our Global Sponsorship Trends for 2024 are numbered; there are ten trends, but they aren’t rank ordered. Depending on where you sit in the sponsorship ecosystem—brand, property, consultancy, agency—each trend will have more or less importance.
We believe no matter where you sit, you need to be aware of these trends as you move through 2024.
We are a strategic partner of the World Federation of Advertisers. In November 2023, we published The Evolution of Sponsorship in partnership with the WFA. The report focused on the current state and anticipated future state of sponsorship for brands. The report was based on research from WFA members, Lumency clients, and brand friends of Lumency. Respondents represented organizations with a combined annual spend of USD $6.9 billion in sponsorship spend, or about 7% of the estimated global sponsorship spend. We’ll reference a few of the data points in this report. If you’d like a copy of the full report, please reach out to us at [email protected], and we’ll be sure you get a copy. We reference data points from The Evolution of Sponsorship here.
And now, to the trends.
- Procurement Leans In
This trend is nascent, but in our view gaining momentum. For most brands, sponsorship is the second-largest marketing budget spend after media. For many brands, sponsorship remains relatively unmanaged. According to The Evolution of Sponsorship, 47% of brands have procurement resources dedicated to sponsorship. Procurement’s contribution to sponsorship within these organizations varies from being a full partner of the brand/sponsorship team to being involved in negotiation sponsorship deals to supporting in helping manage deal process and governance compliance. In some of our client relationships, we report to both the procurement team and the brand/sponsorship team. We’ve had more reach-outs from prospective clients in the past year, some have become clients, with procurement being our initial connection point.
- The Primacy of Data
This trend has momentum. We had this on our 2023 Trend Report list. Data is one of the most underutilized and undervalued asset classes that a sponsorship has to provide to a sponsoring brand. The opportunity for a brand to identify its customers in a property’s databases, connect with them, and reward them for being there and the opportunity to identify category active consumers in a property’s database and convert them to customers and advocates is significant.
It’s also a bit of work. It requires a willing property partner, and it requires some intention from the brand.
Larger properties are reasonably sophisticated in understanding their audiences and then support sponsors in getting regulatory compliant access to the data. These sophisticated properties are also good at leveraging that data for their sponsors to create stronger sponsor activations that add value to the fan/patron/attendee experience. Smaller properties are open to working with sponsors around data, sometimes with a bit of coaching required.
In a cookie-less world, zero party and first party opt-in data become more important. The accelerated trust that a sponsor can earn with fans/patrons/attendees through a sponsorship property can make a brand’s marketing/sales funnel more frictionless.
- Women’s Professional Sport – It’s Time
Men’s Professional Sport had a 100-year head start, but for women’s professional sport – this is its moment. We borrow ‘It’s Time’ from a report from the Canada market that our client Canadian Tire funded, in partnership with Canadian Women & Sport and BCG, looking at the commercial opportunity in Women’s Professional Sport.
After a lot of work and with much more work to be done, women’s professional sport is taking firm hold. Interest in Women’s Super League increased 81% YOY from 2022 to 2023. Broadcast audiences for the WNBA are up 42% YOY. In-stadium attendance for NWSL games is up 43% YOY. Less than three weeks in for the PWHL, the new women’s professional hockey league in North America, and game tickets on the secondary market are running 10x face value, in some cases.
What we find so impressive about women’s professional sport is how smart many of the ownership groups are, in building brand, in engaging community and in recognizing that their players are the face of their sport and partnering with their athletes in very different ways. Women’s professional sport is an exciting product; it’s drawing a wide audience, it’s time – and it’s about time. This trend is on a rocket ship.
Our client Canadian Tire set an important target for itself – 50% of its sport sponsorship investment will support women’s sports by 2026. We’re so proud to be part of that work and we challenge other brands to follow the leader.
- Activation Spending is Up
There is a lack of data across the globe around what brands are spending on activation as a ratio of rights-fee spend. The Canadian Sponsorship Landscape Study, which has been running for approaching two decades, tracked the highest level of activation spend to rights-fee spend ever, at over 90 cents on the dollar for every dollar spent on rights-fees, and up more than 45% from pre-pandemic levels.
In The Evolution of Sponsorship, our first time tracking outside of North America, showed spending globally of over USD 80 cents for every dollar spent on rights fees. Both the over 90 cents and the over 80 cents are lower than we advise our clients to invest in activation, although there is no ‘right’ activation ratio – that will vary across country markets, even across a particular portfolio.
From our own clients, from prospective clients, from property partners, we’re seeing stronger commitments to activation spending by brands as we see stronger commitments to measurement, activation being the bridge between sponsorship value and sponsorship ROI.
- Broadcast Splinters
For avid sports fans, between traditional broadcasters and streaming services, it’s become more challenging and more costly to watch games for their favorite teams. This increase in options has driven up the value of broadcast rights for leagues. The NFL’s broadcast rights will nearly double this decade.
Additionally, virtual bowl/field of play signage is becoming increasingly common; it makes it more challenging for brands to leverage their sponsorships with dedicated media buys and puts control of in-bowl visibility assets in jeopardy over the mid-term, especially as the virtual signage technology improves so quickly and more sports adopt it.
- Partner Consolidation
Through 2023, we’ve had a surprising number of conversations with properties where the message has been consistent – properties across sport, arts, culture, music, and cause are repackaging their sponsorship assets, reducing the net number of partners in favor of fewer, and bigger partnerships. From the property perspective, it gives them a less cluttered environment where the partners that remain are enjoying a greater share of voice opportunity. It makes asset management for the property easier and their content pipe cleaner.
Theoretically, this consolidation pushes up rights fees across fewer categories, especially in the middle of the partner stack, as categories also consolidate. It also pushes out smaller spend sponsors. One Major League Baseball (MLB) club recently reduced its number of partners by almost half, to just over 60. This is a nascent trend.
That said, this is a nascent trend. We’re still seeing properties, especially in professional sport, looking to cut categories into thinner slices and add more partners to drive more revenue from sponsorship – for example, automotive getting cut into high line, premium line, main line, trucks.
- Tying to Purpose
One of the trends we identified for 2023 was sponsorship as proof points and demonstrations of brand values, including in how brands were activating their sponsorships. As a nascent trend, we’re seeing more conversations with brands (potential new clients) start with – ‘we want to align our sponsorship portfolio to our organizational purpose’ more than ever before. This elevates from using sponsorships and their activation as demonstration points for brand or corporate values, to purpose being on a higher order. The nature of sponsorship – the degree to which a sponsor and a property can become intertwined, the borrowed imagery and associative benefits that can flow both ways, tying to purpose makes very good sense.
- B2B Shift
B2B brands aren’t new to sponsorship. The brands that have been doing it well for a long time, IBM and SAP come to mind, have seen sponsored properties as a way to showcase their products and services to customers and prospects. IBM technology has helped the US Open run better for many years. Although many B2B brands have used sponsorship primarily as a hosting opportunity, and maybe not much else.
We’re seeing this nascent trend where more B2B brands recognize the power of sponsorship has, not only as a showcase for products and services but also as a way to demonstrate values and reinforce positioning, and for deeper hospitality experiences for customers and prospects that go well beyond box or club seats for a sporting event.
Recent research shows that B2B buyers are more likely to have a strong emotional connection to the brands they purchase than B2C buyers are; in fact – much stronger. The reason for this is that emotions tied up in a B2B relationship are strong ones – fear, reputation, status, trust. Sponsorship enables B2B brands to extend positive emotion into the relationship or enterprise buying process, nurture and build relationships.
- Managing Reputational Risk
For 2023 we identified this nascent trend, the rising understanding among brands of the importance of crisis management when it comes to their sponsorship investments. The trend should have momentum, but it still doesn’t.
Understanding the readiness of their property partners to deal with crises that may impact the reputation of the property’s sponsors, by association, is vital for a brand. As vital for a brand is having the set of readiness binders on the shelf ready to pull off not if, but when a crisis happens. Property crises – scandals, illegal activity, loss of life or property – it’s the brands that have experienced a crisis with a sponsored property firsthand that are all in on planning around managing reputational risk.
Our challenge to the brands that don’t have plans in place is that the best time to repair the roof is when the sun is shining. Think about how prepared you are to deal with a crisis in your sponsorship portfolio and what the conditions would have to be in front of you to need to put a call in to your CEO to get them out of bed because something has gone sideways and badly.
- Protecting for Defaults
Through 2022 and 2023, there were a number of high-profile defaults where brands from often emergent categories, like cryptocurrency, defaulted on the contractual obligations they had with their property partners. It happened with a sports drink brand in North America late in 2023. We’ve seen properties taking a second look at how they protect themselves, where possible. The scrutiny has extended to payment terms. We continue to believe in progress payments on rights-fees for the categories that we work in. Our advice to properties would be to be wary of potential sponsors who are more concerned with a quick deal than with a good deal and that aren’t as concerned with the value proposition as they should be.
As we navigate the dynamic landscape of global sponsorships in 2024, these trends serve as guideposts for brands, properties, consultancies, and agencies alike. In the ever-evolving world of sponsorship, staying informed and adaptable is key. Whether you find resonance in the burgeoning influence of Women’s Professional Sport, the strategic shift in B2B sponsorships, or the nuanced challenges of managing reputational risks, these trends are a testament to the evolving nature of our industry.
Let’s embrace the opportunities they present and navigate the exciting journey that lies ahead. Here’s to a successful and trend-setting year in sponsorship.
By: Ian Malcolm
