In this Lumency Lunchtime Series, we had the pleasure of welcoming Sam Yardley, Senior Vice President, Consulting at Two Circles for a discussion on the sport sponsorship industry, the evolving expectations and preferences of brands and consumers, and the impact that COVID-19 will have on sport sponsorship.
ABOUT SAM YARDLEY & TWO CIRCLES
Two Circles is a sports property consultancy that uses data to generate insights into how fans engage with sports properties (teams, leagues, tournaments).
Two Circles helps its property clients, and indirectly their sponsors, better understand fan metrics and behaviors and how to build stronger connections with fans, creating more intimacy and more relevancy. Their goals are to improve the overall fan experience and drive revenue for their partners.
Two Circles core business has three main units; a consultancy focused on how to grow business through better commercial strategies; a marketing arm that can execute social campaigns, e-mail, and direct-to consumer marketing campaigns; and their data and technology department, that largely powers and supports all areas of the business. Sam started with Two Circles in the UK, where his focus was the Premier League, UEFA Champions League, and cricket. Upon moving to the U.S., Sam expanded his gaze to include North American sports and teams, all while maintaining his focus in the sponsorship industry.
IN THIS LUMENCY LUNCHTIME SERIES…
Sam takes us through the history of the sport sponsorship industry, including how it follows—and differs—from the greater sponsorship industry. He discusses the evolution of sponsorship assets, and how both brands and properties have different expectations in a sponsorship agreement, exploring the evolution of sponsorship valuation as well as the evolution of consumer demands.
Sam also shares his thoughts on the future of sport sponsorship, including which assets and rights will likely become more popular, the challenges that sport properties and brands will face moving forward, and the impact that COVID-19 will have on the future of the industry in both the mid and long-term.
A few quick highlights and takeaways:
- Despite the growth of alternative content options, sports and sports broadcasts have continued to grow. In 2011, only 49 of the top 100 broadcasts were of sporting events, a number that jumped to 88 by 2019. Sport sponsorship is expected to stand the test of time given that it is deeply rooted in a powerful force—fan passion.
- Consumer actions and digital media have undergone a significant shift. Studies show that people in the U.S. now spend roughly 54% of their time consuming digital media. Despite this shift, the evolution of sport sponsorship packages has lagged behind. In 2019, over half of brand spend was in digital channels, yet only 9% of the value delivered in sport sponsorship deals was through digital media elements.
- As consumer actions have changed, so have their wants and expectations for brands and properties. More than ever, consumers are online consuming digital content, expecting brands to improve their messaging stand out from competition, rather than recycling old content. Consumers are more willing than ever to spend more, so long as they perceive better value is provided.
- As consumer preferences and expectations of brands have changed, so too have brand preferences, and their expectation of properties. While brands were once focused on appealing to the masses, their focus has shifted more to specific target audiences that align with their brand. As a result, their demand for accurate evaluation metrics has increased. Brands are eager to obtain data on consumers and supporters of the property to ensure their rights are effectively being leveraged. When it comes to expectations of the property, brands are expecting more options for content and digital access than ever before.
- Moving forward, Two Circles’ projections have 2020 global sports sponsorship rights fees spend decreasing 37% from 2019. However, this impact will be uneven as different industries are affected differently by COVID.
- With the size of their audiences, the quality of first party data, and their ability to deliver advertisements, look for television advertising—and logo exposure—as well as digital executions to be the main drivers of sport sponsorship value moving forward. While TV is largely dependent on broadcast numbers, these two channels are the most likely to fill the gap left by the loss of ticketing, hospitality and in-venue activations.
- Sports sponsorships are a comparably safe channel, and getting more effective, while linear TV and forms of digital marketing are not without their own concerns and considerations. For TV, the general audience is skewing increasingly older, and not expected to balance out. Reason being, many of the younger generations are gravitating more to social media and digital channels, cord-cutting, and streaming services, and not replenishing the pool of traditional viewers. For digital advertising, there are ongoing conversations around data privacy issues as well as brand safety concerns in terms of the context in which a brand’s ads are displayed. Cookies are also being phased out in the near future, and ad blockers are a moving target. By comparison, sports sponsorships are innovating in terms of branded content, branded integrations, ad and asset inventory, and first party data. Taken together, this represents an opportunity for the sports property landscape to (continue to) remodel itself for the better.
SEE HERE FOR TWO CIRCLES SPONSORSHIP INDUSTRY PROJECTION DATA REFERENCED THROUGHOUT THE PRESENTATION
Thank you to Sam for joining us and sharing his thoughts, outlook and insights on the sports sponsorship industry and the upcoming shifts.
Without question, 2021 and the rest of 2020 will be certainly interesting times for the sports industry. As different sports (largely led by outdoor sports first) begin to return in different phases in different locations, with different schedules, protocols and formats, we will likely see major changes in the landscape and more creativity from brands and properties alike in terms of how they innovate and adapt.
For any questions around these insights, or to understand additional research conducted by Two Circles, please reach out to Sam at [email protected]
By: John Hughes
