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Revolutionising Sports Sponsorships: Unveiling the Broken System

Has anything truly changed in the world of sports sponsorship deals? Is it efficient and straightforward for buyers and sellers to connect and negotiate? Do buyers get what they expect, and is it the same for every buyer? Do sellers receive multiple fair bids for their packages? Unfortunately, the answers to these questions are rarely positive, highlighting the archaic and broken nature of the current sponsorship process.


When we break the process down into its key elements, it becomes evident that it is outdated compared to more efficient marketplace models, such as those in the insurance and other service industries.

The process is laborious, limited in effectiveness, and leaks value for both buyers and sellers.


Over the past 20 years, while working with codes, clubs, stadiums, brands, and media agencies, it has become clear that the people within this system are fantastic and driven. However, the system itself is flawed. Budget targets seldom decrease, and when they do, someone inevitably loses their job.


Here are some fundamental facts that remain unchanged:


Club commercial teams face ever-increasing year-on-year revenue targets. Brand managers are expected to sell more. As a result, rights holders strive to offer smaller asset packages for higher prices to maximise the value of their assets. On the other hand, brand managers aim to maximise their marketing ROI by paying as little as possible to acquire as much as possible. This misalignment creates friction, as demonstrated by Elon Musk's attempt to back out of buying Twitter when he discovered that 25% of what he thought he was buying didn't exist! This issue is even more challenging in the area of sponsorship, where brand equity, fan engagement, and other intangible components often come into play. While some aspects of sponsorship are measurable, the confrontational nature of the process leads to vastly different valuations of the same asset package between buyers and sellers.


So, what is the solution? Transparency, flexibility, choice, and speed can benefit all parties involved, whether they are buyers or sellers in the sports sponsorship landscape.


In the digital world, we've learned that precise targeting and personalised communication with customers can retire the old adage of "50% of my advertising works and 50% doesn't." Collaborating with Deloitte on changes in sponsorships has shed light on key global observations, including the shifting power balance in sponsorships due to emerging changes in revenue streams.


We are currently in a period dominated by digital platforms that offer numerous options to target specific audiences at regional and multi-country levels. Platforms like Facebook, Google, Bing, Amazon, Instagram, TikTok, LinkedIn, Alibaba, and others have become critical for agencies and advertisers, continuously learning and developing solutions for the advertising market. Some platforms even allow industries to aggregate micro-offers into valuable scalable assets and market them to buyers.


Let's consider the challenge of a single stadium selling a small asset, such as space on their restroom mirrors. It is challenging to reach interested parties and allocate significant resources to generate a relatively small income stream. Now, imagine if all the stadiums in your region could bundle these opportunities into a single package, find a buyer willing to pay for a highly valuable opportunity, and share the revenue fairly. All it would take is filling in a form no more difficult or time-consuming than placing an eBay ad. That's pure gold.


Timing is also critical. Buyers need to be reached when they are ready to spend, and sellers need to be reached when a contract cycle begins. While some buyers are aware of the cycles for the sponsorships they know, there are countless potential buyers out there who could be perfect matches yet remain unaware of available opportunities. Similarly, sellers may have assets that are highly desirable, but they struggle to connect with buyers who are ready to invest.


If sports sponsorships fail to adapt, they risk being left behind as advertisers increasingly turn to other platforms that provide more relevant advertising solutions across APAC markets. Sports sponsorships now compete with e-commerce solutions and social media commerce for funding.


Nevertheless, sports sponsorships remain a fantastic way to enhance branding and bring personality to a brand, as exemplified by Toyota in Australia.


It's encouraging to witness the regionalisation, automation, and technology-driven transformation of the sports sponsorship marketplace. The integration with tech platform solutions breaks away from traditional manual approaches to budgets, creating opportunities for advertisers.


In summary, while companies currently emphasise their visions and values, it would be beneficial for brands to search for sponsorships that align with their specific criteria, such as cost, age range, gender, geographic location, and timeline. Aligning these criteria with rights holders would foster transparency, improve initial relationships, and pave the way for better long-term prospects between both parties.


This solution may seem self-evident, but the key question remains: When will we adopt the platforms that truly enable this vision?


I would love to hear your thoughts, so please feel free to comment below.


Matt Rudd CEO SportsXGlobal.com



2 則留言


訪客
2023年6月01日

Hi Matt,

Liked the simplicity of of the article and it basically hits all the key points and it does point towards an inevitable cross road moment for the rights holders in the area of sponsorship. For the big players, sponsorship contribution to total revenues, in percentage terms, has diminished rapidly over the past 10 years from around 50% to in some cases under 25%. This is a function of 2-3 changes over this time - 1. Broadcasters acquiring or blocking rights holders digital assets which were integral to sponsorship packages which “could” have provided customer engagement, 2. Basically all of the physical or category assets are embedded in existing deals under renewal and hard to create new ones. But…

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訪客
2023年5月29日

Plenty of evidence the system needs a rethink Matt. Great to hear reasoned thoughts on how it could be fixed.

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