Pandemic may have rendered traditional sponsorship packages 'a thing of the past'
By Simon Ward
Brands regard fixed sponsorship deals as dead, and a gap is emerging between their stance and that of rights holders, as the sport and entertainment industry digests the impact of the coronavirus pandemic, according to international lifestyle agency MKTG.
The findings of the Dentsu-owned agency’s latest Frontier survey provide a snapshot of marketers’ opinions at a time when many events have been postponed or cancelled, and how these views have changed since before the health emergency.
In particular, they indicate that in-depth negotiations may now be necessary between brands and rights holders over payment for non-delivered assets, and that traditional assets and rights packages “may be a thing of the past.”
As a result of the changed situation, 79 per cent of brands now believe fixed sponsorship to be dead, a figure which compares with 66 per cent of rights holders.
MKTG claimed this may suggest “a need for a more agile sponsorship system” with greater flexibility in terms of the inventory included in a deal.
Prior to the pandemic, there was a broad consensus on non-delivered assets, with 20 per cent of brands believing they should not have to pay for these, and 30 per cent of rights holders of this opinion.
However, there has been a sea change as a result of Covid-19, with 72 per cent of brands asserting they should only pay for the assets they use. On the contrary, only 34 per cent of rights holders agree.
In the Frontier 2020 report, MKTG stated: “This may signal a shift in how rights and partnerships are constructed in the long run, but in the short term it will lead to multiple commercial and legal conversations between ‘partners’. This will help to bridge the divide in perception as we hopefully exit the restrictive phase of the pandemic.
“These unprecedented times have brought to the fore the importance of knowing the value of your assets, be that tangible or intangible by association. It will be interesting to see if those rights holders who price solely on media value are willing to ‘give back’ non-delivered exposure and whether brands undertake their own valuations and identify each asset’s value in their contracts.
“The figures suggest this has been an eye opener and the traditional list of assets and traditional rights package may be a thing of the past.”
The global survey was conducted from 11 March to 8 May and included 800 industry professionals from brands, rights holders and agencies across 30 countries, monitoring changes in sentiment as the pandemic continued.
In terms of the most popular assets, talent, experiential activities and social and digital exclusive content came out on top, with the three elements regarded as important by 83 per cent of respondents. Next came media facing assets, on 74 per cent, and IP/logo, on 68 per cent.
Measuring return on investment remains a key challenge for the sponsorship industry, with the study showing that while 88 per cent agree that tracking performance against objectives is critical, only 20 per cent are confident they are able to do it.
MKTG said: “This highlights the need for measurement to be integrated within the planning process aligning with business objectives and ensuring a 360-degree approach to evaluation and performance.”
Many rights holders and brands have received praise for purpose-driven initiatives as part of sponsorship partnerships that have connected with the public during the pandemic, and these are expected to be maintained going forward.
The study found that 90 per cent of people believe sponsorship makes a meaningful connection with customers, and two-thirds see it as a better platform for purpose-based marketing than advertising.
Reflecting on the results, Charlie Wylie, head of sport and entertainment at MKTG, said: “For the sponsorship and partnership marketplace to grow, we need to take heed of the findings of Frontier. Gone are the days of money being spent on one decision maker’s personal affectations.
“The question of ‘why’ comes up a lot in Frontier and the sooner the industry really challenges itself and asks this question properly, the better. From the ‘why’ of purpose and reason for the activity, to the ‘why’ of meaningful results and rationale for doing something. Whilst these are not new questions, Frontier shows that more thought and consideration needs to be given to them for the industry to develop and grow.”
MKTG clients include Cadbury, FedEx, Jaguar Land Rover, Mastercard and Merlin Entertainments.