Don’t Fumble the Ball
Once upon a time, the sports marketing and sponsorship industry was thought to be recession-proof. At the Sponsorship Symposium in New York only a few months ago, industry experts proclaimed calm waters ahead — and some even foresaw growth.
Unfortunately for all, it was the naysayers in the room who were proven correct. Team passions and loyalties may remain strong among fans, but sponsorship spending has been severely hit by the downturn. Well, maybe “hit” isn’t the right word. Try “decimated.”
In recent weeks, the sports industry has seen reversal after reversal of sponsorships. Brands that previously agreed to march forward with sponsorship commitments, renewals or extensions were suddenly re-examining their decisions. Sponsorships that properties and brands both thought would continue well into 2009 were eliminated as budgets fell victim to austerity mandates.
As the tough news of program cuts was made known, marketers found themselves in no position to challenge management with retention arguments, since they lacked prior success metrics. Where was the evidence? Where were the metrics to define and defend the power of sponsorships? This lack of metrics represents the industry’s greatest challenge — and quite possibly our greatest opportunity.
Keeping Score
As an industry, sports marketing has enjoyed substantial year after year growth. The onus is now on those in sports marketing to improve the metrics used to measure the impact of sponsorships. It starts with the brands becoming more demanding of their agencies. They need to actively collaborate on enhancing their current processes, setting benchmarks and milestones, and communicating exactly what success looks like. They must emphasize the importance of strengthening the bridge that links strategic business objectives to their sponsorship assets, as well as to their subsequent activation programs.
However, the biggest change agents will be with the “trio” — the leagues, teams and properties that interact with brands and agencies on a daily basis.
Most brands active in sponsorship have multiple relationships and interact with numerous partners. They rely on them to provide valuable insight during the review process. If we can agree that brands fluent in sponsorship will streamline partnerships to only those proven to be successful, wouldn’t it behoove the “trio” to recognize they can improve their negotiating positions by going on the offensive? By taking matters into their own hands, the “trio” demonstrate they want to be part of the solution. Let’s face it, closing sponsorship deals is a lengthy process, and each category is not as deep as it once was. Losing a sponsor doesn’t ensure a quick and easy replacement from a competitor. Those days are in the past, at least for now.
For the next 18 to 24 months, there will be great pressure on advertising and marketing budg-ets. That means the time is now for measurement and accountability. Properties that make this a priority will better insulate themselves against the winds of change. Simply put, if brands don’t measure impact, they won’t be able to justify sponsorship when budgets are being even further scrutinized.
Look at it this way: A CFO looking at a brand’s breakdown of revenues and expenses sees sponsorship only as an expense with no direct correlation to revenue generation. It is the responsibility of sports properties to justify those dollars, to provide the metrics necessary to connect sponsorship to revenues. It is critical that we introduce accountability into the system and show sponsorship as an asset, not a liability. Focusing on accountability today opens up a world of sponsorship opportunity for years to come.
Michael A. Neuman is the founder and president of Amplify Sports and Entertainment, LLC.
