What will the sports partnerships space look like post Covid-19?
In truth, nobody can truly know what the sports partnerships space will look like post pandemic. What we can do is anticipate a few different scenarios and plan for them. The global recession looming ahead will have severe implications on business across the globe, which usually means one thing – reduced marketing spends.
If consumers do not have disposable income, we can expect the same trends seen in 2008. Consumers will be cautious in spending, they will be less likely to purchase new cars, go on holiday etc. etc.
2019 saw a boom in sports partnerships, with $33.44 Billion spent on European Sports Sponsorship, up 1.9% from 2018 with football/soccer as the biggest contributor to this number (according to a study carried out by the ESA). We saw new brands enter into the sports sponsorship markets, and existing brands extend their commitment to the space, e.g. Emirates x Arsenal who increased their sponsorship fee and rights with a new record deal.
Market confidence in sport was sky high, athletes were picking up endorsements on a monthly basis, with brands opting to expand their sponsorship strategies to individual athletes as well as locking down clubs and other broadcasting ad spend around sporting events. 90% of NBCUniversal’s Olympics ad space had been sold by February 2020. Marketing teams had jumped onto the sports marketing wagon with strong intent.
A summer filled with sports had marketeers thinking of summer 2018 all over again. “What if the home nation has a strong tournament?”… With EURO’s, Wimbledon, Olympics, Boxing events and esports tournaments sports was set to play an integral role in the Summer of 2020 for marketeers.
Then came the Covid-19 / coronavirus… We saw clients / brands “pausing” campaigns. One brand we spoke to mentioned of pausing £65m worth of marketing spend for 2020 altogether due to the fear of the unknown. Global businesses had to close stores, factories, offices. Leading CFO/CEO’s to panic stations to find ways to save jobs and their businesses. We personally felt the affect of this with a number of the campaigns/partnerships we had been working on for months were paused or in review.
Does this pause mean we will see these companies re-use this budget post coronavirus, or is this budget absorbed in other areas of the business to save jobs?
My answer to this question… This will be a cancellation or mass reduction of budget / spend, not a pause in the majority of cases. Companies are moving marketing budget to save jobs, or if they’re lucky enough to have a product/service thriving they are moving this budget to CSR and helping their community through various methods. Let’s face it, there’s an elephant in the room when it comes to coronavirus and sports right now. Seeing a terrible / blatant ad from your club and their sponsor on your Instagram feed isn’t going to go down well. The activation will have to be pinpoint perfect for the audience to be receptive of the content.
The financial impact on a business when suffering mass closure of supply chain and consumer distribution methods will have a long-lasting impact. The cost of sports sponsorship/marketing will be high up on the finance departments list to cut.
Social Media managers across the globe will be desperate to create new content. Budgets will be used within marketing departments to create fresh new content to liven up feeds filled with repurposed content during the lock-down periods.
Sports manufacturers such as PUMA, Adidas, Nike, NB and UA will have designed their 2020 lead boot for the EURO’s and ready to create content to market these boots. Do they hold onto these designs for 2021? How does this affect their boot roll out plans for 2021 if they do shift the timelines? There are huge impacts from a supply chain and manufacturing perspective here also. The cost in moving timelines will have impact on their marketing spend for EURO 2021. Reemphasising the question, “is this a pause or cancellation/reduction”?
Now to the real impact, the financial planning and budgets for 2021.
The sports industry needs to plan and realise the true implications. Budgets will be cut; people will be cautious. There is a real fear and element of planning towards a second phase of this virus. Companies are now fully aware of the impact a global epidemic can have on the economy. So please don’t fall into the “everyone will be hungry to do things” mentality. Yes, there will be a need to market through sports, but the luxury of a multi-million £ deal will not be there with the majority of companies in 2021. We as an industry need to be savvy and ready for the challenges many of our clients and prospective clients will have.
However, it’s not all doom and gloom. Sports will return before many of us will return to our ‘normal’ daily lives. When the first live games of football return expect viewing figures to be sky high. The exposure for those brands lucky enough to be partnered with football clubs on pitch side LED boards will have millions tuning in for every game globally. Sports fans are bored of the repurposed old content on TV and social channels right now. The re-introduction of live sports will be prime opportunity for brands to emotionally connect with sports fans if done correctly.