Our thesis is that modern sports partnership marketing is moving from brand-centric, mass market advertising to a model that more heavily emphasizes activations explicitly tied to revenue generation and data sharing for partners. Sports properties have enjoyed partial insulation from these trends for at least a decade, due to the scarcity and uniqueness of the IP and audience, a wonderful feature of the asset class for investors that we believe will persist. But franchises and leagues that want to outperform and play offense will need a next-generation partnership strategy. We lay out the foundations for a modern approach to partnership here.
In Short, The Aggregators Did It
Historically, advertising served a brand marketing role, a term encompassing several different processes:
• Establishing broad awareness and relevance for the brand.
• Shaping the brand’s identity; developing a mosaic of positive associations with the brand in the marketplace.
• Establishing differentiation from competing brands.
• Developing customer loyalty and fandom.
In technical parlance, brand marketing is marketing focused on building brand equity – the term coined by marketing academic David Aaker for the intangible financial value associated specifically with brands (i.e., symbols, icons, logos, intellectual property, trademarks).[1]
In the mid-20th century, brand marketing was revolutionary in that it addressed consumers’ motivations for selecting a product beyond a singular focus on tangible product features. Radio and television created powerful new media channels to increase engagement while augmenting traditional print advertising. Hence, this change was both functional and medium-related: (1) function changed from customer education about tangible features to building brand equity, i.e., generating sustained, sub-conscious or primarily emotional purchasing behavior; (2) media changed from primarily print to audio & video, enabling more complex storytelling.
Figure 1: U.S. Advertising Annual Expenditures
Source: Morgan Stanley Equity Research, Goldman Sachs Equity Research, and Arctos Analysis. As of July 2024.
Today, digital marketing via the large internet aggregators (mainly Meta, Google, Amazon, and TikTok) has caused another revolution (Figure 1).[2] These platforms consist largely of automated ad marketplaces with easy-to-use tracking and audience targeting tools, financial and efficiency KPIs, and customizable spend. Marketing spend in this category is often labeled performance marketing due to its quantifiable relationship with engagement and revenue.
Like with brand marketing, performance marketing represents a functional change and a change in medium: the function is now primarily revenue generation and building brand equity; and the media are the digital platforms, not solely television or other sources of “mass market” audiences. Those platforms have been and should remain dominant[3] for three core reasons:
Their products and technology are highly compelling for advertisers and users.
They dominate content distribution on the web, making digital media competition difficult.
The internet is highly competitive, meaning customer loyalty is low and continuous customer acquisition or re-acquisition is required. Particularly, ecommerce businesses are reliable, repeat customers for these platforms, since they are reliant on them for generating revenue.
Due to these advantages, it has gotten easier than ever for brands to generate revenue and harder than ever to keep it. Digital advertising has changed the role of the marketer from that of long-term investor (= build me an audience) to part-time salesperson (= building me an audience AND monetize it). And the genie has been let out of the bottle: CMOs are faced with the demands for explicit revenue generation from both their digital spend (where it is usually easy to measure) and their traditional channel spend (where it is not).
What CMOs Want: Changing Fundamentals
This has caused several significant changes in how CMOs see the world.
To underline this, we used GPT4 to summarize recent earnings transcripts from a dozen prominent consumer companies;[4] here’s how executives consistently described their marketing strategy:
Digital transformation: emphasis on digital ads through social and ecommerce platforms.
Data & personalization: understanding consumer behavior and preferences to better tailor and target audiences. Better customer data capture and monetization from company owned digital platforms.
Product innovation: product marketing was not divorced from product development – these companies recognize they often need to evolve products to meet growing sustainability or health/wellness demands of consumers based on feedback they get from digital channel marketing.
Public company executives package information to investors to win their approval; these strategic choices are as much company-driven as market- and investor-driven. Hence, these shifts are likely tied directly to how these companies think about achieving their value creation and shareholder return goals. CMOs are increasingly compelled to develop investment rationale for traditional channel spend, including sports partnerships, using financial and efficiency KPIs that they regularly receive as a growing user of the digital platforms. Furthermore, digital marketing is not only useful for customer acquisition – it can also build brand.[5] While achieving mass awareness is still a challenge outside of traditional advertising channels, like television, large brands still like the targeted, highly personalized engagement and data capture / reinforcement learning possible via digital. And personalization is likely to get even more precise with the rise of generative AI. As such, digital is a powerful tool for both revenue generation and brand equity growth.
For emerging or venture-backed consumer brands, building a business on digital is (a) significantly more cost effective and (b) as such, causes “digital lock-in”.[6] Internet-first ecommerce companies that allocate dollars from acquisition to traditional marketing face the false dichotomy of near-certainty of lost revenue and the uncertain long-term payoff of brand equity.[7] As such, without some kind of innovation around activation or data, brand marketing starts to make greater sense via traditional channels for these companies at a much later, more mature state.[8] (More on this later.)
This inevitably impacts partnership and sports marketing strategy as well. For one, B2C companies increasingly prefer partnerships with digital amplification – that is, in-venue activations that enable digital engagement and wider reach, whether mediated by the team, the brand, or a third party (e.g., celebrities, influencers, etc.). Two, all companies – and especially emerging or growth stage B2C companies – want more than just signage to get involved: they want activations, customer data (=real-time feedback to inform product design), or evidence of actual sales. Three, as B2C companies have increased their demands, B2B companies have emerged as an increasingly important category for sports partnership, as (a) digital advertising is typically used to support progress across the entire buying journey as opposed to direct purchase intent[9] and (b) venue premiumization has opened new opportunities to engage targeted stakeholder groups in unique ways.
Is Sports Partnership Different?
For those concerned these trends may portend a decline in sports partnerships: quite the opposite. Sports partnership is one of the few avenues of resilient brand marketing. (Figure 2).[10]
Figure 2: Sports Partnership Resilience
Source: Morgan Stanley Equity Research, Sponsor United, and PWC.
Note: As of September 2024.
Sports have been buoyed by three factors – all of which are sustainable if managed well:
First is locality. Sports partnership remains a heavily local business. For Premium Assets, we estimate that ~65% of Big 5 team sponsors are based in or have a significant presence in the team’s local market. (Figure 3)[11] These relationships are unique, bilateral, and often long-term. Purchasing decisions by fans are heavily influenced by team affinity. Passion for their hometown team transfers to corporate partners who integrate their brand personalities with the team’s.[12] For most teams, we do not see this dynamic fundamentally changing in the near-term.
Figure 3: Marquee Sports Partnerships by Brand Type
Source: Elevate, SBJ, and Sportico.
Note: As of September 2024. Local includes companies with a significant corporate presence / Headquarters in the Franchise’s City. Regional includes companies with a significant Corporate Presence / Headquarters in the Franchises Region.
Second is audience. Sponsors large enough to consider league-wide or marquee team assets have had the benefit of continued audience reach that used to be more readily available across all content categories at the height of the cable TV bundle. Live entertainment and live impressions, while smaller in number, are of significantly higher quality: passive audience, enjoying a memorable experience with a brand they likely trust to a degree beyond the norm. As mass market audiences have grown scarcer, so has the price of reaching them. Moreover, fans typically have attributes that are coveted by advertisers – they are upper-income, highly-educated, and at times younger and more diverse.[13] Some of these demographics are harder to reach, and advertisers are willing to pay a premium.[14]
Third is duration. New inventory creation in sports – think badges & patches, helmet decals, etc. – have generated a lot of near-term growth. However, it is important to recognize that much of the value of this new inventory is a function of the duration of this new inventory.[15] These marquee partnerships are visible and consumed by fans for tens of minutes or hours each day. This compares extremely favorable to Tik Tok’s recommended video length of 21–34 seconds[16] or the definition of a video view from Facebook (as little as 3 seconds).[17] Advertisers not only benefit from extended engagement – in-stadium or via a variety of media channels – but also the ‘mere exposure effect’, the notion that repeated exposure to an advertisement can enhance consumers’ positive perception of the brand. [18]
Hence, all three features – locality, scarcity, and duration – explain the continued resilience of sports partnership as a category, but do not necessarily underwrite long-term excellence or outperformance for individual properties. If anything, we believe the resilience of the category has insulated management teams from market pressures that have been felt outside of sports for years, which means many teams will need to play “catch up”.
In the remainder of the piece, we tackle what we believe the most widely applicable offensive and defensive playbooks are for dealing with these pressures with a focus on how sports partnerships can maximize revenue generation and be positioned to partners as a driver of revenue generation for their businesses.
The Next Gen Partnership Playbook
We see several relevant shifts that partnership teams need to recognize and adjust to now. We’ll try to break these down by theme.
Theme 1. Rethink Sales Coverage
Digitally native growth stage challenger businesses are now ubiquitous and easier to launch than ever in most B2C categories. The case for sports partnership should have increasing resonance among this group as they mature.[19] This makes covering the universe of potential buyers more complex and generates substantial winner/loser dynamics (winners: SF, NY, and LA, where business formation is far more dynamic). But even still, every team can and should have some kind of relationship – even if nascent – with every growth-stage, internet-first consumer company founded in their market, if not beyond.
For premium asset inventory, given the corporate fragmentation we just reviewed, the nature of national sponsor coverage is increasingly complex. The economies of scale offered by agencies make them a natural home for premium asset sales. This is the default for most teams for the most coveted, A-rated inventory, but unless your internal sales team is covering the entire country, we wonder whether segments of sub-premium inventory can’t be better monetized by a third party as well.[20] Cultivate a long-term, trusted relationship with an agency (or multiple) that can partially embed with your internal team, help you execute, and be your thought partner in this process.
Long story-short: coverage is getting more complicated. Be ambitious perfectionists in your local market with respect to covering the board and ensure your team is incentivized to spend meaningful time relationship-building; but be ruthless when it comes to outsourcing, when the scale and sophistication of your team clearly outstrips the investment ask of a prospective sponsor.
Theme 2. Digital Amplification & Activations
The imperative of digital transformation and capturing customer data among sponsors means that fulfillment will increasingly require some mix of (i) digital assets and amplification; (ii) digital signage; (iii) data-driven insight into how the ad is performing in-venue.
Explicit digital assets packaged into a standard signage deal or activation is a much stronger sell, especially to emerging brands. However, we believe that many partnerships sales staffs to-date systematically undervalue digital inventory. It is imperative that non-sales staff – analytics or business intelligence – are involved if not responsible for measuring and pricing digital inventory with both impressions and cost of fulfillment and firmly in mind.
Digital signage is a powerful way to give brands maximal in-venue impression coverage but comes with some trade-offs. Static signage provides more impressions and are highly visible on broadcast whereas digital signage provides flexibility with messaging, ability to change sponsors, and can generate increased data.
Finally, data capture – via Wi-Fi, beacon technology, team mobile app, and ticketing partner data to track fan identity and behavior in-venue – is essential.[21] This ensures that CMOs are getting some form of performance feedback akin to a standard digital platform ad. This has the added benefit of giving the team a wealth of information about their fans that can be applied to the concession and merch experience (SKUs, styles, F&B category or vendor popularity, store layout), ingress/egress, parking, and fan engagement and delight with the overall experience.
Fan tracking and data capture, combined with digital signage, can be powerful. With both, a partnership team can credibly promise a specific number of actively engaged in-venue impressions to an ad buyer per game – that is otherwise not possible.
Venue enhancements and improvements must be tied to a digital monetization opportunity or thesis with a measurable return on investment. It doesn’t need to be a new premium club with a naming rights opportunity (though those can be great – build those!) – it could be anything that fosters digital content creation and buzz. Venues must increasingly become holistic entertainment experiences and opportunities to spark inspiration and joy away from the game – think sports theme park + cool hang-out vs. simply a facility for viewing a live game.[22] Are adequate incentives in place for your Head of Digital Head of Venue Ops, CRO, and/or CMO to collaborate on venue redesigns? Are creative but potentially risky ideas getting squelched early? Are strategy or finance teams working to measure ROI on these improvements?
With that in mind, every partnership should aspire to an activation angle, even if there’s no dedicated club or space associated with the sponsor. With boots on the ground, how are you going to help educate your fans about the product or service on offer in the signage or digital ad? How are they going to have a fun time interacting with the beverage, app, or technology in question? Do you have the internal fulfillment personnel & resources to make a vision real (likely in partnership with the sponsor)? Is the activation genuinely novel, eye-catching, or even silly?
Long story-short: digitize how you deliver and track partnership across all aspects of your venue. This means team integration and working with companies that can integrate data across venue ops, partnership sales & fulfillment, and digital.
Theme 3. Rethink Fulfillment
With the increasing complexity of fulfillment, partnership team KPIs must increasingly focus on gross profit, net of fulfillment cost, as opposed to top-line revenue.
The first step is to understand the business objectives of your partner and who your partner is trying to sell to. The most impactful and successful activation is a version of fulfilment that creates the best experience for them and helps them achieve this objective.
The second step is developing creative capability. We fundamentally believe that strong creative can increase the value of the entire sponsor portfolio by “creating solutions” for clients as opposed to “selling assets”.
The use of creative and digital agencies in partnership fulfillment and activations is less common than the use of agencies focused on sales. But we’re not sure why. In the near term, creative agencies could at least give your team the needed experience to eventually develop and deploy an activation from start to finish.
Long story-short: we think true outperformers in partnership going forward will be those providing real capital and creativity behind activating for their clients; while it could be more expensive, it should pay off in differentiation, long-term retention (a topic we’ll return to), and enhanced partnership revenue growth.
Theme 4. Prioritize Retention
The most meaningful partnerships last for years, maybe even decades. Sports are the most powerful as brand equity builders when their effects on the partner are compounded over many years.
We would venture a guess that your happiest partners are also your longest partners. Cause and effect are hard to disentangle, but to keep it simple, it probably runs both directions: the longer the partnership, the higher the impact to the brand in question and the more likely they are to continue forward.
Cultivating partners like this would also dramatically simplify the sales process. The more short-term your partnership, the more work you are setting up for yourself each year. While it may be easier to close a shorter deal or more strategic to “go short” during periods when team performance is off, even then, we question that so-called best practice, since forecasting long-term partnership demand or team performance is not easy and can also lead to ‘partnership cliffs’. In general, in a world of corporate fragmentation and digital disruption, anything that locks down partners or builds loyalty is a massive win; far more so than maximizing near-term sales. Sales will come, once you consistently demonstrate value to your sponsors.
With a greater emphasis on fulfillment and service, including potentially large capital expenditures on your venue to back those resources up, we would expect significantly better retention and meaningful probability that you will be able to graduate more sponsors into long-term (and in some cases higher value) deals.
Long story-short: the goal of a partnership team is to deliver value to a team, NOT revenue. This is a critical point we see missed (because it is neither communicated nor incentivized). Value is a weighted average of today’s revenue and tomorrow’s revenue (i.e., the long-term revenue potential of the franchise). And the weights in that equation are far more skewed to the “tomorrow” bucket. (We will touch on incentives in Theme 8 – which is critical to this point as well!)
Case Study 1: Google Cloud Partnership x Golden State Warriors
In February 2019, Google Cloud was announced as the Official Public Cloud Provider of the Warriors and a Founding Partner of the Chase Center. Importantly, Google Cloud's partnership with the Golden State Warriors featured several unique elements of the partnership (blog post) around how to ‘Transform with Google Cloud’:
Predictive Analytics and Machine Learning: Google Cloud provides the Warriors with advanced analytics to predict player performance, optimize game strategies, and prevent injuries.
Data Integration with SAP: The partnership uniquely integrates Google Cloud's data analytics with SAP's sports data platform, offering a comprehensive view of player and team performance.
Google Cloud's AI for Fan Engagement: AI-driven fan experiences, such as real-time stats and highlights delivered through the Warriors app and in-venue screens.
Enhanced In-Venue Experiences with Google Cloud Technology: The Chase Center, home of the Warriors, features Google Cloud-powered innovations like AR experiences and interactive digital signage, providing a more immersive and interactive game-day experience.
Theme 5. Get Smart on Influencers
Every major metro area has a handful of content creators local to that area. They may be focused solely on fitness, nutrition, music, fashion, home décor, you name it – but ultimately, most of their followers understand where they are.
Engaging these influencers is fertile, mostly untapped territory to deliver national and even international impressions to an in-venue sponsor. Something as simple as having them spend time in one of your suites or premium clubs with media-visible signage.
The digital or partnership team should cultivate these relationships, if they aren’t already.[23]
Long story-short: while most won’t move the needle, partnering with influencers is a straightforward way to produce in-game, monetizable digital content for sponsors in a way that is relevant to fans (especially younger fans).
Theme 6. Pricing & Go-To-Market
Constantly reevaluate your rate card and your category breakdowns. It should be possible to use advanced analytics to formulate a reasonable rate for each piece of inventory on a bi-annual basis (at least). Here, we would reiterate the importance of an analytics or business intelligence actively involved in pricing inventory.
In the long term, we believe that best-in-class franchises will also offer dynamically priced inventory for many individual assets akin to what we see across digital marketing – programmatic advertising with real-time bidding, whereby different companies pay different prices for the same ad unit based on their business objectives and their value of the target audience.[24]
In addition, be precise with your category definitions. Can you have a traditional banking and a financial technology partner? Could you have a corporate or travel card sponsor separate from each? Are you tapping into skill-based gaming as distinct from real-money wagering (the latter of which may be barred in your state)?
Theme 7. A Whole New Ballgame: B2B Coverage
A lot of our focus so far has been on the traditional consumer-focused company – whether they be mid-sized, locally based corporates or emerging, growth-stage brands. But sports is (now more than ever) a critical target advertising partner for B2B. While before that may have applied to local businesses – think corporate banking, professional services, etc. – more often we see teams fail to fully embrace business services and technology.
The entire story arch we outlined above – whereby the advertising function has shifted from brand equity to customer acquisition and monetization – does not always apply to B2B companies. The customer base they seek to engage is often a targeted group of decision-makers, not a mass demographic.
The increase in focus on venue experiences beyond the game and the increasing technological sophistication of venues opens up a simultaneous opportunity for teams: (1) partner with technology and services groups with clients in the local market they want to engage (see Case Study 1 Google / Golden State Warriors); (2) utilize the service / technology in-game or in-venue, thereby marrying the fan experience – and all of the unique, positive associations that come with that – with a customer demo. This has been a powerful driver for large-dollar, marquee Formula 1 partnerships, for natural reasons (i.e., they utilize a significant amount of leading technology products to produce the car and monitor performance) (see Case Study 2 Cognizant / Aston Martin Racing).
B2B partnership also requires a differentiated means to measure and communicate success. One CMO that we spoke to highlighted how after partnering with a Formula 1 team, he had to justify a $10 million expense to his private equity-backed sponsor. To do this, he cross-referenced prospective clients in the company’s sales pipeline against hospitality guests he brought to F1 races and was able to demonstrate >95% sales conversion of those guests (and their companies). Correlation doesn’t equal causation, but meaningful time spent with prospective customers and the unique experiences afforded by F1 partnership was a game changer in closing deals.
Again, if you cannot adequately cover B2B prospects in-market or nationally in-house, an agency should be considered. They can at least get your team up the learning curve.
Maximizing this opportunity again points to the importance of digitizing the venue. That is paramount for several of our themes, this one included.
Long story-short: digitize and ‘premium-ize’ your venue and rationalize that spend via B2B partnerships and activations and find a way to quantify the value proposition to these partners.
Case Study 2: Aston Martin Racing x Cognizant
In January 2021, Cognizant was announced as the title partner for Aston Martin Racing Formula 1 team.
The partnership is aimed at leveraging Cognizant's expertise in digital transformation, IT infrastructure, and software solutions to enhance the team's performance on and off the track.
As described in the press release “In a sport where technology and innovation take center stage, Cognizant will play a key role, not merely as a sponsor, nor even as a behind-the-scenes service provider, but also as a true digital transformation partner with a real purpose.”
Over the course of the partnership, Cognizant has provided advanced technologies and services, including data analytics, cloud computing, and artificial intelligence, to optimize car design, race strategies, and fan engagement.
Theme 8. Incentives & Team Construction Are Everything
Much of what we’ve outlined is external facing, but one of the most obvious and quickest ways to improve partnership performance is by rethinking incentives and how your team is structured.
Compensation is a powerful tool that can be both a reward mechanism and communication tool. And compensation – and compensation design – is not just a focus for salespeople! Your entire partnership team – sales, operations, activation, and marketing should all be incentivized to help drive your strategy.
First, it is critical that your organization adopt a compensation structure that creates long-term enterprise value (vs. short term sales). As we discussed above, the goal of any CRO should be to grow ‘value’ not necessarily ‘revenue’. At times that means incentivizing the retention of accounts while at other times incentivizing the search for new partners.
Second, what we have found to be successful is when all members of the team involved in sourcing, selling, and retaining partners are motivated – intrinsically and financially – to do so. (Too often partnership sales are the only employees with significant variable compensation!) If a successful activation is critical to renewing a partner, should partnership activation not benefit the same way a salesperson would? If a member of the digital team was incentivized for the success of a partner’s branded content, would you see stronger social engagement?
As we discussed previously, an agency could be a powerful way to supplement your team – be it for creative or selling to national sponsors. Building a capable team (i.e., a team with experience evaluating proposals – as an analyst at an agency might), working in partnership with activation, and fluent in data – are core skillsets will ‘level up’ your organization.
Creating – financial and non-financial – alignment between every member of your partnership team and the goals of your organization and partners should be a key priority.
Theme 9. Numbers & Narratives
The last theme we want to emphasize is how the most successful organizations will not only leverage data and analytics in all aspects of partnership, but also be able to communicate this to partners.
We have seen firsthand how important it is to have an articulate answer when the CRO of a global financial services company asks, “How do you measure ROI?” A response that only describes the “earned global media value” received is not an acceptable answer.
Having a sales team that is comfortable conversing in the language of performance marketing and sales data (e.g., ROAS, CPA, CVR, CAC, LTV, etc.) is critical, but so too is working to define the metrics that measure success for a brand and your partner. It is a skill that is increasingly vital as sports partnerships modernize and CMOs demand the same level of sophistication and analytics they are accustomed to with existing performance marketing.
[1] We like thinking of brand equity as: “the qualities and associations of a product or service that enables sub-rational willingness to buy.”
[2] Morgan Stanley Equity Research. As of July 2024.
[3] Alphabet ($260 billion) is outpacing the combined revenue of television, newspapers, magazines, radio and cinema ($252 billion), while Meta ($140 billion) and Amazon ($48.9 billion) are both doing better than magazines and newspapers ($46.3 billion). Some estimates put Alphabet, Meta and Amazon’s share of digital outside of China as high as 90%. (FIPP, April 2024).
[4] PG, CL, ULVR, KMB, RKT, HEN3, NKE, LULU, VFC, HD, FORD, GM, MCD (calendar Q4-2023 earnings reports).
[5] Roger L. Martin, Jann Schwarz, and Mimi Turner, “The Right Way to Build Your Brand”. Per the study, the authors demonstrate that a clear and specific promise to a customer resulted in improved brand perception, brand preference, and purchase intent.
[6] Sarah Emmott and Holly Chen. A Founder’s Framework for Understanding Performance vs. Brand Marketing for Your Startup.
[7] Jim Stengel, Cait Lamberton, and Ken Favaro, “How Brand Building and Performance Marketing Can Work Together”. According to 2022 survey of senior marketing executives at Cannes Lions, “managing the tension between brand and performance marketing” was the most pressing issue. However, in redefining brand metrics, the authors demonstrate how an airline, a fast-food chain, and a winemaker could calculate the short-term and long-term ROI of brand building.
[8] Sarah Emmott and Holly Chen. A Founder’s Framework for Understanding Performance vs. Brand Marketing for Your Startup. The authors highlight the balanced execution required between brand and performance marketing and their framework which is predicated on: (i) product (e.g., type of product, audience, product maturity and lifecycle); (ii) market considerations (e.g., macro factors, competition, and market maturity and readiness); and (iii) company considerations (e.g., resource allocation, objectives and company maturity and scalability). We believe brand marketing via sports will continue to be attractive in growing new categories (e.g., crypto) or in markets with a high degree of competition (e.g., daily fantasy). However, for the majority of emerging B2C brands, we believe more traditional brand marketing is a lower priority.
[9] Brent Adamson, Traditional B2B Sales and Marketing Are Becoming Obsolete. However, this may shift as 54% of Millennials prefer to buy solutions without sales rep involvement.
[10] Morgan Stanley Equity Research, Sponsor United, and PwC. As of July 2024.
[11] One Elevate, SBJ, Sportico and Arctos analysis of premium assets as of September 2024. Premium assets are defined here as stadium naming rights, jersey and helmet partners. Local and Regional includes companies with a significant corporate presence / Headquarters in the Franchise’s City and Region, respectively.
[12] A 2021 YouGov / Wakefield poll (n = 1000) showed an indexed score that avid sports fans were 1.8x more likely than the general population to agree with the statement that “If you sponsor my team, I will buy your products.” Similarly, a 2020 GWI survey of Olympic fans aged 16 – 64 (n = 15,189) found that almost half of Millennials would purchase a brand or product if sponsored by their favorite sports league or team.
[13] Infillion, The New Sports Fan. Pew Research Center, Survey of U.S. Adults (Aug. 2023).
[14] Stanford Report, “Why Advertisers Pay More to Reach Viewers Who Watch Less”
[15] New inventory creation cannot continue indefinitely, as it is not cost-free incremental revenue – it comes at the cost of reduced scarcity value for the category overall and all remaining inventory.
[16] TikTok, Top Tips for Small and Medium Sized Businesses.
[17] Facebook, Video Metrics – Meta for Business.
[18] Robert Zajonc, Attitudinal Effects of Mere Exposure.
[19] We see this already with patch sales, which are increasingly centered on emerging brands.
[20] We would highlight that the current resourcing and economics for agencies are unlikely to make them the appropriate seller of sub-premium inventory. Rather, we believe that it is likely to be a new paradigm – possibly a marketplace (e.g., a live entertainment supply-side platform) that could ultimately fulfill this need.
[21] With increased data comes increased responsibility. It will be critical for franchises to understand and codify when and how they can share the information they capture with partners while protecting fan privacy and complying with local regulation.
[22] From a recent interview with Gensler’s global leaders of Sports and Digital Experience Design Justin Rankin and Jonathan Emmett: “To deliver the best fan experience, as well as give owners/operators the highest return on investment in technology, we must think about the digital touchpoints and experiences in venues as parts of a larger, connected ecosystem…There is demand for a more integrated ecosystem, where everything is connected and we’re blurring those lines between an experiential overlay of technology with that more practical overlay…Digital allows us to bring in advertising in a way that feels seamless and appropriate for that audience.”
[23] One question that we often receive from franchises is whether influencers should be paid. While we would reserve judgement on this question, we would acknowledge the importance of any influencer being ‘authentic’ to the brand of the Franchise.
[24] Programmatic advertising started out in the early 2000s, but it was the advent of Real-Time-Bidding, Demand Side-Platforms, and Supply-Side platforms in 2009 that enabled major impact streamlining the process. We see Digital Out-Of-Home via signage as the earliest and most likely use case given the increased ability of location-based targeting. However, we would caution that only the most sophisticated and well-managed partnership teams should consider forging guaranteed and appropriately priced partnerships while managing risk and simultaneously capturing this upside.
©Arctos Partners, LP, 2024. All rights reserved.
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