Using Data To Create Effective Sponsorship Activation

Data from Superbowl 50 indicates that fans used over 9.5 TB of data during the game, which is a 63% increase over last year’s usage. During this time, the most popular uses were video and web browsing (each garnering a share of 20% each) followed by social media sharing which garnered an 18% share.

The above statistic is a testament to the fact that modern day sports fans aren’t always concentrating on the action that’s taking place on the field and appealing to these fans requires marketers to include digital initiatives taking place within the stadium a lot more seriously. As a naming rights holder, this becomes even more important so as to increase the effectiveness of one’s sponsorship activation.

This in itself presents a range of complications. First of all, there are more than enough brands that are vying for a sports fan’s attention within the environment of the property. Add to this services provided by the venue such as seat upgrades and in-seat meal ordering. And then of course there is the time spent by the fan on his/her social media pages. To capture the attention of the consumer, a brand needs to send the right message to the right consumer at the right time. And in today’s world, it can be made a lot easier by gathering the right data.

How would data gathering help sport marketers and naming rights holders? Firstly, it would help in seamlessly matching the audience to the right consumer segments. For example, if a basketball arena attracts both first time and luxury car buyers, the right data can help in determining who’s who and help the brand create targeted initiatives for each segment.

Secondly, it would help in pinpointing potential customers. For example, if a fan orders a drink on his/her seat through the online ordering portal, one could determine if the fan is a beer or a wine drinker and then create targeted promotions for each one.

Lastly, it would help brands create precise, in the moment promotions. Many sports bars have promotions wherein if a goal is scored; special offers on the menu are unlocked. Imagine doing that, but at a stadium-wide level. It could be a way to increase volumes at concession stands.

In order to help sponsors and rights holders gather this data, properties have to make sure that their technology foundation is up to date. One way of doing that is to partner with the right infrastructure providers. An example of this is Captivate by Horizon Communications, a platform that can help brands aggregate over 2500 data points on fans and then help create and deploy customized, localized real time campaigns across the mobile platform. Captivate’s Engage is a tool that utilizes the network, location, event timeline and fan data to trigger automated real time promotions.

The NFL has already created and deployed a set of Wi-Fi standards that need to be deployed across all participating properties and other leagues are following suit and sport marketers need to utilize this to maximize the ROI on their sponsorships.

Disclaimer: Horizon Communications is a technology partner of Bonham/Wills and Associates. For more information on the captivate platform please visit: http://www.horizon-com.com/fan-engagement

Playoffs & Exposure

What happens with our favorite teams and their sponsorship contracts when they hit play offs???

As the world of sponsorship in sports has evolved, so have the terms of negotiation when signing deals involving teams, properties and corporations. Traditional formulas once used have now been broken down and personalized creating an exciting window of creativity when drawing up contracts.  This gives the freedom to develop standards for negotiation on a case by case basis when getting down to Playoffs.

Methods of Negotiating Playoff Deals with Sponsors vary.  It is up to the negotiation team to use their own hypothesis to determine the extended value regarding the property/team when/if playoff games are held on the property or involved teams are headed for an extended season (playoff run). 

Drilling for Oil….

Rolling the Dice in 2006, Lucas Oil purchased the naming rights to Colts Stadium in Indianapolis, Illinois.  The Naming rights cost Lucas $122 million over a 20 year span.  Six years into this contract Lucas Oil “struck oil” as the Colts had made it to Super Bowl, to top it off Illinois won the bid the same year to host the event that then in turn catapulted Lucas Oil onto an invaluable yet unexpected Global Marketing platform.  Lucas estimates this single event alone has increased revenue by $10 million and Lucas Oil hasn’t looked back since.

Bonus Structures….

Considering there are no guarantees a team’s annual performance. Putting a monetary value on extended seasons have known to be structured in different ways.  In some cases an “exceptional performance revenue” will be included in the contract.  Stating a specific royalty to be exchanged from the corporation to the team/property, usually multi-level bonus structure.  Value based upon number of playoff games, final fours, championships and wins.  Due to extensive exposure during these time periods teams/properties can negotiate based on enhanced marketing exposure frequencies. 

Playoff Packages….

In some cases, additional packages are set to sell if playoffs become a reality.  This is a high risk and high reward method that is used to maximize sponsorship revenue.   This method consists of a fast paced negotiation process, utilizing sales teams attempting to maximize complicated short term contracts.  Evaluation on the team/property/event and exposure, may prove the dependant variables included in this process are well worth the fuss!

Long Term Commitment….

In this case most commonly linked to Naming Rights or Exclusivity Deals the commitment of a sponsor will remain through playoffs with a pre negotiated plan of action.  A per-game calculation is determined due to the undetermined amount of games.  In these relationships it is most common for benefits of regular season contracting stay static, additional promotions may be optional.

Tactics and Strategies….

We all know the amount of impressions significantly increases if a team makes it to playoffs.  For a hosting property and all brands involved during this time, promotional communication has potential increase revenue far above the original projection value.

The characteristics of negotiation allow both Team/Property and Corporation to determine the most symbiotic and profitable approach for their specific contract when approaching the topic of Playoffs. 

Category Exclusivity: what it means & the industry categories that are more likely to pay for it

When entering into a sponsorship partnership, category exclusivity is often an essential consideration for sponsors. Category exclusivity dictates that the sponsor is the only company within its product or service category that has a relationship with the property or event. A guarantee of exclusivity is very appealing for potential sponsors because it serves to limit their competitors’ access to the consumer group affiliated with a certain property or event.

Sponsorship typically exists on a continuum however, from high level Naming Rights partnerships where the sponsor gains exclusivity that runs throughout a property or an event, to small scale sponsorship where the sponsor competes for consumer impressions alongside other sponsors that are from the same industry category such as is often the case with sporting events featuring multiple beverage and performance products. In practice, categorical exclusivity often exists on a middle plane that might include categorical exclusivity to a certain area, but not the entirety, of a property, for example the “Lexus Lounge” in Amalie Arena in Tampa, FL.

The ultimate value that a property or event can garner from a sponsorship partnership is often directly related to the level of categorical exclusivity offered. In most cases, a lack of categorical exclusivity can significantly lower the value of a sponsorship deal. An exception to this general rule is in the case of sponsorship deals for charities or non-profit organizations where a company may relinquish its requirements for exclusivity in the interest of boosting their Corporate Social Responsibility portfolio.

So the question is, when seeking high level sponsorship such as a Naming Rights partner, what industry category is more likely to pay for the privilege of being the exclusive category partner? While a company’s willingness to pay for category exclusivity is influenced by a number of market variables, there are two primary characteristics that are thematic of industry categories that most often purchase category exclusivity: 1) The product experiences high competition in the marketplace, meaning that there is high cross elasticity of demand between their product and a competitors’ as consumers are more prone to substitution, and 2) They exhibit a strong command of their product supply chain that allows the company in the industry category to keep production costs low and profits high.

According to the 2015 IEG Property Sponsorship Category Survey, these two characteristics are present in the top three Industry categories most likely to purchase exclusivity, starting with non-alcoholic beverages in first at 55%, the automotive industry coming second at 54%, and alcoholic beverages third at 53%.  Rounding out the lower end of the scale is retail with 14% and restaurants at a low 13%, which both exhibit a lower elasticity of demand due to consumer’s diminished proclivity towards substitution, longer supply chains and, generally, lowered profit margins.

While these numbers are indicative of sponsorship trends overall, the tried and true method when searching for a sponsorship partnership that exhibits high categorical exclusivity such as naming rights is to look at the community where the property or event is based. Most often, high level sponsorship is derived from companies that have their headquarters or a large consumer base in the area and are interested in securing and growing that consumer base through an integrated community presence.  

See the full table of industry categories that are most likely to purchase exclusivity here.

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-Erin Beaudoin