The Biggest Competitor to Sports & Event Sponsorship is Paid Social Ads. Here’s Why.
I’m sitting in a sponsorship meeting just 8 months ago with a client of ours. It’s the usual Agency, Partner, & Team three sections of the table divided (At SQWAD we get brought into sponsor meetings to help answer questions so I’m with the team reps).
As the sponsor presentation is going down most people are, funny enough, looking at a device or laptop and looking up every once & a while to make sure the assets are a fit from last year.
The sponsorship guy pitching then says, “ And this year we have some new assets, as you know digital is a big part of today’s attention, so we’ve added some ways to connect fans.”
Immediately every head looks up. That’s right, the word DIGITAL can do that these days.
All the sudden questions were being asked. “Can we do X? Can it integrate with Y?”.
All the sudden interest & attention was all in on the presentation.
I was astonished at first, but later that day thinking back it shouldn’t have been. Why? Well….
Take out the fact that we as humans are now glued to our phones. Take out the power & impact that these devices have on us.
30%+ today of brand marketing budgets are reserved for digital initiatives.
Let’s break down the math for what that means in the North American sponsorship world (all graphs from this IEG Sponsorship report for reference).
$24.2Bn projected spent in 2018 on sports & event sponsorship.
$24.2Bn*.30= $7.26Bn reserved for digital.
This means that today there is AT MINIMUM $7.26Bn in open sponsorship dollars looking to be spent on digital initiatives in sponsorship.
This looks like an opportunity.
So what inventory can we look at to offer up to try and grab those dollars?
Facebook posts, tweets, IG stories, Snapchat are all staple options outside the stadium.
But what about inside the stadium or on location at your event?
I hear this a lot when asking this question “In-stadium boothing and signage has made us money for decades. Brands will never stop wanting those assets.”
That may be true, but here is a fact I would like to point out followed by 3 questions:
Most brand marketing budgets are only at 30% reserved for digital.
- Do you think that number will decrease?
- Is your team spending less money on digital ads to get ticket holders?
- Would you put a large amount of your budget into billboard or newspaper ads?
The answer, in my mind, to all of those is NO. If that is your organization’s mindset, it needs to change quickly.
Did that not convince you? OK, let’s see if this does…
MORE THAN HALF OF YOUR SPONSORS, ON AVERAGE, ARE LOOKING TO DROP YOU.
Holy Smokes Batman...
If only we could look into why…
The NUMBER 2 most valuable benefit in sponsorship in brand buyer’s eyes is the presence of digital media assets.
Sponsors care more about digital assets than tickets & hospitality….and where does on-site signage come to…….32%…or 6th most valuable.
Your team’s most pushed, most valuable, crown jewel asset is the 6th most valuable asset in your sponsor's eyes.
This brings me to the epiphany that I came to about a year ago, which started a shift in what we at SQWAD Sports provide to sports teams to help:
The biggest competitor to sports & event sponsorship is… Paid Social Media Ads.
Here is the simple fact that we have to look at…Facebook, Instagram, and even Snapchat ads are a more effective marketing tool than the in-stadium signage or back of gameday guide you offer.
- They are more trackable
- They are more flexible
- They grab more attention today
Brands are learning this and adjusting their spend to the platform that is most effective for driving business. Smart brands have put more than 30% of their budgets into digital and are driving out the giants that are stuck at 30%. It is capitalism at its finest.
When you break it down to its core, you are not competing with other events, television (which by the way came in dead last on value to sponsors), or other non-digital initiatives.
You are competing with paid social ads (sorry I said it twice, only because I want this simple fact to sink in).
But what does this mean for my team, event or property?
Perfect time for one of my favorite Bruce Lee quotes
“If you put water into a cup, it becomes the cup. You put water into a bottle and it becomes the bottle. You put it in a teapot, it becomes the teapot. Now, water can flow or it can crash. Be water, my friend.”
How does this match up? Well if you don’t offer assets that match what the market wants, if you are not formless & flexible like water, you will crash.
If you push non-digital assets you will sell less and less of your in-stadium signage and you will lose deals. You will crash with your customers.
The premium price you charge for those in-stadium assets like signage will become less & less. You will have to wheel & deal to get them filled.
Will it be this year?… I would bet you have already lost out on major deals due to this.
This isn’t just in the sports & event sponsorship world. Paper travel guides, billboard companies, magazines are all being met with the same issue, being pushed into a slow coma due to the power of social ads.
Not death…print will always be an option that some look to grow sales. The TV didn’t kill the radio, it put it into a coma.
The same thing is happening in sports & event sponsorship. You may even have brands flat out tell you “We put all our dollars into Facebook ads, we aren’t looking at anything else because it is so effective.” already.
And just as the smart brands who are destroying in the world by spending more on digital ads…
The first teams who offer digital in-stadium & on-location activations will win that open $7.2Bn reserved for digital.
The teams who don’t will lose it. Seems simple, but it really is.
At SQWAD Sports we provide teams with in-stadium assets like mobile scratchers and scoreboard trivia to connect fans to sponsors digitally to during breaks in the game. Our goal is to help teams sell more sponsorship with the assets we provide.
Some of our work can be seen with the Edmonton Oilers, Portland Winterhawks, and many others.
In this process, I sit in on some of those sponsorship meetings and here is what I am seeing:
The teams that are offering digital inventory as their prime product & inventory for in-arena engagement are flat out winning deals at a high revenue level.
They are literally stealing hundreds of thousands of sponsorship dollars from the properties in their area who are not. It doesn’t matter if they are in a power 5 league or a small minor league team.
WHY? Because they see the shift and offer assets that are as valuable or even more valuable digital assets to rival paid social ads.
In my mind, there are 2 pathways that this narrative will take in our industry:
A. Sponsorship as a collective doesn’t change their on-location & in-stadium assets to match the demand and quickly see dollars shifted to Facebook, Google, Snapchat, and whatever the next crazy digital initiative comes into.
B. Sponsorship as a collective embrace this change, massively overhauls what they offer and how they offer it, and becomes the premier advertising place to spend dollars due to its ability to command influence and attention digitally.
As we know, it usually doesn’t end in ultimatums like that so what will likely happen is:
The organizations that overhaul first will win.
The ones that don’t or do it slowly will lose.
I talked about this recently in my post on the slow adoption of scoreboards in sports. We saw it with Toys R’ Us, Sears, and many others on the commerce side losing to Amazon.
There is hope because…..sports teams are influencers.
There is a lot of talk about the power of influencers on social media. They are extremely impactful and valuable if implemented correctly as a marketing tool.
But what I try to remind our teams of is in essence sports sponsorship is the same thing where teams are the influencers. The reason why brands partner with you is that you command a massive amount of influence, passion, and influence over your fan base. This is seen in the fact that if you put a team logo on a beer can sales skyrocket.
I’m sure I’m not bringing up new here for most people, but what I would like to point out is the only reason an influencer is getting paid more than you for their Instagram post is that their platform (Facebook, Twitter, Digital) matches today’s consumer attention.
You have more influence than these outlets as a team. Your marketing inventory just doesn’t match the attention, which is digital.
This is why I am massively bullish on sports & event sponsorship. When that shift happens at a high level, where you are pushing more assets like Mobile Scratchers & Scoreboard Trivia rather than a sign in the stadium, it can unequivocally become the most powerful way to spend your marketing dollars.
Shift your entire inventory to match today’s attention and you will win.
SOOOOOO Now what?
We need a change in our mindset and ultimately the assets we provide brands.
As advertisers (which sports sponsorship essentially is) it’s our job, and dare I say our duty, to be able to provide our partners with assets that help them reach their goals and capture people on assets where the attention is.
In a free market economy, the best product (usually) wins. We have to realize that sports sponsorship with the majority of the assets we offer, in its current form, is not the best product for our customers and partners.
Once we do this though, we can start building something that will rival any social asset by adding your influence to it along with interactive ways to pull them in the arena.
There are many products out there to help give you the assets to adapt. Again at SQWAD we provide teams with assets that integrate easily and seamlessly with your game day.
But even before you embark on that discovery mission, I would challenge you to do one thing:
Take a day, 24 hours, to take a hard look at what you offer and the competitors in your field for marketing dollars.
Can you honestly say they can compete with Facebook ads in the long or even short term?
If the answer is no, take the steps to build inventory that can maximize the return digitally for your partners.
If the answer is no, email me on how we can help.
Nick Lawson | SQWAD Sports Inc. | nlawson@sqwadapp.co
At SQWAD Sports we help teams & events connect fans to brands digitally during breaks in the action through mobile activations. Our assets help these properties reach their sponsor’s goals and increase package revenue.
