The postponement of the Summer Olympics, coupled with the suspension from play in the NBA and NHL, disappointed fans around the world. For brands, however, the impact of COVID-19 may require the creation of a new playbook if they are to continue marketing to sports.
For some, that may mean taking the money invested in sports marketing and putting it elsewhere, which Anheuser-Busch, a leading sports marketer, does. The beer distributor said this week that it will redirect its investments in sports and entertainment to its nonprofit partners during the COVID-19 health crisis. Some brands may also be looking for ways to continue engaging sports fans, for example through social media or esports. However, any reoriented budgets over the next few months could quickly revert to the big sports leagues once games restart.
“If it continues like this, it’s gonna be a big change [for sports marketers]”Fred Schonenberg, founder of New York-based VentureFuel, told Marketing Dive.” People are going to start looking for new ways to make things happen with this money. “
On the bench
Although widely anticipated, Tuesday’s announcement from the International Olympic Committee and Tokyo 2020 Organizing Committee confirmed the dire situation facing companies that have traditionally allocated a considerable portion of their advertising budgets to live sports.
While there is still the possibility that the NBA and NHL will resume their regular seasons once the pandemic caused by the novel coronavirus is contained, the Olympics represent a bigger blow, given the time and resources devoted to numerous sponsorships and activations, Jim Kahler, executive director of the Ohio University College of Business athletic administration program told Marketing Dive.
“All this overhaul in terms of construction, logistics … I don’t mean that the money is going, but everyone who was planning to participate [as an advertiser] in Tokyo is going to have to think very carefully about how they can push everything back to 2021, “he said.
“We were seeing a lot of brands that were really excited for this year because the economy was doing well.”
CEO, Distinction Agency
While the big brands might be able to overcome the financial implications of the delay, the smaller ones that invested $ 10,000 to sponsor an individual athlete were relying on those sponsorships to deliver, noted Alex Onaindia, CEO of the agency-based Distinction. at Miami.
“We were seeing a lot of brands that were really excited for this year because the economy was doing well,” he said. “It seemed like the perfect time [to sponsor the Olympics] against Rio four years ago. “
The situation is not much better for advertisers when programming major league sports on a regular basis. According to data provided to Marketing Dive by TV commercial measurement company EDO, live sporting events represent eight of the top 10 programs in its SER Index, which measures the effectiveness of a TV advertisement based on the actions taken by viewers.
“The unprecedented cancellation of March Madness, in particular, has dramatic implications for advertisers, who spent approximately $ 1.126 billion in total for March Madness advertising in 2019 for approximately 22.5 billion impressions, ”the company said.
Meanwhile, last year’s NCAA tournament generated around $ 968 million in ad revenue, according to S&P Global Measurement, and was set to deliver another big year for 2020. First-round commercials cost around $ 60,000 to $ 75,000, while final match spots drop to around $ 950,000.
Emerging tactics to watch out for
Over the next several months, sports fans will be looking for a place to continue to gather, if only virtually, according to John Rowady, founder and CEO of integrated sports marketing agency rEvolution in Chicago.
“These audiences are now migrating to these other areas of social media,” Rowady said. “While the games are not being played, I also find that the world of entertainment and culture can show us how to handle these transitions and fill the void. . “
There might even be an advantage for the two sports leagues who are looking for money once COVID-19 is gone as well as for the challenger brands who want to stand out, as traditional sponsors like airlines will try to cut back. the costs.
“Sponsorship in some categories will dry up, which means there might be opportunities that you usually don’t see,” he said. “A lot of these deals are usually held by really exclusive partners. “
Esports and other sponsorship alternatives
Another potential marketing hub is esports and online gaming, which can include fan demographics similar to live sports leagues. There could be increased investment from brands that have already entered esports as well as an opening among brands that have been reluctant to try so far, said Brad Nierenberg, CEO and Founder of the RedPeg Marketing agency based in Washington, DC.
“The CMO will never question you for your involvement in any of the major league players,” said Nierenberg.
The difference is that there isn’t always the equivalent of a single entity like the NFL in esports, which makes it difficult to understand which game is the best to line up with to reach a desired audience. he added.
Some organizations have already moved quickly to try and deal with cancellations. This includes the Las Vegas-based Sports Gambling Podcast, which runs a series of NCAA game simulations on social media.
“Sponsorship in some categories will dry up, which means there might be some opportunities that you usually don’t see. “
Founder and CEO, rEvolution
A potential limitation of esports is that it is younger than live sports like college football, where brands can target older or wealthier fans such as alumni, said VentureFuel’s Schonenberg, who is a accelerator that connects brands to innovative startups.
Schonenberg also suggested marketers look for out-of-the-box sports activities to sponsor, such as OpenSponsorship, a platform designed to automate the process of connecting athletes and influencers with brands. These sponsorships could be as simple as supporting athletes who show off their training techniques at home via social media, for example.
Other options include startups like AR-51, which could allow athletes who have tested negative for COVID-19 to be filmed in a small three-on-three basketball game that consumers could watch as a hologram 3d.
For now, however, everyone interviewed for this story agreed that sponsors and leagues face issues they’ve never had to contend with before.
“I’m curious what will happen with these [Olympic] the ad spaces that NBC has sold – are these just extending into 2021? Many regular sponsorship deals have likely been stuck until 2020, “Onaindia said.” It will be interesting to see how far brands return to the drawing board and renegotiate them. “
Even though some budgets are shifted to digital or esports, Kahler predicted traditional channels would come alive once the pandemic is over.
“We will see the return of sport before we see the return of sports spectators, as there will likely be limited capacity in arenas and stadiums,” he said. “As a result, you’re going to see an increase in TV ratings of 24-40%.”
Rowady, among others, remained optimistic about the long-term potential of the industry.
“The return of sport will be a leading indicator for anyone considering economic recovery [after COVID-19]”he said.” Once we start seeing these ads, you’re going to see a whole different attitude across the country. All over the world, in fact. “