Growth of Sponsorship in Sports
Why is it growing, and how can brands measure their value?
Wandering the streets of Madrid as I tried to calm my nerves before the Real Madrid vs Liverpool match, I came across a vintage clothes shop stacked with old kits from teams around the world. Excited, I rushed in looking for any Liverpool kit that had the words Carlsberg on the front. Now if you’ve read this, you would know that I became a Liverpool fan after Carlsberg had already ended their shirt sponsorship deal with LFC. Why did I want it then?
LFC x Carlsberg
LFC x Carlsberg is the longest association of a brand with any one football club in English history. Together, they have created countless memories, and Carlsberg is still one of the first things that comes to mind when you talk about Liverpool. This is because of brand recall and recognition.
Brand recall is the ability of consumers to remember a brand. It is a measure of the strength of a brand’s association with a particular product or service in the minds of consumers.
Carlsberg has utilized its sponsorship of LFC to increase brand recall by being creative in its marketing efforts, leveraging the emotional connection that fans have with the club to create memorable campaigns that resonate with supporters and remind them of the iconic moments they’ve celebrated together — like the launch of limited-edition beer packs as they completed 30 years together.
This brings us to a more important question — why do brands sponsor sports teams? What do they really stand to gain from their name on a shirt sleeve, especially if their core product is unrelated?
Sports & Brands — A Match Made in Heaven
According to research from the European Sponsorship Association and Nielsen Sports, sponsorship across Europe in the sport sector achieved a record high in 2022, standing at €20.69bn compared with €19.80bn in 2021 and €20.26bn in 2019.
In its essence, brands sponsor the sports sector as a way to increase brand awareness, reach a larger audience, and create positive associations with the values of the sport. These sponsorship deals can help brands to build brand equity, enhance brand image, and create emotional connections with consumers, like we saw with Carlsberg. By constantly pursuing the link between their marketing and commercial returns and capitalizing on football’s ever growing following, Carlsberg has been able to maintain their position at the top of the world of beer’s premier league.
30 years ago, maybe you would think that sports would be a limited market, but it’s growing more than ever, with new sports entering the fray. E-Sports has already seen a massive growth in the last few years, and we’re seeing new sporting leagues being set up all over the world. Just this Sunday, the Kings League ended with resounding success in a packed Camp Nou. An innovative mix between football and e-sport, the broadcast of the final on Twitch turned into a huge hit with more than 15 million views. In just three months, the Kings League channel has become the platform’s third most powerful channel with 27 million hours watched. This is a very good sign for brands hoping to partner with sports teams and leagues.
There is also a continued rise of athletes as influencers. As sports teams look for new ways to engage with fans and promote their brand, they are turning towards visual storytelling that leverages their athletes. Fans are fans are captivated by almost everything that has to do with their favorite players, and clubs and brands must realize this. The potential benefits for brands partnering with athletes can be clearly seen in the graphic below.
The growth of social media and streaming platforms has further solidified the growing love of sports for brands, with the ability to deliver ancillary content for rights holders through behind-the-scenes documentaries and original films. I talk about more about our changing consumption of sports here, but its clear how changing and adapting your content based on the digital platform now forms an increasingly important element of a rights holder’s fan acquisition strategy. The new digital channels may not yet be providing significant subscription revenues for rights holders but are effective marketing tools for sponsors and contributor to the overall sponsorship values.
There, I used it — sponsorship values. How do you brands and sport organisations measure the value of their sponsorship? Is it even possible, realistically?
Measuring your sponsorships — are they worth it?
The true value of a sponsorship comes from both brand equity and sales impact. When measuring the success of a sponsorship, it’s important to consider both short-term and long-term sales metrics, in addition to vanity metrics like social media likes and impressions. These sales metrics should be standardized and include acquisition and retention rates. By using these metrics, brands can better understand the contribution of sponsorship versus other marketing activities to their overall revenue. It’s important to note that the value of a sponsorship depends on its ability to generate sales within a brand’s marketing mix. Therefore, it’s crucial to measure and assess the impact of sponsorship consistently across platforms and assets to understand the return on investment (ROI).
Measurement needs to be holistic and adaptable:
The sponsorship industry is undergoing changes that are leading to a complex and fragmented environment. New consumer behaviors, channels, platforms, and fan experiences are creating multiple combinations, which are driving the true value of sponsorship. To establish value, sponsorship needs to be assessed through a sophisticated measurement framework utilizing standard and adaptable metrics, as tangible outcomes are the only way to determine value.
Despite the growing trend of sponsorships in sports, many companies fail to effectively measure the impact of sponsorship on brand equity and sales. This is a significant issue considering that on average, sponsorship accounts for 15% of a company’s total marketing budget. The failure to accurately measure the impact of sponsorship is often due to companies using the wrong data or models, leading to a huge potential error in ROI. Furthermore, many companies also ignore the long-term impact of sponsorships on sales, resulting in a significantly understated ROI. As a result, companies may miss out on significant amounts of sponsorship-driven revenue due to a lack of rigorous optimization of their current sponsorship portfolio. This can lead to companies spending on the wrong properties or over/under-investing in others, ultimately resulting in missed opportunities for growth. In addition to this, the lack of accurate measurement can lead to sponsorship budgets being reduced or cut completely.
Brands need to make sure that they properly quantify their sponsorship decisions and should be able to answer (at least) the questions listed below:
- What is the overall return on investment (ROI) of our sponsorship portfolio?
- How does the ROI of our sponsorship portfolio compare to that of our traditional marketing channels?
- What is the percentage of our sales that is driven by sponsorship in total and for each of our properties?
- How much of the impact of our sponsorship is driven in the short versus long run horizons?
- What is the effectiveness of our sponsorship in building brand equity and recognition?
- What is the overall impact of our sponsorship on our brand’s reputation and image?
- How does our sponsorship impact our customer acquisition and retention rates?
- What is the impact of our sponsorship on our sales and revenue growth?
Was I able to find an LFC jersey with Carlsberg? YES, and the elation I got from holding a jersey from 13 years ago speaks volumes about the success of the partnership between them.
