Sponsoring a successful sportsperson or team should be a no-brainer for brands. Provided they pick one that appeals to their key demographic, they can benefit from their success, use them as a spokesperson, boost their brand and generally engage more deeply with potential and actual customers.
However, if this is true why are many of the biggest companies in the world conspicuous by their absence from sports sponsorship? I may have missed it, but I don’t see the logos of Google, Apple or Facebook on footballer’s shirts, F1 cars or advertising hoardings in athletics stadiums. They simply don’t see it as a good use of their marketing budgets it seems.
Looking deeper, this is part of a retrenchment over the past few years, with commercial sponsors replaced by trade suppliers in many sports. In Formula One, the biggest sponsor of Lewis Hamilton’s Mercedes is, err, Mercedes, while Red Bull is a hybrid owner/sponsor. In cycling a large number of teams are sponsored by bike manufacturers and equipment suppliers and in athletics the likes of Nike and Adidas have a huge profile. In football seven of the 20 Premiership teams were sponsored by online bookmakers over the 2015/6 season, and a further two (including champions Leicester) by their owner’s companies.
So, why are consumer brands less visible when it comes to sports sponsorship – and what can clubs, teams and sportspeople do about it? I think it boils down to four factors:
1. The threat of scandal
There’s always been a chance that your brand’s chosen ambassador will go off the rails and get you publicity for the wrong reasons. But in an age of constant scrutiny the slightest indiscretion is now plastered over the front pages before your brand has the chance to react – look at Tiger Woods as a good example. As testing technology improves, more and more drugs cheats are being caught, even if, as in the case of Lance Armstrong, it is years after their offences actually took place. And that’s before you start on the impact of corruption within governing bodies on public and business perceptions of a sport. Many brands simply don’t want to take the risk of involving themselves in a crisis down the line.
2. Value for money
Sports sponsorship obviously covers a huge range of budgets and opportunities, but generally is becoming more expensive. Global competitions, such as the Premiership and F1 have a worldwide reach, meaning that only the largest brands have the budgets to spend on sponsorship. And to get any value from your sponsorship you need to make sure people know about it, using other marketing activities to make sure that your target audience feels involved and included, and that you maximise the impact through advertising, corporate hospitality and other add-ons.
We’re coming up to Euro 2016 and the Rio Olympics, meaning sports fans will see a procession of sponsor logos over the next couple of months. By the end of it all, will people really remember who sponsored what? Was it Nike or Adidas that provided the match balls for Euro 2016, or had pride of place on the stadium hoardings? I’m sure, if asked, many fans would claim to have seen adverts for brands that weren’t even there, such is the level of advertising saturation we are subjected to thanks to wall-to-wall TV and internet coverage. Demonstrating this, over half of the brands that consumers associated with Euro 2016 in a poll were not even sponsors of the tournament.
4. Other opportunities
Put simply, brands have a growing number of places where they can spend their marketing budgets. From online advertising to supporting good causes, they are all opportunities to boost a brand and engage with audiences. In many cases these channels weren’t there 10 years ago – and equally some sports have been hit by what you can and can’t advertise. One of the reasons for the growth of F1 for example was the enormous sponsorship from tobacco companies – they had nowhere else they could advertise in most countries, so could focus their budgets on one sport. F1 is in many ways still coping with the hangover, with high costs and a cultural desire to outspend rivals – but not the budgets to support it.
Digital channels in particular make it much easier to measure the results of marketing in terms of click throughs, visits and sales, whereas measuring the impact of sports sponsorship can be more difficult.
So, is sports sponsorship doomed? Not completely, not while we are still able to be moved by amazing feats of sporting prowess on the field or track. However, brands need to be more careful on what they spend their money on, and activate sponsorship more cleverly if they are to stand out from the crowd. And teams, players and governing bodies need to focus on getting their own houses in order, removing cheats and corruption and remember that the reason that brands sponsor them is to reach the fans – put them first and you’ll build loyalty that will deliver return on marketing investment, whatever sport you are in.
I don’t think there’s ever been a better time to launch a startup in the UK. The public profile of the tech industry is incredibly high, and those that create businesses are more likely to be seen as visionary entrepreneurs than cranks who couldn’t get a job in a proper company. Indeed, for those leaving university, setting up your own startup is a valid (if not as initially lucrative) alternative to becoming an accountant, banker or lawyer. I’m sure startups would complain that it is still difficult to raise money, or scale up their businesses, but it feels that there is now wide public and political acceptance of the importance of creating a culture that encourages startups.
Read the press and politicians’ speeches and there seems to be a relentless search to find the ‘European Google’ or ‘British Facebook’, multibillion dollar global companies that can become standard bearers for the industry. Alternatively, other European companies essentially mimic what is being done in the US, taking their business models, localising them and then hoping that first mover advantage will let them create viable businesses before the original enters the market.
The people that run startups are smart, as are the venture capital funds that back them. But are they looking in the right areas when it comes to creating new businesses – as an article by Liam Boogar in Rude Baguette recently asked “Where are the European startups to solve Europe’s biggest problems?” Leaving aside the question of whether Europe is cohesive enough that the same problems apply to life in Edinburgh, Athens and Bucharest, it is a valid point. What issues can be solved, first in Europe, and then expanded globally, to create thriving companies that benefit us all?
The article focuses on the need to shake-up the savings market, and with interest rates in many countries close to (or even below) 0% I can see the opportunity to transform the sector, such as through peer-to-peer lending.
However, what other areas would enable European startups to build global businesses? Thinking about the particular problems Europe faces, here are four that come to mind:
Across Europe, people are living longer and birth rates are falling. Longer lifespans increase pressure on health and social care services, as the elderly battle chronic diseases and poor health. While this isn’t just a European problem, it is one that startups can focus on, particularly given the public money currently being spent on healthcare research. Areas such as wearable monitors and the Internet of Things can potentially help improve the quality of care, even allowing people to remain in their own homes, rather than be treated in hospital.
From driverless cars to drones, technology is revolutionising transport. With its combination of major car and aeroplane makers, Europe is well-positioned to lead the way, but it needs an injection of startup energy and fresh thinking to succeed. Whether it is new ways of charging electric vehicles as they wait at traffic lights or smarter cities where you are automatically guided to the nearest parking space, there is plenty of scope for innovation, along with the chance to scale up to export the technology across the globe.
More than 6 million jobs were lost in the recession between 2008-13, and youth unemployment in many countries remains high. Many of the roles that were made redundant are simply not coming back as they have either been offshored to lower wage economies or replaced by technology. What are needed are ways to reskill European jobseekers so that they can compete in the global market. Much of this should be the responsibility of governments, but technology can help with new ways of training, new opportunities for collaboration and the encouragement of remote working to combat rural depopulation.
4. Cutting bureaucracy
All governments, of whatever political persuasion, seem to delight in creating red tape that tangles up citizens and businesses alike. And, despite the European Union, there is still a range of different measures that need to be met. Many countries have begun to put their services online, but more can be done, and in many cases nimble startups can get things done quicker than lumbering government departments.
I’m sure there are plenty more European problems that need solving, from the environment to education. These don’t just benefit society, but are potentially extremely lucrative as well. So the challenge for startups and entrepreneurs is to try and solve them – and at the same time we might create the European Googles that politicians are so keen on.