- Sports sponsorship allows tech companies to prove products in intense environment
- Sophisticated B2B activations are inspiring consumer brands to be more creative
- Some sponsors are so embedded with rights-holders it would be a challenge to disengage from them
As McDonald’s exits its long-standing Olympics partnership and Intel signs up, it’s intriguing to note just how important B2B and technology sponsors have become to sports rights-holders.
With tobacco, alcohol, fast food, financial services and betting greeted with varying levels of opprobrium, the likes of Intel, SAP, HP, Microsoft, IBM, Oracle and Alibaba have emerged as critical to the future of sports business.
At first sight, this seems counter-intuitive, because B2B and technology brands generally have limited use for the mass-media exposure so often touted as sports sponsorship’s No.1 asset.
But David Peters, founder of The Value Xchange and former managing director of Dentsu Aegis Network Sport & Entertainment, says “in some ways sports sponsorship makes more sense for B2B and tech brands than consumer brands, because it gives them the ability to prove their products and services will function in an intense, fast-moving environment.”
It’s not just the few weeks around the event that matter either, says Peters. “In the build up to big events, tech brands get the opportunity to develop and test products before they finally showcase their innovations to the world,” he adds. “They can make events more efficient and improve the consumer experience – which is the perfect way to capture the attention of business decision-makers, who have a notoriously short attention span.”
Another advantage enjoyed by B2B companies, says Peters, is the fact that they don’t need to reach many people to achieve their business goals.
“A B2C brand needs to convert millions of people into purchasers to justify its investment,” he explains. “But B2B brands are only targeting decision-makers and budget-holders. This means it is also easier to get an accurate sense of how a sponsorship has contributed to return on investment.”
The key way to do this, he adds, is by offering “money-can’t-buy corporate hospitality experiences. And unlike financial services companies, B2B firms don’t run into problems with bribery regulations because they can argue that they are showcasing products and services, rather than just entertaining clients.”
IMAGE: Intel CEO Brian Krzanich receives the Olympic Torch from IOC president Thomas Bach (Walden Kirsch/Intel)
Going beyond hospitality, B2B activations at major sports events can also be referenced by sales forces out in the field as a way of making their sales pitch more interesting.
Microsoft sales agents, for example, use the company’s work with Nascar to show companies in retail, manufacturing, financial services and oil & gas how they can help streamline manual or antiquated business processes and improve operational efficiencies.
What’s more, says Peters, B2B and technology brands rarely experience the kind of consumer cynicism that B2C brands attract. He says: “These brands create genuine value, so it’s much easier to argue that they have a reason to be involved in sport.”
The attraction of sport as a sponsorship platform has also increased as B2B brands and rights-holders have become more sophisticated at delivering deeper and richer event activations, according to Alex Charkham, a director at marketing agency Fuse Entertainment.
He says: “IBM has been involved in sports sponsorship since 1960 – so it’s not the case that B2B sponsorship is new. But what is new is the recent shift from ‘storytelling’ to ‘storydoing’. B2B and technology brands aren’t just piggybacking sports platforms, they’re having a major impact on the way they are organised and enjoyed.”
As the ‘greatest show on Earth’, the Olympics is a natural stage for B2B and tech brands, says Charkham – but as Microsoft’s partnership with Nascar illustrates, the B2B/technology relationship with sport now runs much deeper.
Another example Charkham cites is IBM’s partnership with the Wimbledon Championships tennis tournament, where a data-driven partnership called #WhatMakesGreat was this year used to promote IBM’s cloud, security and cognitive solutions businesses (see video below).
He also singles out Intel’s involvement with the International Cricket Council’s 2017 Champions Trophy tournament, where the company embedded computer chips in bats to help players track their performance. “Intel recently formed a dedicated unit called the Intel Sports Group,” says Charkham, “which is all about using sport to commercialise and monetise emerging technologies.”
Another example which underline just how flexible sport’s relationship with B2B brands can be includes Cisco’s partnership with the Extreme Sailing Series, which is designed to promote the company’s Smart Cities offering. SAP, meanwhile, has worked with the San Francisco 49ers National Football League (NFL) franchise on SAP Scouting, a product that pulls data from various sources including league databases to help the team with its recruitment strategy.
Michael Payne, a brand and rights-holder consultant who was formerly head of marketing at the International Olympic Committee (IOC), was intimately involved in Chinese ecommerce platform Alibaba’s recent deal with the IOC.
He says: “There’s no question that sport is a great way for companies to showcase innovations and emerging businesses. I remember AT&T showcasing an early form of email back at the 1984 Olympic Games in LA. But there are also benefits for right holders, which are under growing pressure to be responsive.”
In the same way that leading publicly-quoted companies must innovative to survive, “bodies like the IOC need to be more agile,” says Payne.
“Consumer goods firms are not going to dramatically transform big sports events – but the likes of Alibaba and Intel are bringing new thinking in areas such as digital ticketing, cloud computing, ecommerce and drones,” he adds.
“Partners like these are fundamental to rights-holder evolution.” This invariably has a positive impact on the rights-holder’s brand image as well, making it easier for them to pitch to blue-chip brands that are concerned about the company they keep.
When asked about where he would like the 2024 Summer Olympics to be hosted, Intel chief executive Brian Krzanich expressed a preference for Los Angeles (which is close to Intel’s HQ in Santa Clara). But many B2B companies see sports events as a way of building credibility in new territories.
Alibaba’s strategy, says Payne, is primarily about introducing the brand’s capabilities to the international market. This is also true for Indian company Tata, which uses Formula One to demonstrate the robustness of its connectivity, hosting and delivery technologies, while at the same time helping the sport cut costs.
Japanese firm NTT Data has also used partnerships with golf’s Open Championship and motor racing’s Indy Car Series to support its global expansion plans. In the five years since it first sponsored The Open, it has seen global revenues grow from 18 per cent of its total business to more than 30 per cent.
In stage two of its international expansion, it wants to be viewed as a global brand because it anticipates this will boost profit margins. So further activity in sports sponsorship seems logical.
Andy Kenny, head of CAA Sports Consulting UK, believes the new rigour being brought to sports sponsorship by B2B brands is also having an impact on how B2C brands activate their rights.
“I think all brands are now asking how they can create a deeper relationship with rights-holders,” he says. “Land Rover’s work with Ben Ainslie’s America’s Cup BAR team is about showcasing their engineering expertise while Bose is providing NFL coaches with the best possible audio. By making a difference to the sport, they develop a more authentic image among consumers.”
Also worth keeping in mind is that some leading technology brands have both B2C and B2B dimensions, says Kenny, meaning that there is more than one way for them to generate a return on their investment.
For example, although Intel doesn’t do much direct-to-consumer marketing, most consumer are familiar with the ‘Intel Inside’ stickers that come with new computers – providing a kind of quality assurance measure. For other B2B brands, there is clearly an opportunity to try and emulate this elevated position in the mind of consumers.
Besides, adds Peters, technology changes so fast that today’s B2B brands may be tomorrow’s B2C revelations. There was a time when Apple was not especially well-known to the mainstream audience so building brand trust in expectation of some future breakthrough may prove a worthwhile exercise.
EXTRA: What is B2B sponsorship worth?
Microsoft spends more than $100m a year on sports sponsorship, according to IEG, via properties such as Nascar, the NCAA, NFL, F1, the PGA Tour and Real Madrid.
IEG has SAP and HP as the next biggest B2B/tech spenders, although Alibaba’s IOC investment certainly shakes things up. Cisco is also a rising force in the world of sports sponsorship. Like Intel and Alibaba, it has a relationship with the Olympic Games.
Andy Kenny, of CAA Sports Consulting UK, points out that there are several internal benefits that B2B brands can achieve through a well-activated sponsorship. “Across an organisation, it’s a way to engender pride and offer incentives,” he says. “But think about how exciting it must be for those employees who are actively involved in one of these sport-based projects. And then think about the value of that in talent recruitment.”
The raw numbers underline his point. IBM has around 379,000 employees while HP has around 287,000. New IOC sponsor Intel has a family of 106,000.
Fuse Entertainment director Alex Charkham says modern B2B sponsorships are “much more like business relationships than they used to be”. This has a couple of implications. The first is that the headline rights fee may not always be as high as for a B2C brand. This is because the deal may take account of the cost of products and services being provided (value in kind). The second is that the way in which rights-holders approach renewal of such partnerships will probably look more like a contractual tender than a sponsorship negotiation.
Once Intel and Alibaba have been embedded in the IOC’s technical architecture for almost a decade, for example, it will be a challenge to disengage with them and replace them.