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James Mercer | How Covid-19 has revolutionised the sponsorship model for the better

James Mercer, commercial director at Formula E race team Envision Virgin Racing, looks at how the pandemic has forced the sports industry to rethink collaborations with sponsors and how the team has overcome the loss of face-to-face time with clients.

James Mercer (Envision Virgin Racing)

The pandemic has forced everyone working in the sports industry to dig deep and think outside the box for answers to some extraordinary and unforeseen questions. As a Formula E race team with the prospect of little-to-no races last season, Envision Virgin Racing had to think fast: how do we run a race team if we cannot all be in the same room at the same time? How do we engage with our fans with no live sport? How do we provide better value for our partners with fewer events?

We had to decide if the pandemic was going to stop us in our tracks or spur us on. Thankfully, being a nimble and agile independent team, it was the latter. We started getting creative.

‘Ok, so not all our team personnel can attend the race. Instead, let’s bring the race to them using the latest remote working technology.’

‘True, we could not viable offer hospitality opportunities. So, let’s create our own bespoke live broadcast to let partners network from home.’

We had fewer races, so we invested in our digital activations, and with other rights-holders and organisations. It all drove significant added new value for our partners and fans, pushing the boundaries by even inventing our own fun, award-winning Formula E parody using marbles (aptly entitled Marbula-E).’

 

Championships, teams, athletes, rights-holders and events all had to rethink how they worked. It taught us all one clear lesson: we needed to be more adaptable. It also perhaps woke us up to the fact that perhaps this was a manner of working that should already have been part of our working day.

What does this mean within sports sponsorship, specifically? Speaking to partners and rights-holders, you quickly realise that some of what may have worked pre-pandemic could well be something we must now leave behind. Interestingly, challenging the status quo and the ability to look at the sponsorship structure is now a necessity – and that’s coming from a salesperson. Sticking rigidly to a set of rights over a fixed, two- or three-year agreement sounds fine when your sport is carrying on as normal, but not now. Event engagement, hospitality and networking opportunities have been lost.

Sponsorship contracts have tended to be relatively fixed in terms of their durations and benefits. But why does this have to be the case? Like any business, priorities shift over time, so why should a sponsor have to decide on the rights they want for the next three years at the point of signing? This year, partners may not be able to host guests and activate physically, but next year they might. Partners may want to enter new and different markets in a year or two. Can sponsorship deals be flexible enough to cope with such questions and changes?

The pandemic showed Envision Virgin Racing that, just as we had to be flexible and imaginative on the track, we had to be so off it too. The world changed and so has our sponsorship model. With the rule book torn up, we decided to implement a new model whereby a sponsor can invest in the team and that investment can be split and changed as best suits them.

Sponsor investments in Envision Virgin Racing are now split into three areas: core rights, marketing and sustainability. Every season, the partner has an ability to not only co-own projects and campaigns but can also choose what rights it wants in each section. For example, that first year it might want to dial up networking and employee engagements as it establishes contacts. It might then switch to a focus on branded content in year two, and larger activations in year three. It is a way for a partner to constantly change how its investment is spent year-on-year without being tied to the same rights for the entire length of the contract.

This has proven a surprisingly simple but effective offer to partners. We have found it possible to attract new partners without the traditional prospect of wooing and courtship. We have even been fortunate enough to sign a new partner despite having never met face-to-face, not even to sign on the dotted line – which was unthinkable 18 months ago.

We went even further. With a flexible and creative mindset, we have secured collaborations with the likes of the UN’s COP26 climate change conference and the sustainable streaming platform WaterBear. These added value to the team and provided additional platforms for our partners. This has been invaluable at a time when events and hospitality remain uncertain.

For me, 2020 will not just be the year the world changed; it will also be the year the sports industry learned to become adaptable with sponsorship models. The sponsorship marketplace is a resilient, inspirational and creative space and I have little doubt that we will all adapt whilst enjoying the ride.

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