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Alex Charkham | UK sponsorship sector right to be excited about ‘freedom day’

Alex Charkham, chief strategy officer at the Fuse marketing agency, predicts the UK will receive more than its normal share of global marketing spend as it emerges faster from lockdown than other economies – and this represents a big opportunity for sport

Alex Charkham.

Already this summer, we’ve been reminded of sport’s unique power to command an aggregated and highly engaged audience – 31 million watched England’s Euros final defeat, a TV audience not seen since Princess Diana’s funeral in 1997.

And, with Covid restrictions having lifted on July 19, the sports marketing industry is right to get excited.

But key challenges remain. How do brands balance an inevitable sense of caution with a desire to capitalise on a ‘restriction-free’ environment? How do they plan for 2022 with Covid likely to remain an ever-present challenge? How do brands continue to make a business case for investment in an industry so reliant on the power of live, collective experiences?

We don’t anticipate significant change for the rest of 2021 – client budgets are already locked. However, as the UK opens up faster than other markets, we anticipate significant industry momentum from 2022 onwards.

The foundation is promising

A total of 55 per cent of British businesses are part of major regional or global organisations. As restrictions lift ahead of other markets, we anticipate the UK to receive more than its normal share of global marketing budget. This presents a fantastic opportunity for sports marketing to both pre-empt and capitalise upon a welcome injection of cash.

Sport’s appeal should also increase because it offers a space that is ‘owned and operated’ by rights-holders – they control the channels, content and audience. This means that sport can deliver reach, frequency and engagement within a ‘brand-safe’ environment.

Although digital advertising is set to command the mainstay of marketing budgets in the coming years, its ability to drive true effectiveness within a brand-safe, accountable environment is under severe scrutiny. As a sports industry, we should better capitalise on this narrative to create stronger cases for investment.

Demands are changing

Sponsorship remains a fantastic platform to build brand salience, but many now want their investments to deliver attributable value throughout the purchase funnel.

The market is slowly adapting to these changing demands. For example, we’re having more notable conversations around the following: more comprehensive digital (and sometimes digital-only) rights, the ability to access and share data (especially with third-party cookies set to become obsolete), outcome-led approaches to measurement, performance-related payment clauses and more balanced force majeure provisions to mitigate the unpredictability of the pandemic.

New sectors are challenging old methods

We’ve seen a number of new market entrants from sectors that have ‘benefited’ from the pandemic (IG, Cinch and Just Eat to name a few). This has deepened the pool of players in the industry and created some welcome competition in the market.

The digital and D2C nature of these businesses has directed much of their marketing spend towards media that’s conducive to conversion. As performance inevitably plateaus, sponsorship presents a chance to reach new audiences, build salience and, if necessary, attract investment.

However, flux is a natural state for these businesses. They will demand a level of flexibility from their sponsorships that has been historically lacking from our space.

This will require rights-holders to compromise on the fixed and often long-term nature of packages. It will also require them to commercialise new inventory – such as data – to keep these businesses onside. This should also benefit sponsors that have more traditional rights-holder relationships.

For agencies, agility will be key. Rights management services will still be in demand, but agencies that can ‘sub in’ integrated support (strategy, creative and media planning to less familiar skills such as data science) will have a stronger point of difference. Remuneration models will also need to be more nuanced with de facto, long-term retainers not always offering the required flexibility.

In summary, there are signs of long overdue momentum which should properly bear fruit next year. Covid has forced historic sponsors to ask new questions. It has also helped produce a new breed of sponsor that has a different set of requirements. Agencies are also heavily scrutinising their service models. If the stars align, we anticipate a positive future for our industry.

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