This is an excerpt from Beyond the Scoreboard by Richard B. Horrow & Karla Swatek.
a universal source of community pride and a multibillion-dollar industry, sports are a source of fan passion with the power to drive significant consumer brand affinity. Over time, a growing number of marketers who command multimillion-dollar budgets couldn't help but take notice.
A common denominator that transcends cultural and societal differences, sports are an enormous and growing business that delivers a massive and highly engaged audience game after game. As the last Alamo of a time-shifted, TiVo-ed consumption—and with a nearly infinite supply of regularly generated content, storylines, and statistics—sports are perfectly suited for the new multiscreen world, with the rise of technology creating a virtual sports bar for 'round-the-clock content and engagement. Americans love entertainment, and sports—the original reality television—are nothing short of synonymous with everyday theater.
Although the modern business of sports marketing, and specifically sports sponsorship, remains a relatively fledgling industry (remember when the BCS games didn't have a sponsor attached?), it's a vastly different one in the 21st century than it was some 50 years ago. Much has changed in sports sponsorship since the inaugural corporate stadium naming rights deal, sold in 1973 to the Buffalo, New York–based food service company Rich Foods, Inc., for a now-paltry total sum of $1.5 million. At $100,000 per year, this could barely cover the annual cost of a sign in a professional or major college stadium today, even adjusted for inflation.
An evolving understanding of sports marketing as the gold standard of integrated marketing communications has accelerated sports marketing's rise in importance within the broad discipline of marketing. As such, sports command gargantuan budgets for both media and sponsorship and premier consideration within the corporate marketing elite. What began, in many cases, as a way for CEOs to get close to their favorite athletes and pastimes has become a behemoth of an industry: Sports Industry Almanac 2011 estimates the annual spending for sports marketing and advertising in the United States is more than $27 billion.
The global financial crisis in 2008 demonstrated that the sports sponsorship industry is far from recession-proof: Marketing purse strings were universally tightened in corporations large and small, and the emphasis on the bottom line renewed with gusto. This “new normal” birthed a new catchphrase: return on investment, or ROI, frequently referred to at leading industry conferences as the holy grail of sports marketing. The recession helped accelerate a new era of accountability in which CFOs and procurement officers call the shots or, at the least, hold corporate marketing officers under the gun to prove tangible returns against business metrics and objectives. No longer would multimillion-dollar sponsorship deals be hatched on a cocktail napkin and executed on the whim of a personal indulgence by a C-level executive whose favorite team had just won a divisional championship.
A fundamental shift in power from marketer to consumer and the onslaught of digital and mobile technologies have driven the migration of consumers to new screens for information and entertainment and changed the very notion of what advertising is and how it is measured. Vanilla deals have become a thing of the past, replaced by increasingly complex sports marketing platforms that include sponsorships that must be activated in new mediums. This continues to challenge the way properties structure partnerships and demonstrate value, and it requires a full understanding of the myriad of consumer touch points. Understanding the new sports marketing landscape, and sponsorship's ever-changing position in it, is crucial for optimizing brand impact with regard to business and advertising metrics, sponsorship, and related media buys, as well as protecting brands from ambush efforts by competition.
Read more about Beyond the Scoreboard: An Insider's Guide to the Business of Sport by Rick Horrow and Karla Swatek.