What Happens To Sports Marketing Budgets Without Sports?

 

March Madness. The Olympics. The NBA and NHL playoffs.

Brand marketers spend billions on tentpole sporting events annually, but with live sports either canceled or postponed for the year, they must now figure out where to repurpose that budget – or decide if they can use it at all.

Here’s how marketers are adjusting their sports sponsorship budgets for 2020.

Wait and see for the big leagues

For postponed events such as the Olympics, Major League Baseball and the NFL, brands are in wait-and-see mode.

Sponsorships for the NHL and NBA playoffs are mostly on pause until marketers have some direction on when – or whether – the leagues may restart. And MLB sponsors are waiting to see if the season will be shorter this year before adjusting their budgets accordingly, said Ludmila Palasin, associate director at The Media Kitchen.

NBC is allowing brands to push media commitments for the Tokyo Olympics to 2021, but how elaborate those activations will be will depend on how the economy impacts sponsors over the next year.

“I would suspect a significant number of Olympic brands will downplay their activation compared to what it would’ve been this summer,” said Michael Neuman,  EVP, managing partner of Scout Sports and Entertainment, the in-house sports marketing division of Horizon Media.

Depending on whether the NFL season can start on time, Q4 could see a lot of sports sponsorship activity. But today advertisers are “waiting anxiously for direction” before moving any money around, Neuman said.

The harsh reality is that it’s unclear if we will see future waves of the pandemic, or how quickly fans will be ready to jump back into a seat in a crowded stadium.

“We can’t assume all fans will return,” Neuman said. “Without people in arenas, it’s difficult for brands to want to activate at sporting events.”

What’s done is done

Coronavirus abruptly canceled the live events circuit, but marketing dollars are tied up in sporting events long before the air date.

Marketers spent over $1 billion on NCAA Championship advertising last year, and projected to spend even more this year before the tournament was canceled, Neuman said.

Turner is allowing NCAA sponsors to push their committed dollars to next year’s tournament or reallocate the money across its portfolio. The network is also giving refunds to distressed brands that request it.

“Some travel brands who have been hit very hard have made tough decisions to not move forward with certain sponsorship commitments, or they’ve eliminated agency resources they worked with in the past,” Neuman said.

Repurposing spend across Turner’s assets could make sense for some marketers, such as a beer brand trying to reach sports fans who also like “Rick and Morty.” But a variety of brands that support the NCAA are being conservative right now or pausing ad spend through Q2 outright.

That scaling back is having ripple effects across the sports media world, beyond just the TV networks that air games live. Sports Illustrated publisher Maven Media laid off 9% of its staff on Monday, with CEO James Heckman noting a “dramatic pullback” of sponsorship dollars and 40% CPM declines.

Brands often tie product launches, new brand messaging or product line extensions into the NCAA tournament, meaning commitments pushed off until 2021 will most likely require creative updates.

“Any of those reasons may [make creative] obsolete 12 months from now,” Neuman said.

Finding the audience elsewhere

Brands that rely heavily on sports are trying to stay connected with players and the fanbase in spite of live event cancelations. 

“Even when they’re not playing, sports teams are integral parts of their communities,” Palasin said.

The Media Kitchen is reorienting sports content around community support. One client that sponsors the American Hockey League team Syracuse Crunch, for example, sponsored a video featuring the team’s radio broadcaster reading a book about teamwork and sportsmanship. The agency promoted the video on the team’s social media channels.

For the Buffalo Sabres NHL team, The Media Kitchen has continued to air clips of the fan-favorite video segment where kids get to interview players on social “to provide a light moment for fans,” Palasin said.

Other brands are turning to audience targeting to find sports fans in different places. TV sales consortium Ampersand was able to repurpose about 90% of its clients’ sports ad dollars committed to cable networks airing the NCAA tournament, NHL and NBA game to new places by targeting audiences on linear TV, said Chief Data Officer Bob Ivins. Xandr is offering marketers a similar solution with its addressable products.

With daytime TV watching up 102% in mid-March according to Comscore, there’s a lot more opportunity to spread that money around.

“We’re seeing money going into every daypart,” Ivins said.

Take me out to the virtual ballgame?

Marketers are also shifting sponsorships to virtual sports and esports as leagues experiment with remote competition.

Nascar launched a virtual tournament in response to the pandemic and allowed sponsors to transfer their committed dollars to the event. The second race, aired Sunday, March 29 on Fox and FS1, drew in 1.3 million viewers, breaking Nascar’s own record for an esports broadcast set the week before.

On Friday, April 3, the NBA is hosting the NBA 2K tournament on ESPN, where 16 NBA players including Kevin Durant and Trae Young will battle each other live in the famous esports league.

“We’re seeing gap-filling going on through assets being granted or extended to the virtual world,” said Nicole Pike, head of Nielsen’s global esports business.

Esports lets brands reach a younger male demo, and many clients are warming up to the idea of sponsoring virtual sporting and gaming events, Horizon’s Neuman said.

But gaming isn’t the right environment for all brands, and many are hesitant to jump in. Reach and audience profile will be top of mind for any marketer looking to recommit sports dollars virtually.

“A lot of this is experimental,” Pike said. “There’s going to be different levels of interest and acceptance from brands.”

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