As two industry players immersed in the sports world, we asked Sportal and BMI Sport Info to give us some insights into the current state of South Africa’s sponsorship market and what it means for rights holders.
What happened in 2017?
In many ways, sports mirrors the South African industry and 2017 was a tough year for business. The impact of factors such as politics, the instability of the Rand, the costly last minute cancellation of Cricket SA’s T20 Global League and even the year end collapse of Steinhoff with its tentacles reaching as far as South African sport, affects everything.
Overall, traditional sport is under more pressure than ever. Thirty percent less people are watching TV – sport included. However, given that overall interest levels remain constant for most of the highly sought after broadcast sports, this indicates that audiences are increasingly media fragmented as they consume the game differently via other channels.
Brands have also made big changes in their traditional leverage spend which has been redirected towards digital and apps which are a lot harder to quantify. Generally, fan engagement with brands is down due to these shifts – even though digital engagement is greater, it engages with fewer people due to our local issues of high data costs and access.
Sponsor-wise, there were casualties as well as some gains. SA Rugby sponsors committed a lot to the 2023 Rugby World Cup which then failed to materialise. However, after a winning streak big brands such as MTN, FNB and Land Rover came on board.
We did see that rights holders linked to national sporting codes can have their sponsorship value exposed to risk, buffeted by political turmoil or other drama. Globally, if we look at the 2018 FIFA World Cup Russia and their struggle for sponsors with a tarnished brand, the problem is clearly not a local one.
The cricket world provides an excellent local example, where the winning form of the Proteas enticed Standard Bank to return to a sponsorship platform that served it well in the past. The deal was signed in 2016 and has performed extremely well for the brand in 2017, but the recent failure of the T20 Global event and associated corporate governance issues has to be a concern for all of CSA’s current sponsors.
According to the latest data released from BMI Sport Info, the authority on the South African sport and sponsorship industry, sponsorship spend in 2017 was relatively flat for the second year in a row and we appear to be in a holding pattern.
What does 2018 hold?
The big three – soccer, rugby and cricket – have the footprint to properly tackle rights management and commercialisation. However, privately managed rights holders are sometimes more agile and can move quicker to capitalise on the changing market dynamics.
In some ways, the sports marketing industry has moved ahead of the actual market. As budgets have migrated to digital, it has both positive and negative implications. Data costs are still prohibitive but accessibility is catching up which means the industry is nicely poised to take advantage of huge opportunities.
Opportunities for rights holder in the year ahead
Improve rights management and be innovative
Becoming better organised enables growth and is the key to revenue. Sporting bodies are managing their rights in the same old ways without any improvement. The attitude should be “let’s make more money with sponsors.” Effective rights inventory management, targeted upselling of inventory and real-time monitoring and reporting would radically improve management for both rights holders and sponsors.
This, alongside e-commerce, should be a primary goal for any sporting organisation to effectively monetise their organisation.
E-commerce, e-commerce, e-commerce
SA sporting organisations still don’t see e-commerce as a priority and are lagging behind the global trend. Undeniably, they are missing out. Last year, Adidas recorded a 60% growth in its e-commerce business, leading the company to double its digital targets for 2020.
Locally, there is a perception that pursuing an e-commerce strategy is risky and it is safer to rely on the traditional approach which means there is minimal to zero leveraging of digital properties to drive sales. However, e-commerce is not risky but rather lucrative with the right mechanisms in place to monetise content and backed by a fully-supported e-commerce platform.
Social media driving sales
Most local organisations are not using social media to drive sales despite these networks becoming the new online marketplaces. Adidas delivers an authentic message on its social channels and has truly connected with a highly engaged young audience. ‘Social shoppers’ use their networks as part of their everyday shopping behaviour and images seen inspire purchases. Incorporating a social media strategy into a wider e-commerce plan will enable rights holders to unlock valuable social commerce by converting today’s browsers into tomorrow’s buyers.
Live streaming of events
The emergence of Facebook and Amazon’s appetite for streaming live sports shows the demand for content and sales from big e-commerce players. This broadcast battleground holds profitable monetisable content that is linked to online sales. Rights holders and brands should experiment with different types of content on multiple platforms to capitalise on live streaming as part of their marketing strategy.
Loyalty as part of long-term strategy
The big sporting codes tend to show a lack of loyalty to brands and appear to switch sponsors to suit their current needs. A case in point is with SA Rugby losing BMW as their official vehicle sponsor and subsequently moving over to Land Rover. Facts like these can cause a brand manager to take pause and query what’s the point of having a brand strategy or investing in a sport? Real partnership takes time to develop such as seen with the iconic 36 year history of the Nedbank Golf Challenge or Absa’s successful eleven year relationship with the Cape Epic.
When choosing partners, rights holders and sponsors should consider long-term loyalty that traverses all the ups and downs of a team’s journey. Are rights holders building structures when their teams are not winning? Factors like this must be addressed up-front with brands due to the high costs associated with them looking into investing in properties. Good rights managers form partnerships that build long-term equity for the brand.
Quantifiable measurement of sponsor investment
The measurement of a sponsor’s value in a non-traditional way that is quantifiable and leads to revenue growth is crucial. South Africa’s approach to measuring media and in particular sports broadcasting already sets a global standard. It is not surprising that BMI has been recognised as a world leader in measuring ROI. These learnings have not however been adopted yet in any consistent or verifiable way to encompass the equivalent measurement of other digital and social channels. Given the shifts in activation budgets, this is now a priority if current growth levels hope to be maintained.
Factors like political uncertainty and match-day performance will always play a defining part for both rights holders and sponsors alike. However, there are concrete steps that rights holders can implement today as part of a holistic strategy that will attract and retain sponsors, improve fan engagement and ultimately further commercialise their sports business, driving sales and boosting the ever important bottom line. And they are all measurable.
Sportal offers turnkey digital solutions for sports bodies such as e-commerce platforms, digital and social media to sales tools, as well as strategic consulting services that ensure all assets and rights work together to drive engagement and commercial return for both rights holder and sponsors alike.
BMI Sport Info is South Africa’s first and only independent research company to deal exclusively with the sport and sponsorship market. BMI is at the forefront of sponsorship evaluation research and is recognised as a leader of this science, both locally and internationally.