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The sports industry derives most of its revenue not from ticket sales but from media rights and advertising: capturing and then selling the attention of a highly engaged audience to sponsors. The sports-sponsorship market is expected to grow from $63.1 billion in 2021 to $109.1 billion by 2030 as a host of new sponsors — such as sports betting and streaming giants — buy in. However, in exchange for their sizable investment, those technology-driven companies expect teams to be able to prove that they can get a meaningful return.
That means franchises should seek new opportunities to better track and optimize fan data. Traditional metrics, such as ad reach or audience demographics, won’t suffice. Rather, investors want specifics. Did their messaging affect the behavior of certain fans? If so, exactly how did it happen? Teams should be able to characterize each impression an advertisement makes: When and in what context did it occur and for whom did it resonate? The more granular the fan data and the better teams understand fan preferences, the more valuable it will be for sponsors and business partners.
Inventory expands exponentially
While old-school analog real estate showcasing sponsor logos is still a lucrative commodity — the NHL added more than $100 million in net-new revenue by adding a sponsorship patch to its jerseys — the digital landscape opens more opportunities than ever before. With nonfungible tokens (NFTs), emerging metaverse technologies, loyalty programs, social media, email newsletters, podcasts, and augmented reality at stadiums and arenas, sponsorship opportunities are limited only by the imagination and creativity of marketing and sales teams.
Digitally engaging fans also helps create more experiences that companies can sponsor. Teams can now customize and monetize virtual on-field pregame events or access to the locker room.
Data tracking and optimization can demonstrate value
So what’s the real value of all these new sponsorship opportunities? Teams will have to be ready to make that case with concrete data or suffer the potential financial consequences. Take the cautionary tale of Spotify’s sponsorship negotiation with FC Barcelona for naming rights to the team’s stadium, jerseys and other assets. According to the Irish Times, Spotify requested access to Barca’s fan database. Though the team boasts some 350 million fans, the audio-streaming giant discovered that only about 1% of them had registered their personal information with the club, greatly limiting its ability to tailor marketing to the other 99%. Spotify agreed to a €280 million deal, a significantly lower fee than they were willing to pay if the club had more detailed customer data.
The good news is that teams have all sorts of emerging technologies at their disposal to seamlessly track and analyze fan engagement with sponsors. Leveraging cloud data, IoT devices, loyalty and rewards programs, and basic personal information, sports organizations can combine their unique insights with other datasets — for example, viewing and online-purchase data, search history, and social media profiles — to build a detailed picture of how their audiences interact with particular products and marketing strategies.
To achieve this without running afoul of privacy laws, teams on the leading edge of consumer marketing have engaged the services of third-party clean rooms that collect customer data from multiple sources, analyze it and return de-identified results that demonstrate how patrons responded to advertising in the days and weeks after seeing it and what other qualities they have in common. For relatively expensive goods and services, such as cars or insurance, clean-room data can enable sponsors to target promotions to broad demographic groups that may be more likely to be considering such a purchase. In this way, the sharing of customer data between teams and sponsors can be a boon to fans as well, because they will receive more personalized offers and less irrelevant marketing messages from their favorite teams. Conveying the value proposition to fans will be key, since consent is required to collect and use their data to create these opportunities.
How to capitalize on sponsorship metrics
To prepare for a world in which sponsors expect to be able to evaluate their investments with outcome-based metrics, teams should do two things.
- Maintain easily accessible and consistent records for their fans, including identifiers (such as phone numbers) that can be compared with other companies’ records. The more detailed a team’s fan records are, the more valuable they can be when compared to those of a business partner, so investments in powerful customer relationship management software and other technologies could prove extremely valuable beyond their traditional use cases.
- Proactively explore relationships with clean rooms and other sources of robust anonymized data as well as data append services.
Most organizations believe their records are well-organized, but a closer look often reveals incomplete fields, missing or redundant data and other challenges that make it difficult or impossible to share data at a meaningful scale. Most of the big sponsors already have complex customer-tracking systems and are ready to ingest and compare whatever data a team can provide them. When teams are able to lead these conversations, they can drive additional value from their business partnerships and provide a better overall experience for fans.
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