Why has data availability changed the sponsorship industry, what exactly encompasses the ecosystem of esports and why is involvement of early adopter non-endemic brands in sponsorship so important? We talked about 'why' and 'how' to Malph Minns, former Head of Commercial Partnerships at Team Sky and founder of Strive Sponsorship, which specializes in sport, music, esports and film partnerships.
SPORTO: When referring to data and digital, Matt Rogan, CEO at Two Circles, said at SPORTO 2016: “The world has changed. And it’s not coming back.” How do you comment the digital transformation, driven by data insight, and where do you see the biggest changes in the sports industry and its landscape in the recent years?
The huge impact the digital revolution has had, and will continue to have, is without a question. The availability of data to both analyse past and predict future consumer behaviour is only going to become more sophisticated and available to marketers to inform and evaluate decision-making. What is the key right now, though, is not just the ability to physically collect the data, but the expertise to analyse and interpret it as part of the decision-making process. Every day I see a huge disparity between data availability, and marketing and sponsorship professionals’ ability to do anything with it. Generally speaking, traditional sponsorship professionals’ exposure to, and therefore understanding of, research and data seems to be way behind that of their broader marketing colleagues – and even they are struggling. Those with an FMCG background seem to be the most data-savvy, but there is a lot people need to do to advance their understanding of what data is important, and how they can use the tools and technologies now available to them to make better decisions.
Availability of data brought a shift to the world of sponsorship as well …
Whereas sponsorship impact was once accused of not being measurable, and indeed few practitioners were held to account on their spend, prompting a lot of emotionally, rather than rationally, driven sponsorship deals, the availability of data has brought with it an expectation that return on investment could and should be measured and reported. With the convergence of channels, and internal competition for spend within brands across advertising, PR, events, digital, sponsorship and other fields, sponsorship managers are having to do more to show the value of their decisions. The greater need for financial transparency from shareholders and the public at large has also driven this requirement to be more data savvy and has been one of the biggest shifts in sponsorship I have seen in the last five or so years.
The use of technology has increased fan engagement opportunities and also has influence on sport itself. Could we say that technology companies transformed part of the sponsorship industry as well?
Sports has always been very focused on technology from a point of view of how it can enhance performance and viewing. A lot of what fans want to know, especially in the early stages of a sport that is commercializing, is how they can improve their own performance when participating in it. This is because usually the first fans are participants first and fans second, and not just consumers of an entertainment product. However, even non-participants can be fascinated by the science of the sport and the technology and techniques used in operating at the highest levels. A lot of technology now is digital technology, and is not exclusive to elite athletes only. It’s affordable for the amateur athlete and so this information becomes far more engaging as you cannot just track and compare your own performance to those of the best in the world, but you apply their techniques to improve. This deepens engagement and therefore this kind of information has the ability to tell powerful stories, add value to fans’ love of their passions and create strong engagement opportunities for brands. But using a new technology, for new technologies sake, is not good enough. It still needs to have relevance and add value or solve a problem for the fan for engagement to properly resonate.
"Barcelona looks at what other football teams do, but benchmarks itself against Disney, whom they deem the best entertainment brand in the world. A lot of the assets are the same; Disney has Disney World, Barcelona has Camp Nou; Disney has Mickey Mouse, Barcelona has Lionel Messi. Barcelona also has multiple products and as such, an esports team wouldn’t be a surprise."
Esports has been on the rise in the recent years. If we start with the basics: esports is constantly being compared to traditional sports. What’s in the name? Is ‘esports’ the right phrase for computer competitive gaming or is it, in a way, ’using’ the power of sport – as the most passionate thing we can be involved in – for its positioning?
Whether esports is the right name is largely immaterial. If people are making judgments one way or another on the basis of the name ‘esports’ and its relationship to sports, I think there are bigger issues to be worried about. This debate is old news for many, and it’s happening in territories where esports is at an even earlier stage than it is in most of Europe or outside of the sports and gaming communities. The only challenge with the name at the moment is people’s immediate understanding that esports means competitive gaming, and not digital integration with existing sports. However, these misunderstandings are becoming fewer as esports starts to break out of its core audience and into the mainstream.
Esports has digital native environment in its DNA. It’s about digital participation; millennials consume content in new ways ... Many different streaming platforms are being used, such as Twitch, YouTube Gaming channel, also Facebook and Twitter. Where do you see the main opportunities and traps in the esports industry?
Esports maturity, be that from the participation, the entertainment product or as a commercial platform, is different by region. Asia and North America are well ahead of Europe in pretty much all aspects. If I were to look through the lens of the UK, for example, the market I’m most familiar with, the opportunities for esports as an industry include change of the perception and prejudices overcoming, whilst improving the quality and sustainability of the industry through greater outside expertise and investment. On the other side, the main danger is aggregation. As the cost of operating and competition increases, fewer businesses will be able to afford to compete and only the biggest and best-resourced will survive.
The mentioned online streaming platforms have the chance to be a commercial rights holder, not just a broadcaster, and to broaden revenue streams (e.g. Twitch selling games and, through Amazon, also developing them).
What about brands and traditional sports rights holders?
Brands also have the chance to be commercial rights holders, add significant value to fans experiencing esports in a relatively uncluttered environment and to engage with the so-called millennial audience when they are hard to reach via more traditional channels. About the traps: increase in the cost of operating as professionalization of teams and event organisers, for example, require more expensive resources. In addition, players, and therefore teams, will expect a bigger share of income.
“The only challenge with the name esports at the moment is people’s immediate understanding that esports means competitive gaming, and not digital integration with existing sports.”
Existing sports rights holders can extend current match days (core offerings), appeal to new audiences they don’t currently engage with (and monetise these) and learn how to better digitally engage their core audiences by taking learnings from esports, while a threat is an increase of the cost of operating. As an agency, we are in ongoing discussions with traditional rights holders about the opportunity gaming and esports could potentially offer them, and not just from sport teams, but leagues and global governing bodies, too. Indeed you only have to look at FIFA’s latest strategy document to see they are looking at the role esports could play, and UEFA currently have an request for proposal out for games publishers to license their brands for esports purposes.
At the IEG Conference 2017 in Chicago, one of the main messages was that nowadays, everyone is media and everyone is content. Esports is an example of blurring the traditional broadcasting model … Could traditional sports perhaps learn something from it?
This is an interesting question. Most people ask about what esports can learn from sport, and they are right to do so. But flipping this question certainly has relevance. I would say that some of the key things sport could learn from esports are the following: the appetite from its professional community to constantly learn and innovate and try new things; the way how to properly build and nurture an online community/fanbase; the identification of potential new revenue streams (e.g. donations and micropayments) and the use of non-traditional digital platforms where fanbases could potentially be attracted and nurtured (e.g. Twitch and Reddit, not just Facebook, Twitter, Snapchat and Instagram).
Philadelphia 76ers acquired two esports teams, PSG created its own esports franchise … Are those steps just another evidence that leading sports properties are entertainment brands and reaching new audiences is the main driver?
There is certainly a realization by a number of sports teams that they aren’t just competing against other teams in the same sport, nor just teams in other sports, but actually other peoples’ passions altogether, be that film, music, fashion, the arts, gaming etc. for their attention. As such, they have to think differently to build relevance to not only more deeply engage and retain their current fan base, but to attract new fans. Indeed, some of these teams are now considering themselves entertainment brands, as you say, stretching the brand to build wider relevance. However, this only works if the stretch is credible and the core fan base, and what the brand represents to them, is paramount when making these sorts of decisions. This isn’t a new concept. Barcelona has considered themselves an entertainment brand for a number of years. They look at what other football teams do, but benchmark themselves against Disney, whom they deem the best entertainment brand in the world. A lot of the assets are the same; Disney has Disney World/Land, Barcelona has Camp Nou; Disney has Mickey Mouse, Barcelona has Lionel Messi. Barcelona also has multiple products, in that they have a team in basketball, football, handball, futsal and roller hockey. As such, an esports team wouldn’t be a surprise.
"Sports has always been very focused on technology from a point of view of how it can enhance performance and viewing. A lot of what fans want to know, especially in the early stages of a sport that is commercializing, is how they can improve their own performance when participating in it."
In terms of PSG, Schalke 04, Philadelphia 76ers etc., I would suggest that this is the model they’re adopting. At Strive Sponsorship we identified six different commercial models used by traditional sports rights holders in esports to date. We have defined these as: ‘Sign a player’
i.e. sign a FIFA 17 esports player (West Ham Utd, Manchester City …); ‘Strategic partnership’
i.e. a traditional sports team partners with an esports team (AS Roma and Fnatic); ‘The Barcelona Model’
i.e. defining yourself as an entertainment brand (PSG, Schalke, Philadelphia 76ers ...); ‘The Collective’
i.e. owning an esports team and a commercial stake in the league that the team plays in (The French and Dutch Football League’s creation of e-LIGUE 1 and e-Divisie); ‘Integrated’
i.e. integrating the core traditional sport, or talent from it, with that of esports (Formula E and the Visa Vegas eRace) and ‘Pure content’
i.e. get an esports player or gaming vlogger to create content around esports/traditional sport. There are no current live examples of this, but some teams we know have been considering it. There are various benefits and drawbacks of each and the suitability of each model really depends on the objectives of each rights holder.
Red Bull was one of the brands that embraced esports and added them to their portfolio of content. How do you see the importance of early adopter brands in general?
Early adopter, non-endemic brands are key to emerging sports and rights holders for a number of different reasons. To begin with, they do a lot of the hard work around understanding the audience and ecosystem and identifying the types of value brands can offer to engage fans with. They also do a lot of the storytelling that helps educate other brands. Endemic brands know which audience is their target audience, and so tend to activate less and also not in a way that grows the profile of the sport/rights holder beyond the existing engaged audience. Non-endemic brands’ involvement also increases the profile and enhances perception of the sport/rights holder on the basis of the reach and size of the brand itself and the channels and budgets available to it to activate. The involvement of early adopter non-endemic brands also usually helps gain the trust of the core fan base that they aren’t just going to interrupt their passions, but add value to them. Obviously, this is dependent on the brands approaching things correctly. Whilst outside investment is welcomed to sports, and properties, where money is scarce, there is always a nervousness that money means that there will be changes to the things that they love. Non-endemic early adopter brands also help upskill sports and rights holders. Their level of sophistication of approach can both be learnt from and also increases the expectations of what the rights holder needs to deliver and facilitate in return for investment.
Brands talk a lot about being innovative, but few actually are in the world of sponsorship. In esports, Coke and Red Bull have been the innovative non-endemics who were first to market and have led in helping grow the scene. Their involvement, investment and ongoing support give other non-endemic brands the confidence to invest in time, too. The first questions we are usually asked by non-endemic brands looking to invest in esports are ‘what other brands are involved?’, ‘what are they doing? and ‘who is doing it well and what examples can you show me?’. This was no different to cycling in the UK 10 years ago.
This text was first published in the SPORTO Magazine No. 9 (May 2017).
In the 2nd part of the interview you could read about Malph Minns's experience and insights from his years as the Head of the Commercial Partnerships at Team Sky, and his views on the marketing potential of cycling and opportunities for sponsors in niche sports.