This article was originally published on June 3rd, 2020.
Digital sponsorship spend is both the “greatest area for innovation” and “the most undervalued asset” in the sports marketing space, according to Two Circles chief executive Gareth Balch.
Speaking during SportsPro’s Insider Series, Balch claimed that the sports industry lost out on US$16.7 billion in unrealized sponsorship revenue throughout 2019, largely owed to not knowing how to best monetise user data garnered online.
That figure, he says, represents roughly 28 percent of total brand spend on sports sponsorship last year, which climbed to more than UK£35 billion (US$42.8 billion).
While rights holders continue to navigate widespread cancellations and suspension of events due to the coronavirus pandemic, Balch says the biggest change post-hiatus will center on “what brands choose to buy” and should spur an acceleration in digital content spend.
“Digital is the greatest mis-sold, unsold, undersold, undervalued asset in the sponsorship mix,” Balch said. “Sports properties have been aggregating and growing audiences digitally and building bigger data sets, but not necessarily knowing how to monetize them.
“What sponsorship gives you is an opportunity to monetize data. Of course, regulation now means that’s not an option anymore, but being able to sell the relationship that exists between the fan and the sports organization, and doing that through a digital medium, has never been more current or more valuable.
“So, what we see is an opportunity to come out of this unprecedented crisis – while we’re growing attention yet not monetizing it very well – is an acceleration in the way that sports sponsorship incorporates digital into its otherwise physical packages and a shift in what brands buy and which types of brands buy.”
Overall, total sports sponsorship spend has grown from US$44.3 billion in 2018 to US$46.1 billion in 2019, according to Two Circles’ own data. However, Balch says those revenues – now set to be hit by the fallout from the pandemic – have not been spread evenly across the ecosystem.
“There’s a lot of value being created here,” Balch continued. “However, it is also the biggest missed opportunity in sports sponsorship in the past ten years. Sports sponsorship has been growing over the past ten years, including billions of dollars a year, but it has been growing with the big getting bigger and the medium and smaller properties really struggling.
“This is the untold story. It’s been a really difficult time for anyone other than the big names to find ways to innovate their sponsorship proposition and some of the best innovation has actually been from those who have had to work hardest to find it.”