MKTG Insights: Our Favorite Things of 2014 - Deals
2014 was a landmark year for sponsorship marketers. Globally, large-scale games like the Sochi Winter Olympics and the FIFA World Cup contributed to record investment and brand activity. Here at home, Canadian sponsors continue to raise the bar through greater sophistication and creative programming. 2014 taught us that while the health of our industry is strong, the landscape is becoming increasingly competitive and complex. Rights fees are rising, technology is enabling brands to push the envelope on activations and more than ever before sponsors are being casted as the moral arbiter in moments of scandal, facing pressure to leverage their financial influence into action. As the year draws to a close, MKTG will be using our weekly Friday Insights blog to provide analysis on the year that was in sponsorship. We will be writing a variety of Year in Review columns that showcase our favorite things in sponsorship from 2014. We hope that you not only find these collections informative and educational but that you engage with us. Was there something we missed? Disagree with one of our picks. Let us know by emailing us email@example.com or tweeting us @SESponsorship!
Last week, MKTG presented our favourite sponsorship activations from the last year. The third installment of our "Favorite Things" blog series will look at our favorite deals from 2014.
Before consumers can interact with an innovative sponsorship activation or before a property can reap the benefits of a partner's investment, dealmakers must come together in the spirit of partnership. It is at the boardroom table where the seeds of sponsorship success are truly planted. There is no silver bullet indicator for a successful "deal" in sponsorship marketing. Rather, a variety of factors help determine whether or not a partnership will ultimately drive success for a corporate sponsor: Does it meet the objectives of the brand? Is the investment size representative of fair market value? Are there innovative elements of the deal such as unique inventory or a compelling activation narrative? Without being subject to the financial details of most partnerships, our rankings for 2014 Deals of the Year are a measure of thepartnerships that stopped the sponsorship industry in its tracks; notable deals for either their size, uniqueness, or strategic benefits.
1. Daily Fantasy Sports Websites In Arms Race for Sponsorship Deals
2014 saw the rapid rise in relevance for a new sponsorship category: daily fantasy sports websites. FanDuel and DraftKings entered a number of partnerships over the past year to become the official fantasy game associated with key properties. In addition to a number of team deals signed by both brands across the 4 major North American sports leagues, most organizations entered league deals as well. DraftKings entered a sponsorship agreement with the NHL, while competitor FanDuel has signed a deal with the NBA to become the league’s official daily fantasy sports game. Research shows that participation in fantasy sports significantly increases time spent consuming live content, driving value for both properties who want to improve the fan experience and sponsors looking to engage with an authentic audience. The difference between daily fantasy games like those hosted on FanDuel and DraftKings andtraditional fantasy games like those hosted on Yahoo! and ESPN is the fact that players can actually wage and earn money on daily platforms and do not need to commit to an entire season of play. Deals in this category peaked the interest of those in the sports business community for being a signal of changing attitudes within sports leagues in regards to the taboo of betting.
2. Reebok Becomes First Official Apparel Sponsor for UFC
Reebok's sponsorship of the UFC completely shifted the MMA sponsorship landscape. In December 2014, the UFC announced that an official uniform supplier was coming to the organization, as Reebok signed on to outfit the organization’s roster of athletes as part of a 6-year sponsorship agreement. The deal was the largest marketing partnership in UFC history and will bring branding cohesion inside the Octagon. As the UFC continues to work towards legitimizing its brand in the mainstream, a singular uniform sponsor and consistent fighter appearance will help them join the likes of other major sports leagues. UFC President Dana White has announced that the revenue generated from the Reebok partnership will be entirely paid out to the fighters via a tiered-ranking scale; an offset to the fact that they will no longer be able to display their own individual sponsorship deals from specialized MMA apparel brands inside the Octagon (a mainstay in the UFC and historically an important source of income for many fighters). The payout structure is a key element of the deal to watch for in 2015: some believe it will benefit the elite and restrict newer fighters from on their earning potential. Conversely, the deal brings stability in the category and incentivizes performance. For Reebok, the partnership is aligned to their overall brand promise of providing “tough fitness” experiences to hardcore athletes, most evidenced by their investment in CrossFit.
3. Microsoft Gains Rare Sideline Integration in Landmark NFL Deal
While Microsoft reached their 5-year, $400-million sponsorship deal with the National Football League in the Fall of 2013, the agreement went through an interesting evolution in the 2014 season and was brought to life in new and engaging ways. In a league that has the least amount of on-field signage and the overall cleanest playing surface of the "Big 4" sports leagues (previously sponsor presence was restricted to Gatorade cups and coaching headset sponsors), Microsoft has successfully integrated their tablet product, Microsoft Surface, onto NFL sidelines. Players and coaches can regularly be seen reviewing film of previous possessions while on the sideline. The sponsorship is not only a brand-building opportunity for Microsoft but an opportunity to showcase their thought-leadership in tablet technology through influencer adoption. The partnership also presented opportunities for Microsoft to create unique NFL content and interactive experiences through their XBOX ONE game console. The deal has given XBOX users the ability to stream NFL games on their console, receive live fantasy league scoring updates in real-time, and leverage Microsoft technologies such as Skype into the viewing experience. The deal has helped to position the XBOX ONE as more of an all-in-one entertainment experience than a traditional gaming console, a clear differentiator within the next-gen console category.
4. Adidas Becomes Apparel Maker for Manchester United in Record-Setting Deal
For its sheer size and magnitude, Adidas' deal to become the uniform supplier for Manchester United, the world's third most valuable soccer franchise, belongs on any list of sponsorship deals of the year. The partnership is the most lucrative uniform deal in sports history. According to Forbes, "Adidas will pay $1.3 billion over 10 years to United, or $130 million a year, beginning with the 2015-16 season." The agreement eclipsed the previous record for a kit deal which was held by Arsenal and Puma and worth approximately $50 million per year. Some reports have suggested that Adidas will play three times the value of the expiring Nike/United deal. For apparel brands, there is no greater statement of on-field authenticity than to have the top athletes in the world sport their products. Adidas has built a global soccer platform through a large portfolio of sponsorships and a Tier-1 property like Manchester United provides the brand with added credibility as a soccer authority.
5. Country of Azerbaijan Becomes Jersey Sponsor of Athletico Madrid
In one of the more unique sponsorship deals of 2014, "Country" became the category. Oil-rich eastern European country Azerbaijan became the kit sponsor for Athletico Madrid, a Champions League finalist and one of the top soccer teams in Europe. The sponsorship was aimed at boosting awareness of Azerbaijan as a tourist destination and promote relations and trade with Spain, where Athletico plays. The country is trying to project a renewed image of itself on the world stage and is leveraging sponsorship to do so. The deal also included a wider strategic agreement that included Athletico Madrid playing games in Azerbaijan and a plan to train young players in the country. The global appeal of soccer means that for club teams, the sponsorship sales territory is truly global – in this instance, literally manifesting in a foreign country becoming a sponsor.
6. AirBnb Leverages Sponsorship of the NYC Marathon to Counter State Legislators
This past July, in the midst of a regulatory battle with New York State legislators, AirBnb became the official hospitality sponsor of the New York City Marathon. New York’s powerful hotel lobby, the Hotel Trades Council, spoke out against the partnership and expressed disappointment that marathon organizers had taken on Airbnb as a sponsor, due to the perception that Airbnb's presence in New York City was hurting the financial success of traditional hotels. The deal was notable for the fact that the property demonstrated the prioritization of consumer needs/interests over industry trade groups and government officials. Despite pushback from critics, it is clear that marathon participants valued the brand's alignment with the marathon: in 2013, “more than 10,000 visitors used Airbnb to live like a New Yorker during marathon weekend and 25% of [its] listings were within walking distance of the course.” The average price of a listing on Airbnb during the marathon is approximately $300 cheaper than the average hotel price during the same period, and will give runners the opportunity to experience the city in an authentic fashion. The way in which AirBnb leveraged sponsorship, both as a mechanism to introduce their brand to new markets and as a counterbalance to a regulatory struggle, rendered it deserving of "Deals of the Year" recognition.
7. Cross-Pollination of Sport and Cause Prevalent in Adidas/ Movember Partnership
The apparel giant joined the mustache movement in 2014 to help “change the face of men’s health”. After years of organic participation amongst Adidas employees in Movember fundraising, the brand became an Official Partner of the Foundation. For Movember, brand partnerships represent an effective way to raise awareness and increased funds. Adidas activated their partnership with an online microsite dedicated to selling Movember-themed athletic merchandise, including product tailored to key geographic markets, with a portion of proceeds being directed to the charity. The brand also leveraged its roster of sponsored NFL athletes to promote co-branded merchandise (Robert Griffin III, Von Miller, Sammy Watkins, Vincent Jackson, and Mark Ingram). These types of cross-pollination efforts between a sponsor’s sports portfolio and cause portfolio are becoming increasingly common across the sponsorship landscape in an age where consumers expect brands to display authentic corporate citizenship. Movember has emerged as a best-practice example of how not-for-profits can focus on brand building in a way that triggers voluntary participation and sponsor interest.
8. Nationwide Enters Creative Endorsement Agreement with Peyton Manning
While the notion of a corporate sponsor partnering with a retired athlete can provide generic strategic benefit across all brand categories, in specific instances, the retired status of the athlete can be emphasized as part of the marketing narrative and aligned to the business objectives of the sponsor. It is in this vein that Nationwide Insurance’s partnership with the Denver Broncos and Peyton Manning can be considered best practice. In 2014, Nationwide signed Manning, one of the NFL’s most marketable athletes, to a 5-year deal, despite the fact that his career will likely be over in 1-2 seasons. In retirement, Manning will be used to promote Nationwide’s suite of retirement products and appear in creative designed to make people feel better about the transition into retirement. One of the fundamental pillars of Nationwide’s brand promise is to help clients plan for retirement in a way that protects themselves and their families. Manning, who between endorsement deals and charity work has prepared himself well for life after football, is an authentic spokesperson for the role. Brands are often reactionary in their endorsement activity: “what should we do now that a player is traded/hurt/suspended/retired/ridiculed”. Nationwide’s proactive strategic approach to how they will activate Manning will only yield greater value and bake in a layer of authenticity to the partnership.