Social media and sports sponsorship: a legal perspective

Social media has created a wealth of opportunities for sponsors in sport but with new rights and new timelines emerging, it has also created its share of legal challenges.

Social media and sports sponsorship: a legal perspective

The utilisation of technology and in particular social media by brands to target consumers is not a new topic. What is new is the way in which brands are getting smarter and more innovative in how they use tech and data to target consumers in their sponsorship activation.

Where previously the rights offered by rights holders were linear, predictable and largely tangible in nature we are now fully immersed in the world of ‘influencers’, ‘brandter’ (inter-brand banter) and measurable impressions. Rather than passively engaging with consumers through traditional methods like shirt sponsorship and product placement, brands need to be agile, dynamic and innovative.

The job of a modern day marketer is an evolving minefield. Negotiating fair terms which incorporate social media is complex. The following are some of the issues currently pre-occupying our clients.

Improved data = shorter-term contracts?

A team’s lucky striker will likely have more Instagram followers than the team itself but which will more effectively inspire customers to purchase your products or services?

Brands now have access to verifiable data clarifying the impact of their ads. Social media enables impressions and click-through purchases to be counted, used to inform real-time campaign optimisation and be referenced in annual reports.

Knowing your audience and understanding who that audience is listening to has always been key to a brand’s strategy – while this remains the case, this new verifiable data takes the guesswork out of the equation.

Brands have started demanding shorter-term contracts enabling them to collate data and extend only the more successful sponsorship arrangements. One-off engagements relating to a specific campaign or event – or even a single tweet – are also increasingly common.  In a world where an individual’s popularity fluctuates as often as the wind changes, this trend seems likely to continue.

More flexibility, less control = greater impact

In traditional sponsorship arrangements, brands have required approval rights over any content disseminated by any means. As the world becomes increasingly fast-paced and responsive, advertising must keep up. Requiring approval rights over every tweet or Instagram post could seriously reduce the impact of that post.

We are seeing more agile frameworks in sponsorship arrangements that allow for reactive posts and constant engagements rather than the traditional prescribed rights and obligations of each party. Due diligence on potential partners is more crucial than ever.

Striking a balance between maintaining the reactive appeal of social media and the protection of the brand is complex. One way for brands to manage this is to set out clear parameters in terms of what is acceptable without approval and what is an absolute no-go.

Staying on the right side of the regulator

Social media sponsored advertising has been a hot topic for the advertising regulator in recent years. Consumers are also becoming more aware of the restrictions put on brands and will report those who fall foul of those obligations.

As a reminder, if an individual or entity has been paid – by money or otherwise – to post content on social media about a brand, and the brand has any control whatsoever over the content of the post, it must be clear that the post is an ad. Remember to make the disclosure early and make it clear including ‘#ad’ is always a good idea.

Exclusivity – what about new technologies?

The extent of exclusivity will always be a hot topic for negotiation in a sponsorship arrangement. As new modes of advertising are created a new topic in the exclusivity discussion has emerged: to what extent will a brand have exclusivity over new technologies and platforms?

Clarity in the contract is essential. Stating that a brand has exclusivity in social media will be insufficient if the latest platform is not classed as social media. Increasingly we are seeing rights of first refusal in sponsorship arrangements that cover new technologies. Whether or not this right will involve additional sponsorship fees is open for debate but this allows both parties a degree of flexibility which is a necessity in this ever-changing landscape.

Reputation management – can your social media history every truly be erased?

Incorporating morality and reputation clauses in sponsorship contracts is nothing new but many brands are becoming increasingly concerned about engaging individuals to promote their brand on social media. The reactive nature of social media means that brands often have less control over content but, in addition, terminating a sponsorship deal doesn’t necessarily give brands the instant separation that they are looking for.

Historic social media posts will exist until they are deleted. Including a ‘cleansing’ clause in your sponsorship deal which can be activated if the arrangement is terminated for certain reasons might give some comfort here.

Social ,edia has transformed the sponsorship scene. Contracts for a single tweet from a pre-eminent individual are heavily negotiated. Where rights and obligations have previously been meticulously described and the parameters clearly set out, we are moving to a contractual standard that is agile, responsive and principles based. Brands are increasingly giving up control – something that the boardroom will undoubtedly struggle with. But it’s worth it – one tweet is worth 1,000 branded shirts.

Caroline Swain is an associate at Charles Russell Speechlys, and advises clients on a range of commercial contracts including software licensing, events and sponsorship agreements, terms of sale, digital and social media agreements and marketing contracts. She also has experience advising on consumer law, data protection, e-commerce and sales/advertising.

Caroline has worked with clients across a broad range of sectors including retail and leisure, TMT, charities, and sport. She regularly acts for both large multinational corporations, and innovative startups and charities.