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Study: US$14bn worth of US sponsorship value impacted by Covid-19

IEG report says sponsorship industry should reinvent itself in wake of pandemic.

12 August 2020 Sam Carp

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  • Sponsorship value gap equivalent to more than 50% of paid rights fees for 2020
  • Report calls for rights holders to abandon one-size-fits-all or tiered sponsorship packages

As much as US$14 billion in sponsorship value needs to be made up in the US following the suspension of live sports and entertainment events, according to IEG, which said the figure equates to over 50 per cent of paid rights fees for this year.

The forecast marks a US$4 billion increase on a mid-April estimate made by the Chicago-based sponsorship consultancy due to the extended period of event cancellations and ongoing uncertainties around the second half of 2020. 

The new report, titled Resumption vs Reinvention: The Sponsorship Industry Comeback from the Covid-19 Crisis, argues that it would be a mistake for the sponsorship industry to go back to business as it was before the coronavirus pandemic, even with live events getting back underway.

‘This crisis can serve as a catalyst for much needed change in the way partnerships are decided upon, built and executed,’ the report states. ‘The comeback can be greater than the setback, but it will take reinvention with creativity, courage and patience.’

The report, which was put together in collaboration with Engine Shop, suggests that the sponsorship industry reinvents itself with new rules of engagement and value metrics that are ‘mutually relevant’ to rights holders and sponsors. 

It puts forward three rules of sponsorship acquisition and execution that should be adopted in the wake of Covid-19. The first is collaboration between properties and brands to identify the asset mix that best aligns with the sponsor’s objectives, rather than one-size-fits-all or tiered packages.

Secondly, the study says partnerships should be built around fanbase access and brand equity in order to help add character, reinforce brand attributes and make the sponsor memorable.

Finally, IEG advises that properties provide assistance to help brands leverage their marketing budgets to allocate adequate money towards activation and engagement opportunities.

The report claims that the adoption of these rules will create a ‘new value narrative’ where properties and brands are less concerned about the performance, tracking and accounting of traditional assets. 

Commenting on the report, Peter Laatz, IEG’s global managing director, said that “a massive sea change” needs to take place around how sponsorship is bought, sold, valued and executed.

Laatz continued: “The gradual, limited comeback of live events is an important step; however, resumption alone is not enough. Reconciliation and reinvention will be essential to achieve sponsorship industry recovery.”

Brian Gordon, chief executive at Engine Shop, added: “Brands can have a more authentic role in the triangular relationship between fan, property and brand through a thematic partnership because most often, the platform is created by the brand and gives the community a way to more deeply engage with the property they love.”

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