Flexibility, clear communication and the need to strengthen relationships and partnerships were some of the key take-outs from Nielsen Sports’ first annual ‘Sponsorship Outlook Report’ carried out in South Africa.
This follows research conducted by the local arm of the global player in sports intelligence and measurement. This research involved engaging a healthy sample of senior leaders representing the rights-holder, brand and agency sectors within the South African sports and entertainment sponsorship industry.
“In 2020, with an ever-changing media landscape and the growing impact of social media and digital, and on the heels of a global pandemic, it’s important to have a clear view of the sponsorship industry and its challenges,” says Jean Willers, Managing Director of Nielsen Sports South Africa. “This report provides a snapshot of the sponsorship industry, focusing on current and potential challenges, and the concerns of key stakeholders. The results are revealing, to say the least.”
According to the ‘Sponsorship Outlook Report’, current sponsorship category spend in South Africa is focused approximately 64% on sport and less than 1% on esports/gaming.
Further, the corporate brands polled indicated that close to 60% of their total annual sponsorship spend was allocated to rights fees, with roughly 30% allocated to leveraging/activation, and 4% spent on evaluation and research.
“This means that brands are spending only 50c on leverage against every Rand spent against rights fees, which is significantly lower than we see in most global markets,” says Willers.
Looking ahead, and unsurprisingly, in the wake of the COVID-19 pandemic and resulting impact on spend in the market, those corporate organisations projected an estimated 46% decrease in their investment/spend in sports sponsorships in their next financial year.
“Interestingly, those corporates also pointed to an estimated 62% increase in their investment/spend in esports/gaming sponsorships in the same period, but this is off a very low base” says Willers.
Taking a step back to evaluate sponsorships as a whole and the approach of corporate brands when assessing sponsorships, Nielsen Sport South Africa’s research revealed that the three most important rights elements for these brands are:
- digital and social integration opportunities: 95%
- media coverage (not broadcast opportunities): 89%
- flexibility of benefits throughout the contract: 84%
“Whilst our research shows that brands and rights-holders agree on the importance of digital and social integration opportunities, there does appear to be a disconnect regarding the leveraging of sponsorships and the flexibility of benefits,” says Willers. “Whilst the rights-holders polled clearly place great value on the opportunities to leverage around an event and mass reach (relevance to a broad target market), the brands rate flexibility of benefits throughout the contract as third most important, versus the rights-holder view, which has this element down in 10th position.”
Another interesting takeout was the brand/sponsor view on the factors they regard as ‘most important’ when evaluating/reviewing the performance of their existing sponsorship properties. The results were as follows:
- sales impact
- brand impact metrics
- brand exposure
- direct revenue
- brand advocacy
So, what about the short-term future of sponsorship in South Africa and what is the view of the country’s rights-holders, brands and agencies, as it relates to how long they feel it will take for the sponsorship industry to recover from the impact of COVID-19, once play resumes and venues are re-opened?
Again, the results are revealing, with 48% of the industry indicating they believe it will take longer than 12 months.
It’s clear that uncertainty remains the single biggest challenge facing brands/sponsors, as a direct result of the COVID-19 pandemic. That’s with the sponsorship industry as a whole predicting a time frame of more than a year for the industry to recover, after play resumes and venues re-open.
“With this in mind, it’s clearly critical for rights-holders to address the guaranteed delivery of a flexible set of rights in the interim,” says Willers.
That, however, according to Willers, can only be achieved if there is clear communication between brands and rights-holders, and the partnerships that exist in the South African sponsorship space are strengthened by the recognition that the environment has evolved and the needs of the various parties have changed.
Nielsen Sports South Africa represents all the major players – brands, rights-holders and agencies – in the sponsorship industry and the goal of the first annual ‘Sponsorship Outlook Report’, says Willers, was to drive greater mutual success in the industry by ventilating some of the key issues and strengths, as well as identifying opportunities for improvement.
For a copy of the summary report of Nielsen Sport SA’s ‘Sponsorship Outlook Report’, contact Jean Willers at email@example.com or on 082 49 44 083.