How Challenger Brands Can Thrive with Sports Sponsorships

Jan 27, 2022 Sponsorship Innovation

The world of sports sponsorships is an increasingly competitive one. Small and midsized companies, also known as challenger brands, are competing with larger brands when it comes to this type of marketing. Being smaller has its advantages: flexibility, nimbleness, agility. These challenger brands are getting aggressive in the world of sports sponsorships precisely because they recognize that larger organizations can't keep up. Moving quickly and trying new things is where challenger brands can shine in the face of better-funded, better-known competitors.

But being a small or midsize player in the world of sports sponsorships also has some challenges. Namely, every invested dollar is precious. Justifying return on investment offers very little margin for error. A small or midsize brand sponsoring a local team rarely has the budget to waste. A marketing opportunity outside of sports does not always have to be better. Sometimes, the mere ability to understand the return on investment of alternative marketing tactics, like a pay-per-click or broadcast advertising campaign, is all it takes to close the door on sports sponsorships for good. 

This piece will detail how challenger brands can thrive with sports sponsorships. It outlines five key challenges to address and offers strategic and tactical solutions. Sports sponsorships can be fruitful for even the most budget-conscious brands. Success means addressing the challenges below with the right tactics and ideas.

Challenger Brands and Sports Sponsorships

Today, more and more midsized companies are beginning to add sports sponsorships to their marketing mix. One example of a challenger brand making a successful foray into sports happened in the English Premier League in 2012. Newcastle United Football Club announced that the club had partnered with the payday loan company, Wonga.

Wonga is not a traditional sponsor of football clubs. The company wanted to increase awareness and drive loan applications in the UK. The partnership was particularly beneficial for Wonga as they were able to use the club’s crest and name in their marketing efforts. Wonga was also featured on LED boards at the stadium and on the back of players’ shirts.

While Wonga eventually faced business difficulty in 2018, it is hard to argue that the sponsorship was not a success. The company was able to leverage an association with Newcastle United in all 32 countries in which it operated. This opened doors to new customers the world over due to the popularity of English Premier League football.

More recently, sports drink company BioSteel became the official sports drink of the Los Angeles Lakers.  In concert with BioSteel sponsorship of well-known athletes in other sports like Chiefs quarterback Patrick Mahomes, the Canadian beverage company was able to take market share from a larger, better-funded competitor.  How? By leveraging high-value and highly-targeted sports sponsorship opportunities to gain an audience with a competitor’s most loyal customers.

Benefits of Sports Sponsorships

Sports sponsorships can provide challenger brands with many benefits. These include perception and association, national (or even international) exposure, activation and promotion of key messages, connective marketing opportunities, and increased media coverage.

Perception and Association

Challenger Brands can enjoy the exposure and awareness that sports sponsorships bring. When Newcastle United announced their partnership with Wonga, the share price of the payday lender increased by around 33%.

Targeted Exposure

Sports sponsorships are a great way for challenger brands to target specific audiences, whether it be at a regional, national or even international level. Wonga promoted the Newcastle deal across all 32 countries where Wonga operated.

Activation and Promotion of Key Messages

Sports sponsorships are a visible way for smaller companies to amplify their marketing efforts. Sponsorships allow them to activate their own marketing messaging through the club or athlete’s social channels, website, billboards, LED boards, etc.

Connective Marketing Opportunities

One challenge often faced by brands is identifying where and how to connect with their target audiences. Sports sponsorships provide opportunities to engage with potential customers in the stadium, on TV, and via social media, depending on the partnership activation.

Media Coverage

When sports teams and athletes are featured during games or training sessions on social media outlets and sports publications, there is a great chance that sponsors will appear next to the action. This can lead to increased awareness and brand association. Photos and videos may go viral online and on social media and provide opportunities to be featured on television.

Key Challenges By Emerging Brands

Sponsorships can help smaller companies increase brand awareness. The association with prominent teams or athletes can be fruitful. At the same time, there are some challenges that challenger brands need to consider before embarking on such an initiative.

Lack of Knowledge to be Effective

Measuring the effectiveness of sports sponsorships can be complicated. For example, an online banner's effectiveness can be measured by click-thrus or direct conversions.  A brand logo on display at the check-in table for the Boston Celtics is a little harder to manage. As a result, many marketers new to sports sponsorships are challenged to know what to measure and how to measure it.

Complicating matters is that brands new to sports sponsorships rely on information shared by partners or those trying to sell them sponsorship. Absent their own sources of data, it is easy for a brand to invest in the wrong sponsorship simply because they did not know how to locate and qualify a different, and better, option. With their own data set, a brand can evaluate how potential partners can help them reach their target audience, what assets are driving the most brand visibility, and more.

Data Challenges with Partners Including Accuracy and Timeliness

Many of the challenges marketers face in sports sponsorships, including those listed above, can be addressed with data. Information around placement, impressions, and visibility is just the start. Deep data sets exist for sports sponsorships.

The challenge is that many teams or data partners do not provide data that is sponsor-centric. That is to say that many data sets are incomplete, untimely, or focused on metrics that are more valuable to one party than another.

Challenges in Measuring ROI

Justifying return on investment for sports sponsorships can be difficult. This is because of their intangible nature. To that end, benchmarking against other activities can be key. Tracking key metrics like exposures, impressions, follower growth, and overall engagement against PR and social media initiatives can help in identifying the lift sports sponsorships provide.

Internal Pressure to Show Return on Investment

Part of the appeal of sports sponsorships is that they give brands a chance to engage a highly captive audience, with the ability to stay connected to devout sports fans all year-'round. The problem is that it can be difficult to justify the ROI for such expenditures. The nature of sports sponsorships makes agreement on the impact elusive for many sponsors and teams. Because more traditional marketing avenues are more prevalent, sports sponsorship is often seen by leadership as a black box. Failing to justify the return on investment in short order may lead to fewer (or no) dollars for sports sponsorships in the future.

Competing for Share of Voice with Better Funded Brands

An in-stadium sports sponsorship can pay huge dividends for even the smallest brand. At the same time, a small banner on the left-field wall at Yankee Stadium won't mean much if a larger corporate sponsor has signage, logos, and banners blanketing the rest of the stadium, as well as sponsorships with many other teams and leagues. This is why it is critical for challenger brands to hone in on only the best partnerships. Otherwise, the brand may be drowned out and the sponsorship investment is not worth it. 

Alignment with Business Strategy

A sports sponsorship must align with a company’s broader marketing strategy. When evaluating a sponsorship, brands must consider not just placement and price but also audience and affinity. For example, if a challenger brand is in the health drink market they might consider sponsoring a cycling team. If the company’s primary product is beer then they might be better off sponsoring a football or ice hockey team. The ability to conduct such analyses to determine where to invest has historically been very difficult for brands, especially those working with tighter budgets.


Overcoming Core Challenges

Addressing the challenges above is not easy, but it is straightforward. The solutions available do provide areas of opportunity for challenger brands. The key to success, however, is understanding where your brand's gaps are in data and business alignment. Consider the following as you evaluate the role of sports sponsorships in your Go To Market activities.

Determine Business Objectives and Alignment

Before committing to sponsorship, it is important to define the reason for your brand's involvement. Different sponsorship activities will deliver different benefits that may or may not align with your organization’s overall marketing strategy. For example, if the objective is to increase brand awareness with professionals who have purchasing power in the B2B sector, then sponsoring a major golf tournament might be more relevant than sponsoring an esports tournament. Similarly, looking at the demographics of the target audience can also help determine where to invest.

Aligning sponsorships with business objectives also goes a long way in justifying spending to leadership. A luxury car brand finding a sponsorship opportunity at the U.S. Open or the Masters makes intuitive sense. You don't need to be a marketing professional to know that the audience for golf aligns more closely with those that might buy a high-end vehicle. The same brand sponsoring a lacrosse league might be a harder story to tell. It is possible that the lacrosse fanbase is great for a luxury car brand, but leadership may not know that on their own.

Think Independently

The traditional sports sponsorship model of partnering for a multi-season engagement and hoping for the best does not work for challenger brands. Pepsi can pay the Dallas Cowboys a large fee to be the official drink sponsor of the team without necessarily having expected ROI fleshed out in detail. Such is the benefit of being an enterprise organization.  Most likely, you do not have that luxury. 

As a result, waiting for reporting and data from a team is a recipe for disaster. Success comes to those that are active, not reactive, and rely on their own data sets and measurements to gauge success.

Calculating the value of your sponsorships and your return on investment is not a matter of taking data offered by a team and fitting it into your plans. You have to think independently and view sponsorships through the lens of your business and your goals. The team at Madison Square Garden may think that signage in the concourse is worth a certain amount of money. At the same time, the team at Madison Square Garden is thinking about their business and their sales goals, not yours. 

Understand the Return on Investment Through Data 

Sports sponsorship marketing budgets are often limited which makes it difficult to justify. Understanding your objectives, defining the appropriate measures of success, and benchmarking against other activities such as digital advertising campaigns can help during these challenging times.

A reliable and regularly updated source of sponsor data is key. While teams and organizations share data with sponsors, this delivery of the data is often infrequent and on the team's terms. Make sure your data source is objective and provides a clear insight into what is and is not working.

Relo Metrics provides sponsorship analytics that are used by teams and sponsors alike. The insights offered detail the value of sponsorship or placement in a way that is based on data, not supposition. If you are looking for a reliable and near real-time data provider focused on sports sponsorships, then Relo Metrics will have the information you need at a price that fits into your budget.

Thriving as a Challenger Brand in Sports Sponsorships

The importance of leveraging sports sponsorships is on the rise. Challenger brands are often smaller than industry leaders. This leaves more room to get creative with their marketing budgets. Before going all-in on sports sponsorships, however, it is important to understand the challenges and how to overcome them.

There are still areas of rich opportunity in sports sponsorship for sponsors and advertisers. Those that find untapped areas or arbitrage in value can recognize outsize value from their sports sponsorships. The greater likelihood, however, for many challenger brands is uncertainty around what to measure and how to measure it. To gain an even deeper understanding of the tactics necessary for challenger brands to succeed in sports sponsorships, see this Relo Metrics guide highlighting five tactics you should have in your arsenal.  


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