SPORTS MARKETING II: Integration Of Products Into Sports

By Ajuyah Charles

In the first part of this series, we analyzed how much sports marketing has grown over the past few decades and how Sports Marketing can be extended to include the scope that accepts the realm of marketing through sports. The article also touched on the various products available to consumers such as spectator products and participatory products. In this part, we will be analyzing the integration strategies employed to market in the world of Sporting. In Sports Marketing, this is key. There are various ways this can be achieved, but for this paper, we will have them categorized into two: Traditional Strategies and Sponsorship strategies.

Traditional Strategies

This category is the type that resonates with the layman. This is because we see such strategies play before us in our day-to-day lives. This strategy involves using sport as part of the marketing program. The usual marketing strategies of having a target market and a target mix are always present. Here, after developing a product, the marketer comes up with a system for pricing, distribution, and promotion that appeals to the particular target market the product was designed for. Under this type of strategy, there is no legal relationship between the marketing firm and its product with a sporting platform (league, player, or tournament). The traditional strategy in practice uses the novelty associated with sports to draw its market. This would entail an advertisement featuring popular artists/actors/models participating in Sports. This advertisement could be on television or in a sports publication. Another option would be to give a sporting feel to the packaging of the product. For example, in Nigeria, the popular ludo board game used to be sold with images of local footballing heroes.

Sponsorship Strategy

Sponsorship strategies as the name implies, entail marketers capitalizing on a legally existing relationship between the sponsor (the marketer) and sponsee (sports organization or an athlete). Nowadays this is the strategy adopted as more and more marketers find ingenious ways to get their products to the consumers. It involves a multitude of activities. The most obvious form is what we would refer to as the traditional sponsorship. In this form of sponsorship, the sponsee (the sports platform) usually acknowledges the sponsor and/or sponsor’s product, the sponsor also retains the right to use the intellectual property (logos, trademarks) of the sponsee. These are to leave an impression on the minds of the sponsee’s market/sponsor’s target market. Typically, billboards at the stadium or scoreboard, as a form of virtual advertising for those watching at home for example how seeing PlayStation billboards on UEFA Champions League nights is a staple of the competition. The traditional sponsorship can encompass title rights; for instance, the Total African Cup of Nations leaves no uncertainty as to whom the primary sponsor is. In a slightly more subtle application of this strategy, a marketer might be recognized as the presenting sponsor. Noteworthy examples are “UEFA Champions League is Presented by Heineken: Drink responsibly” and “Last week’s highlights were brought to you by Progressive.”

Over the last decade and a half, Sports marketers have evolved their game and added three new sponsorship strategies which are (1) Venue naming rights, (2) endorsements (3)Licensing.

Venue Naming rights as the name implies is where the sponsor gains the naming rights to a sports center, arena, or stadium. These can also be described as building sponsorships. Arsenal Football Club plays their home games at the Emirates Stadium. This is an addition to traditional sponsorship they have with the Airline brand which also sponsors the club’s main jersey sponsor. Asides from this, there are numerous examples: the King Power Stadium, Leicester. Allianz Arena, Munich, or the FNB Stadium in Johannesburg amongst a host of others. These examples come from a wide range of commercial spheres. Why do we have a plethora of corporate entities vying for the naming right of sports building? Simple, Sports buildings are good to obtain first-class brand exposure and keep the name brand in the mind of the audience every other weekend or game day. It is highly lucrative and quite frankly for the elite. This is why, in looking for the best sports buildings, corporate organizations consider, the location, capacity, quality of team using the building, quality of opponents/competition, and also multipurpose use, as some brands could negotiate for the right to use the stadium for concerts/events. With sustainability programs going on in places like the Santiago Bernabeu, that element could be something future investors look out for. For the sponsee, the gains from such a relationship would be the fact that the highly expensive stadium maintenance expenses would be covered by the sponsor.

Venue naming rights can be argued as a special type of ‘title sponsorship”, as the corporate organization pays an enormous amount of money for a lengthy amount of time.  The imperative conclusion that can be drawn is that venue naming rights represent a special form of sponsorship.

When Etihad paid a mind-boggling £400 million for a complete sponsorship package with Manchester City over ten years, including shirt sponsorship and stadium naming rights, many saw the move as shady considering that the club at the time was not of that valuation, however, when the renewal comes up next year, not many would have such complaints as the club is a far bigger brand.

Endorsements are another form of sponsorship that could be referred to as personal sponsorships. It is a legally binding relationship between an individual athlete and the sponsor. The aim of the sponsor under this type of arrangement is to market its products by leveraging on the commercial goodwill and loyalty of fans to that specific athlete (the sponsee)

LeBron James’ significant earnings from “sponsor endorsements’, memorabilia and media have seen him earn an estimated $64 million[1]. His sponsorship portfolio has companies like PepsiCo, Walmart, GMC on it[2]. Cristiano Ronaldo is undoubtedly the world’s most famous footballer and his world is said to have endorsement deals with his off-field exploits earning him about £50,000,000 (fifty million pounds) from companies like Tag Heuer, Clear Haircare, Altice, DAZN, Herbalife amongst others[3]. He is one of three athletes in the world for which Nike gave a lifetime contract, the other the aforementioned LeBron James[4].

Licensing is perhaps the most controversial and debatable form of modern sponsorship. This is because experts argue whether or not it is a form of sponsorship. However, in practice it is evident that it is indeed a form of sponsorship. Earlier we discussed that sponsees give rights to sponsors to use their intellectual property rights (logos, trademarks) in their marketing activities. This form of sponsorship has given rise to the birth of the “official supplier”. They are granted the rights to produce and sell logo sports fashion and a host of other licensed products. Licensing in a sense gives the sponsor the chance to optimize the full value of its sponsorship rights

A good example to give clarity would be when in 2020 Konami signed an exclusive licensing partnership with Juventus FC. This move gave rights to use official trademarks and intellectual property rights to Pro Evolution. The significance of this form of sponsorship is that companies like Puma, Nike, and Adidas have gained brand exposure through their intellectual property rights whose value surpasses that of the products. This could only be achieved because of the preexisting sponsorship relationship those brands have with leading sports teams and events. It is striking that each venue designated to host the Olympic Games is mandated to pass a set of strict laws to protect these sets of sponsors (this was discussed in a previous article https://thenigerialawyer.com/intellectual-property-and-sports-importance-landmarks-and-current-trends/ ). At this point, one could be forgiven for the interchangeable use of sponsors and licensing. Given that the common practice amongst the lawyers and marketers who are involved in producing the contracts on which these relationships are found is to these types of agreements as ‘sponsorship agreement’, it seems reasonable to assume that licensing can be classified as a special form of sponsorship.

On March 15, 2022, the streaming platform juggernaut Spotify announced that it will become the main partner for FC Barcelona from 2022-to 2023. This agreement included standard deals to have Spotify as the official jersey sponsor, as well as renaming the Camp Nou to Spotify Camp Nou. Interestingly, this deal included Spotify being named the “Official Audio Streaming Partner” and also states that “Spotify and FC Barcelona will work together to create opportunities for the iconic shirt to be a space that celebrates artists from across the world”[5]. However, that plays out over time remains to be seen.

From this piece, it is evident that Sports Marketers have a vast array of options when deciding how best they can penetrate any given market with the influence of sports. Two main options are available to them. The traditional marketing strategy is based on the basic approach of selecting a target market along with its parallel marketing mix for each target market. In the alternative, a more formal and expensive approach may be taken to use the sponsorship strategy. Sponsorship gives marketers far more options in terms of brand exposure it could give the entity, as regardless of the type of sponsorship, they all rely on using the sponsee’s brand loyalty and commercial goodwill to bring exposure to their products.

From the first part of this series, we evaluated the type of products that can be marketed in the Sports industry (Sports Marketing I (https://thenigerialawyer.com/sports-marketing-i-an-overview-perspective/ ); taking this second part into account, we can say that the Sports marketing industry could be divided into three:

1. Marketing of sports or marketing through sports
2. Type of products being marketed (sports or non-sports); and
3. The strategy used by marketers to integrate their products into the sporting sphere either by traditional marketing strategies or sponsorship strategy.

In the next and final part of this series, we will be analyzing how marketers have used the various marketing integration strategies along with the various array of sports and non-sport product options to yield a clearly defined concept of the dimensions of modern give Sports marketing.

BIBILIOGRAPHY

LeBron James: Forbes Profile https://www.forbes.com/profile/lebron-james/?sh=484d0fc42398

Cristiano Ronaldo: Forbes profile https://www.forbes.com/profile/cristiano-ronaldo/?sh=3d9dfbf565dc

Spotify official press release of March 15, 2022: https://newsroom.spotify.com/2022-03-15/spotify-and-fc-barcelona-announce-a-first-of-its-kind-partnership-to-bring-music-and-football-together/

Tuale Charles Ajuyah, is a Sports Manager/Administrator, legal practitioner and mediator. He is the CEO of Racks Race Sports, a Sporting organization that deals in various issues that the sporting industry entails, including but not limited to finance, agency, marketing, organization and governance, strategy, marketing, business planning, and event management. It also promotes sporting culture and ethics

[1] LeBron James: Forbes Profile https://www.forbes.com/profile/lebron-james/?sh=484d0fc42398

[2] Supra n2

[3] Cristiano Ronaldo: Forbes profile https://www.forbes.com/profile/cristiano-ronaldo/?sh=3d9dfbf565dc

[4] Supra n3

[5] Spotify official press release of March 15, 2022: https://newsroom.spotify.com/2022-03-15/spotify-and-fc-barcelona-announce-a-first-of-its-kind-partnership-to-bring-music-and-football-together/