Today’s guest columnist is Aidan O’Connor, a vice president at the strategic communications firm Prosek Partners.
The whirlwind romance-turned-breakup between Elon Musk and Twitter has been one of the summer’s most sensational storylines, with no clear end in sight. This volatile relationship, combined with the market’s drag on tech sector stocks overall, has thrust social media valuation and mDAUs (monetizable daily active users) into mainstream discussion.
At the same time, 40-year inflation highs are squeezing brands’ resources for advertising and marketing endeavors. A fifth of CMOs have already trimmed their budgets, which have dropped 16% on average YoY (per Advertiser Perceptions). The decline of consumer purchasing power and rising cost of commodities are also pushing consumers onto social media in favor of more expensive activity alternatives.
This confluence of events marks an opportune time to argue why sports organizations must urgently address their underused “digital inventory,” or risk squandering potential sponsorship revenue as macroeconomic headwinds continue.
Branded social media content (i.e., a publisher’s content that features a sponsor in exchange for funding) is a more cost-effective and sorely undervalued marketing channel for the sports economy, compared to less nimble traditional alternatives such as signage, jersey placement, television commercials and in-stadium media. There is also major intrinsic value attached to branded sports content offered by teams, athletes, leagues or federations, which receives 2,500% higher engagement on average than standard social media advertising.
To stress the opportunity at play, let us use Europe’s top six soccer leagues as an example. Per a recent Horizm study, “brand-activated posts” published by teams across these leagues accounted for less than 5% of all social media content. If these entities activated just 5% more, it would garner “billions of additional impressions…and more than €75m ($76.3 million) in additional activated value.” Another study by Talkwalker found that only 9% of Facebook posts made by sports properties were sponsored.
While there is significant opportunity for tier-one sports participants to bolster income streams with this knowledge, monetizing digital real estate is also a logical pivot for nascent sports organizations with fragmented global audiences (Major League Rugby), rich storytelling potential (Professional Fighters League) or a lack of steady income from lucrative media rights deals (any professional esports league). This strategy also meets the next generation of sports fans in their preferred domain: 84% of Gen Z consumers have purchased products in direct response to branded social media content (per Oracle and CRM Essentials).
To be clear, the approach is more nuanced than buying display ad space. Branded content elicits an emotional response, which in turn drives brand perception and purchase intent higher. A Turner Ignite and Realeyes study found that branded content viewers are 62% more likely to show positive reaction than those watching 30-second ads, while over 66% consider branded content to be more influential when making a relevant purchase decision.
A successful example lies in the fiercely contested arena of gaming and sportsbooks, where sizable marketing budgets have raced to capture market share following repeal of the Professional and Amateur Sports Protection Act. FanDuel became a category exclusive sponsor for Pat McAfee, the NFL punter turned entertainer, with collaborations ranging from McAfee’s daily YouTube show to promo code offerings, merchandise, a live events tour and viewing parties tied to major sporting events like the NFL draft.
The FanDuel-McAfee success story can be attributed to both sides sharing similar values, including an affinity for blending live odds with industry commentary that generates almost 10 million visitors each month. Focusing on branded content also expands FanDuel’s presence to the online audiences of celebrities and pro athletes who regularly guest appear on McAfee’s show. This winning formula resulted in a renewed and expanded $120 million, four-year partnership in December 2021.
The impact of branded content can also be seen in adjacent, more experimental areas. Opendorse projects over $900 million was spent by brands in the first year of NIL’s existence in college sports. In the same window, sports organizations such as the NBA and the Big3 showed a unique ability to attach real value to the NFT phenomenon, with utility ranging from content ownership and club perks to exclusive discounts and novel experiences. While sobering economic forecasts and declining purchasing power might hinder the growth of NIL deals and NFT use cases, sports organizations can take valuable insights from these areas and apply them to the less risky realm of digital brand partnerships.
For those looking to capitalize, there are several actionable next steps.
1. Sports organizations must create a dedicated narrative, a north star, for how they approach brand partnerships on social media: to maintain integrity, relevancy to the organization’s core values, and alignment when activating short-term, campaign-specific engagements.
2. Contracts between athletes and teams/organizations must include language allowing for branded content overlap between their social media channels. Athletes are an extension of the organization to which they are contracted. They are typically influencers in their own right, too. If, for example, they can thoughtfully weave brands into behind-the-scenes footage on game days, there is substantial mutual benefit for all.
3. Sports organizations must establish robust, real-time coordination channels between communications, content, marketing, and social media teams. Breaking news (competition draws, players trades), timely assets (starting rosters, final score) and interactive content (goal of the month or player of the match polls), are all fertile opportunities for agile operators.
4. Lastly, sports organizations should explore the third-party platforms coming to market that specialize in digital inventory management. This infrastructure provides a central resource for sponsor selection and evaluation, purchasing digital inventory, and targeting different audience demographics. These providers also offer more advanced brand conversion metrics to validate engagement, as well as predicted sales benchmarks for brand partners looking to compare different sports properties.
It is tempting to stick with what one knows during times of uncertainty. But current events, inside and outside the industry, reinforce why hesitant sports properties and partners must ditch their reservations and invest in compelling branded content offerings.
In addition to his position with Prosek, where he works with private equity, enterprise technology, media and sports economy clients, O’Connor is also a strategic adviser to Zone7, an AI-based injury prevention platform. You can find him on Twitter @AidanOConnor.