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 Warren Phelops, who heads up the International Sports Law Group of global law firm Kirkpatrick & Lockhart Preston Gates Ellis, and his colleague Lucy Otterwell a senior associate in the firm, assess the impact that new technologies have on the traditional sponsorship model.
New technologies have created a proliferation of means to reach, and interact with, an audience. This creates the potential for a new approach to sponsorship rights, carving up sponsorship opportunities into distinct, platform based rights or selling bundles of rights in a comprehensive sponsorship package.
The traditional objectives for sports sponsorship continue to hold true: for sponsors, to enhance brand profile, equity and value; and for rights holders, to generate revenue. However, the traditional model of event sponsorship contracts, including priority rights to acquire broadcast sponsorship and commercial airtime around television coverage of an event may not be the best way to achieve these objectives in the future. Why is this so?
The technology and consumption trends described above are having two key impacts on the traditional sports sponsorship model. First, the fragmentation of media – people are spending more time online, watching clips on mobiles and choosing any of a hundred TV channels. This means the traditional ‘interruption’ model of TV advertising is being undermined. The fragmentation also offers faster and easier global dissemination.
Second, with fragmentation comes the need to engage with people. Successful marketing campaigns illustrate this trend - they engage with users to enhance their experience, rather than just bombard them with branding and hope it sinks in.
These trends are arguably making sponsorship an increasingly more attractive and valuable marketing medium and we are already witnessing the interesting consequences for sports sponsorship contracts. Impact on rights holders From a rights holder's perspective, how should sponsorship packages be structured in the ‘new world’? For example, the place-shifting phenomenon allows you to ‘divide’ broadcast sponsorship rights on a platform basis. In future, we may talk in terms of ‘simulcast’ marketing rights. Might some rights (for example the right to stream highlights or the right to make clips available to mobile users on-demand) be reserved?
It is essential the contract defines and delineates the grant of rights with the technological, and hence value, consequences in mind. Definitions (for example of ‘internet’ and ‘television’) must take into account new technologies and be very clear as to which rights are granted and which are reserved.
It is clearly vital to understand the different rights afforded by new technologies to ensure the grant is clear and as intended and, from a business perspective, to influence market perception of the value of your rights.
Allocating a price to each specific right should inflate the rights package value. For example, the time-shifting phenomenon affords possible pricing models based on sponsorship rights for live, delayed, on-demand highlight and clips windows, as well as on a device basis. Impact on sponsors  From a sponsor's perspective, it may prefer to acquire ‘bundled’ rights. For example, the right to sponsor all broadcasts (streamings, simulcasts, etc) on a platform neutral basis, together with ancillary rights to sponsor computer games and podcasts.
Sponsors must also understand the impact of new technological delivery systems when framing their contractual arrangements. For example, a shirt or event sponsor should consider:
(1) how to ensure that its logo is clearly visible when viewed using non-traditional media means;
(2) whether its branding will be included in virtual representations of the event and in computer games based on the event; and
(3) whether digital manipulation of images of the event to remove or alter event branding is prohibited?
A broadcast sponsor should consider whether the sponsorship contract gives the sponsor the right to sponsor interactive functionality offered to viewers of a digital broadcast. If so, does the sponsor have the right to data generated as a result of that interactive functionality, which data may be useful in terms of assessing the sport’s demographic?
New platforms may also present audio-visual manipulation opportunities not currently available. For example, streaming technologies allow broadband users to watch sports programming on their computers, also enabling sponsors to juxtapose their content to become part of the programming as the event happens. In the UK, this type of digital manipulation is currently prohibited by OFCOM (the independent regulator and competition authority for the UK communications industries).
New technologies are also impacting on the valuation of sponsorship rights. The ability to access sports content via multiple platforms means that traditional evaluation models based on viewing figures may not be providing the whole story.
While event attendance, television viewing and internet viewing figures are readily available, it is more difficult to measure how many viewers watch an event via a portable device. In the US, Nielsen has developed the ‘Go Meter’, technology which sits on a mobile phone or other portable device and measures viewing of audio-visual content by collecting audio signatures. However, at the time of writing, we understand the Go Meter is still in trial stages of development. Until such integrated measurement systems are in place and accepted as accurate, sponsors and rights holders need to work together to find alternative means of assessing an event’s reach and, hence, value.
Conclusion  As outlined above, the growth in new technologies has changed the means of disseminating sports content to users and created new opportunities and threats for sponsors and rights holders alike. It is also changing the prominence of the marketing mix, as sponsorship becomes an increasingly powerful and engaging tool for brands. The key to deriving benefits from the new opportunities, and to protecting against the associated risks, is to ensure that you understand the new technologies and the opportunities they afford.
The above article is an extract from Journal of Sponsorship, the leading international professional journal for all those concerned with sponsorship and experiential marketing, delivering high quality, peer-reviewed content in all areas of sponsorship.
Every quarter, Journal of Sponsorship publishes a wide range of authoritative, peer-reviewed practice papers, research articles and professional briefings written by leading industry and academic experts - including:
Practice papers - addressing the issues facing practitioners in industry and consultancy
Legal and regulatory updates - providing expert guidance on the major legal and regulatory issues
Reviews - commissioned articles by top experts in the field, reviewing key topics in the area
Comments - short analyses of topical issues affecting sponsorship professionals
Case studies - focusing on the real-life challenges and problems faced by sponsorship professionals, how they were approached, and lessons learnt
For more information about the Journal, including a list of forthcoming content, the Editorial Board and how to subscribe, please visit the
Journal website at http://www.henrystewart.com/jos To contact Warren Phelops or Lucy Otterwell, e-mail: warren.phelops@klgates.com or lucy.otterwell@klgates.com
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