Sports Partnership Investments Primed for Growth in 2023
Along with gingerbread, eggnog and peppermint bark, ‘tis the season for advertising and marketing industry spending forecasts outlining what to expect in the year ahead.
The outlooks published thus far are in consensus that 2023 should see an overall slowdown in spending. One of the most prominent reports, global media investment and intelligence company MAGNA’s Global Ad Forecast, predicts just five percent growth , slowing from seven percent this year.
While that news may have some marketers running to spike their eggnog, the nature of sports partnerships should allow sponsorship growth to outpace the overall market next year.
The reason? When properly activated, sponsorships can deliver all of the benefits promised by other marketing channels, i.e., traditional advertising’s exposure and awareness, digital and social media’s engagement and content creation, sales promotions’ brand experiences and purchase incentives, etc.
Sponsorship’s cross-platform abilities make it less susceptible to negative forces buffeting any individual media type, such as those described in the MAGNA report, including:
TV Viewership Decline: “Television advertising will suffer from continued erosion in linear viewing (five percent to 15 percent decrease depending on targets and markets) still not fully offset by rising audiences and ad sales on non-traditional platforms or formats, and the lack of cyclical events (elections in Brazil and the U.S., Winter Olympics, FIFA World Cup) following the record cyclical spending of 2022.”
Digital Delivery Issues: “Advertising spending slowed down in the second half of 2022 because of economic uncertainty and issues affecting digital advertising formats…Traditional editorial media managed to grow by 2.5 percent. The gap in growth rates with digital advertising growth (8.9 percent) was the narrowest ever measured by MAGNA, suggesting that the long-term transition to a digital-centric marketing landscape has slowed down.”
Digital’s troubles will even impact the three giants in terms of ad revenue: Google, Meta and Alibaba, which “grew net advertising revenues by a combined five percent in 2022 (compared to 41% in 2021!), i.e. they underperformed overall market growth (6.6 percent) for the first time ever and their share of global ad sales paused at 42 percent after rising sharply and constantly in the last 15 years.”
Social Media’s Many Challenges: “Multiple headwinds (plateauing reach and usage, brand safety concerns, targeting limitations, and the rise of video snacking hurting both insertions and pricing) combined to cause social media advertising revenue to stall in 2022. Global ad sales grew by just four percent…a far cry from the growth rates of 20 percent to 35 percent observed in the previous three years. TikTok is the only social media owner to post advertising growth, while incumbent social networks suffer flat or declining ad sales, especially in Europe and North America. MAGNA anticipates social media advertising to re-accelerate only slightly in 2023 (seven percent growth).”
While some of those issues will impact sports properties and their brand partners as they activate on traditional and digital platforms, both the diversity of sponsorship inventory, as well as the strength of sports brands and programming due to fan passion and loyalty will serve as a major buffer protecting the investments made by sponsors and minimizing their risk.