The impact of Covid-19 on sponsorship budgets

If you’re not struggling to predict the future, you are not telling the truth.

To help me out I asked my SponsorshipX colleagues to gather some intel. Our analytics team decided the best way to help ourselves, was to also help you by gathering insights from industry professionals across the world. Last week, we surveyed 289 experts from twelve countries to gain their perspectives on the future. We can now reveal a few of the highlights.

I want to begin with a big surprise. Esports is not being as widely investigated as you might think. In fact, less than 5% of our experts were engaging in esports. Which I feel to be a bit bizarre. However, those organizations that are already in the sector are going ALL IN.

Presently we see 67% of sponsors are focused on current Covid-19 issues such as food, shelter, security, and mental health. As one of my friends in the NFP world states, think of Maslow’s Hierarchy of Needs: the consumer is at the bottom and marketers’ efforts are at the same level.

Not surprisingly, most experts agree that this going to last a lot longer than expected, with over 60% targeting a “return to normalcy” date of September 2020 or later, and a whopping 25% not expecting normalcy until 2021.

We should also be careful about the word “normalcy” as our experts are predicting a 29.5-44.8% decrease in sponsorship rights fees and a parallel decrease of about 43.7-47.7% in live activation. Those two numbers represent a double whammy for the industry ecosystem.

Sponsorship agencies (one of which I happen to be the owner of), are also very concerned with an expected drop in billings, and corresponding revenue, by 52%.

But there is an underlying lesson in all of this, and it should come as no surprise, and that is that the industry is creating an unprecedented and growing list of new and innovative sponsorship platforms. I have been advising brand sponsors to undertake three major workstreams to tackle this mammoth challenge:

Gather insights from your consumers & the consumers of your partners to that you can best understand how they plan to engage with your properties. Understanding these nuances and complexities will drive your ROI up.
Generate entirely new sponsorship plans and concepts that focus entirely on your most valuable clients, customers, and prosumers. This is not a time to appeal to the masses.
Based on your insights and new approach, engage in a dramatic renegotiation with your partners over assets, intellectual property, and business terms for you to continue your partnerships.
With so much of the world in pain around us, it is hard to think of the silver lining this pause may have created. However, the renovation to your sponsorship portfolio is definitely one of them.

The impact of this pandemic on our industry shifts and spreads as fast as the disease itself. We plan to repeat this study on a regular basis over the next few months, so if you are interested in participating please email me directly.

For a closer look at the results of this study, our SponsorshipX team will be conducting a webinar on “The Impact of COVID-19 on Consumerism and Sponsorship”, led by Dr. Norm O’Reilly. You can register for the free online session here.

Mark Harrison, founder, SponsorshipX

Email: info@sponsorshipx.com

Web: www.sponsorshipX.com

Twitter: @SponsorshipX