Sports bucks still abound

Bil­lions spent on mar­ket­ing

Finweek English Edition - - Advertising & marketing -

SPON­SORS OF SPORT­ING EVENTS, teams and in­di­vid­u­als con­tin­ued to dig deep into their mar­ket­ing bud­gets last year, de­spite the ab­sence of ma­jor events. To­tal ex­pen­di­ture in SA on this form of mar­ket­ing, in­clud­ing an al­most equiv­a­lent out­lay on “lever­ag­ing” the di­rect ex­pen­di­ture on rights, ex­ceeded R4,8bn.

This was 18,5% higher than in 2005, but this year is likely to be one of ab­nor­mal growth, stim­u­lated by the cricket and rugby world cups (not be­ing held in SA) and the Pro20 Cricket World Cup (in SA). An­other peak can be ex­pected in 2010 when the Soc­cer World Cup, the big­gest sport­ing event in the world, is held in this coun­try.

“With com­pa­nies want­ing to be a more in­te­gral part of the World Cup, many are try­ing to get a foothold in the mar­ket by spon­sor­ing teams,” says Jo­han Grob­ler of BMI Sport Info, which tracks the spon­sor­ship mar­ket. “This has also re­sulted in highly in­flated costs for all soc­cer prop­er­ties, which will re­sult in above-av­er­age growth over the next few years.”

Lever­ag­ing in­cludes all the ex­pen­di­ture in­curred to pro­mote, ad­ver­tise and stage the spon­sor­ship events. It amounted to 84% of last year’s di­rect ex­pen­di­ture.

Spon­sor­ship is sur­pris­ingly well de­vel­oped in SA. Di­rect spend on rights and fees (R2,6bn last year) is equiv­a­lent to 13,9% of na­tional ad­ver­tis­ing ex­pen­di­ture. The fig­ure peaked at 15,2% in 2003, a year of sev­eral ma­jor events. The world av­er­age is only 8,6%.

Since 1985, ex­pen­di­ture on spon­sor­ship has been grow­ing faster than that on ad­ver­tis- ing – ex­cept for last year.

Ac­cord­ing to the BMI Adult Sport­track Re­port: “The next decade will wit­ness the most sig­nif­i­cant changes in the way we con­sume sport since the emer­gence of mass au­di­ence television in the Fifties. The pro­lif­er­a­tion and frag­men­ta­tion of me­dia chan­nels such as satel­lite and cable television, the In­ter­net and mo­bile tele­phony have un­der­mined the tra­di­tional free television model in ev­ery ad­vanced econ­omy.

“Un­de­ni­ably, en­sur­ing ac­cess to trans­mis­sion rights, to pre­mium con­tent, to plat­forms and to dis­tri­bu­tion net­works has re­cently be­come a core fo­cus of at­ten­tion for both reg­u­la­tion and com­pe­ti­tion law en­force­ment in the broad­cast­ing sec­tor.”

Con­ver­gence has sparked an in­creas­ing de­mand for plat­form neu­tral­ity, in which broad­cast rights are sold in bun­dles that in­clude TV, mo­bile phone and In­ter­net.

“We are start­ing to see a fur­ther shift in how sports rights are de­lin­eated, with dif­fer­en­tia­tors be­ing set more around the con­tent of the var­i­ous pack­ages of rights than the tech­nol­ogy by which they are ex­ploited,” says the re­port.

Th­ese is­sues have been rel­a­tively un­ex­plored in SA, but this will change as it pre­pares to host the 2010 World Cup.

WHERE SPON­SORS SPEND IT

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