Sports sponsorship and betting providers

Sports sponsorship and betting providers

To any regular observer of many mainstream sports shown on TV these past few years, it’s been nigh on impossible to ignore the lengths that betting and gaming companies go to in order to reach their target audience (which, if you’ve seen them, is almost certainly likely to be you).

Those betting and gaming operators might be the title sponsor of the event itself, advertising during the commercial breaks of the programme you’re watching or sponsoring the so-called ‘bumpers’ leading into those commercial breaks. They might also be taking ‘inventory-share’ on the advertising hoardings at the game on screen, or having their logo on the shirt of the football club playing in the game you’ve perhaps tuned in for. All in all, they have most options pretty well covered.

Last month, Nielsen reported that gambling businesses had spent nearly half a billion pounds on UK TV advertising alone in the past three-and-a half years. The annual spend grew from £81.2m in 2012 to £118.5m in 2015, an increase of 46%.

In 2013, an Ofcom review showed that the number of TV advertisements for casinos, bingo and sports betting had increased by 500% in the previous six years.

By comparison, the share of overall spend on sports sponsorship by gambling companies is actually relatively small, both domestically, and internationally.

Last year, IEG, the international sponsorship consultancy, measured sponsorship spend – by category and main sponsors – across the five key sports of football, cricket, golf, rugby union and motorsport.

Across these five sports, betting and gaming was one of the smallest ‘product categories’ – less than 2% of total sponsorship spend -- and just a couple of gambling operators had spent sufficient to be considered ‘significant’; bwin (football) and bet365 (cricket).

That balance may be about to change.

Ahead of the start of the new Spanish La Liga season, PaddyPowerBetfair announced they had an agreement to make the online betting company one of FC Barcelona’s official global partners until 2019. PaddyPowerBetfair’s share price rose 3% on the news.

Hull City, newly promoted to the EPL, have just struck the most valuable shirt-sponsorship contract in their history, with SportPesa, a Kenyan bookmaker keen to promote themselves to the 400 million Africans who watch the EPL each week.  The company dipped their toe in the EPL waters last year with a link up with Arsenal and were clearly pleased with the result.

Elsewhere, fast-growing ‘challenger brand’ Betway has recently done deals with five German Bundesliga 2 sides, for in-stadia branding. Last year, they struck a three-year shirt agreement –  worth £20m – with West Ham United, the most lucrative ever struck by the East London EPL side and which dwarfed the £3m income the sponsor Betway had replaced. Betway also support horseracing, darts, snooker and tennis events.

So what is it about this form of sports sponsorship that attracts so many betting operators, particularly within the most-watched sport of all, football?

SportPesa’s deal with Hull City is probably a good case in point; 15% of the total global EPL TV audience comes from Africa, yet the region has just 2% of the global sports betting market. SportPesa’s reaching out to this particular audience via this channel looks both smart and potentially very good value. And, having just concluded another multi-million betting partnership deal with fellow EPL side Southampton FC, their intent looks crystal clear.

But it’s in this whole area of ‘strategic value’ that some sponsorship-industry executives sound a note of warning; Antony Marcou, CEO of sponsorship agency Sports Revolution thinks that many betting companies are using shirt sponsorship as a customer acquisition tool instead of looking to build their brands. He said “If they’re not careful, football clubs will increasingly be seen as direct response marketing vehicles and not as valuable partners for building brands. Given the global exposure and value of the Premier League, that’s a huge missed opportunity”.

Interestingly, Betfair’s deal with FC Barcelona doesn’t cover shirt sponsorship, but rather gives visibility of branding within the Camp Nou stadium, special access to players and  a host of other digital image association and marketing rights with one of the most valuable football clubs in the world.

Phil Carling, managing director of Octagon Sports Marketing’s football division, also advised caution, saying “…part of the problem resides with clubs in the lower reaches of the EPL, where the threat of relegation and a lack of a global fan-base can reduce their offer to a more short-term ‘media buy’.”

In reality, betting and gaming companies are probably unlikely to ever operate at the rarefied sponsorship levels of global big-spenders such as Coca Cola, Nike, BMW or Toyota.

But the betting industry has proven extremely adept at selecting sports their audiences tune into, and delivering communication channels they respond to, all of which has enabled highly cost-effective brand exposure, and gaining healthy returns on their marketing investment.

The challenge will be – amidst yet more competition, ever-rising marketing costs and sponsorship price inflation – can they continue to do that? Gaming Economics is betting they probably will…

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