Every industry has its pivotal moments.

The advent of P2P music sharing was heralded by Napster in 1999 — granted it didn’t survive, however, it illustrated the appetite for digital music consumption (although it took another 9 years for both technology and the industry ecosystem to catch up) with Spotify finally breaking through in 2008.

Legal movie streaming as we know it was driven forward when Netflix announced in January 2007 that it would launch streaming video, moving away from its core business of mailing DVD’s. 6 years later Blockbuster had closed all remaining stores and Netflix was going from strength to strength, even creating original content in the form of its “House of Cards” series.

One could argue (and I intend to) that the last year has been a seminal one for the business of sport. For an industry that has for years focused on delivering one core product, the matchday experience, massive disruptive pressure is now being applied across every aspect of an event from ticket sales to broadcast rights and equally, the relevance of ‘fan engagement’ to the overall customer experience. All of these are being disrupted, adapted and improved by digital forces.

However, between the daily headlines proclaiming Amazon as the next coming, the next new Facebook for sports or Twitter’s inevitable demise, one headline in particular caught my attention: The announcement by Adidas that they were ditching TV advertising. Completely.

What’s interesting is that this headline doesn’t really come as a surprise. Especially when the article clarifies the motivation further stating — “young people engage with the brand on mobile”, it’s a move that absolutely makes sense. In fact, it’s as understated a statement as Adidas could likely invoke when discussing the youth of today and one that invariably should be extended to include its more elderly customers as well.

Young and old alike are mobile, digital and social. All day, every day.

What is striking though is that this is the most definitive statement from a leading brand on the importance they place on digital. It’s literally their entire strategy. Or as David Greenfield, global head of digital ecosystem more pointedly remarks:

“Of course TV still has a place but the fax machine still has a place too and I’m not about to create a fax machine marketing strategy. Digital is the most relevant channel for our audience.”

The inevitability of this move has been, according to a bevy of leading industry commentators, clear for some time now, with a snapshot of prophetic articles below:

(These and more are listed in our 20 best sports business blogs to follow blog article, definitely worth checking out)

So given that backdrop, given the considerable thought and research underpinning these contributions and given the relatively slow reaction to date, why is this statement from Adidas so pivotal? Surely we’ll just see Adidas spending more on digital, and everyone can carry on as usual and good luck to them?

Well, indulge me and let’s look at Adidas, not solely from a brand & marketing perspective, rather as one of the largest and most active brand sponsors of sports. Globally.

How significant is Sponsorship to their overall strategy? Pretty f$$king significant. In 2015, they spent an estimated $195 million USD on sponsorhips in the US alone, while that same year they signed a $1.3 billion USD deal to sponsor Manchester United shirt deal for the next decade.

So, let’s just agree, in sponsorship terms they’re big.

And they’ve just announced to the world that all they care about is digital.

Now re-frame all future (and even existing) sponsorship negotiations — any partnership they have with any team, league or organisation, within this context. Any sports team partners engaging with Adidas have it in black & white. Any future sponsorship negotiation has just had its parameters defined.

“We don’t care about TV. Give us digital.”

Or translated more specifically:

“Save your TV exposure on pitch-side signage and hold the logo soup. Give us clicks, shares and conversions.”

Sponsorship has always been challenged with delivering value for brand sponsors, connecting them to a devoted fan and customer base. In the TV generation, aligning brands with the excitement was oft-touted as a viable end goal, in large part due to a dearth of measurement, endemic within the industry as a whole.

In contrast, digital marketing rose and thrived on a foundation of delivering measurable conversions from the outset, whether clicks, likes, comments, shares, purchases or impressions. With eMarketer tallying total digital ad spend at $194.6 billion globally, growing a staggering 20.3% in 2016, the value of measurement has ensured digital is now the critical input when assessing budgets, ROI and ultimately advertising strategy and success.

Within this context, Adidas’ proclamation is pivotal. Arguably the largest sports sponsor globally, has articulated an absolute requirement for all their future spend — including sponsorship inventory — to provide comparable levels of digital value and measurement.

Meaning teams will have to move from this:

atletico

To being able to compete with this:
FB Targeting

A significant challenge for an industry that has only recently begun to innovate in the digital space and where current entry level digital inventory revolves around logo branding within an app or website, or posts or tweets made through team social channels.

Any significant challenge though is beset by significant opportunity. And the size of the digital opportunity is monumental. According to an IEG & ESP Properties report, for every $1 USD that a sponsor spent with a team in 2016, those same sponsors spent $1.8 USD on activation — increasingly on social.

Digital Sponsorship opportunity

If that statistic holds true, capturing the digital opportunity could be worth up to $103.5 billion globally, providing serious motivation. For teams & leagues willing to embrace digital sponsorship, the opportunity is to re-route the digital spend that has been flowing to social networks.

Clearly the mechanics of sponsorship are changing. Digital sponsorship inventory will now need to become as critical, if not more critical, than shirt branding, or pitch-side signage. The focus will now increasingly shift towards integrating digital sponsorship platforms that help teams capture this digital spend.

Adidas have called it clearest and loudest. The question now is, who will take notice?

—————-

About Crowdsight:

Crowdsight helps teams, leagues and organisations capture content & data on their fans, identifying their most influential fans. These ‘influencer fans’ and their social reach are harnessed to deliver measurable value to Sponsors, allowing sports teams to capture revenue that would otherwise have been spent with social networks.

Are you ready?

Get in touch for a demo and we’ll show you the power of harnessing your influencer fans!

Or if its too early to commit, follow us on Twitter or sign up for our Sports Tech newsletter below!