Ad agencies muscle in on sporting arena

The ad industry is mounting an assault on the £12bn sports marketing sector. But do agencies have the right skills?

Most people’s image of sports marketing has been formed by the Tom Cruise movie Jerry Maguire, in which his potential sports star client demands: “Show me the money… show me the money.” It is a scene which could soon be replayed in agency boardrooms across the UK as advertising chiefs seek to exploit what is now a $19bn (&£12bn) business.

The sector is dominated by one player, Mark McCormack’s International Management Group (IMG), which was set up over 30 years ago. Swiss group ISL, part of the privately-owned International Sports Media & Marketing Group (ISMM), is also strong in Europe, with lucrative football contracts.

But last week, the advertising industry signalled its intentions when IPG-owned Octagon announced it was stepping up its activities with a global rebranding. The move divides the business into five companies: Octagon Marketing; Octagon Athlete Representation; Octa- gon CSI; Octagon Motorsports; and a Latin American joint venture, Octagon Koch Tavares.

The company has hired former Ogilvy & Mather chief executive Tom Bury as managing director of its European division. Bury reports to former TBWA chief Alasdair Ritchie.

At the same time, General Motors’ former director of the World Cup sponsorship Jim Latham has joined Bates as a director of its 141 Communications subsidiary (MW September 30).

Such moves are likely to drive a wedge between the two sides of the sports sponsorship industry as consultancies come under increasing pressure from advertising and marketing specialists.

Many in the advertising sector believe they have the brand guardian skills client companies are looking for.

Matthew Patten, M&C Saatchi Sponsorship chief executive, says: “As costs rise, clients realise they cannot afford to simply throw money at sponsorship. They are looking to their ad agencies, which have all the traditional measurement skills, to find a solution.”

And he believes branding expertise will be key: “Clients want all their marketing communications to carry the same branding message, whether that is through sponsorship, advertising, PR or direct mail. And branding is one of the advertising industry’s great strengths.”

Octagon director Matthew Wheeler agrees: “The sports marketing industry has always been sales-led. We believe we are introducing something new by bringing in marketing expertise.”

But one sponsorship observer believes agencies do not recognise the huge differences between the two sectors.

He explains: “When you are pitching for an ad account, it is a relatively simple process: you think of an idea; draw up the visuals; and then present it to clients – they either like it or they don’t.

“But if they don’t, all is not lost because it’s a very promiscuous business – clients switch between agencies all the time.

“Sports marketing is much longer term – it can take months to secure a deal. First, you have to convince the client of the need to run sponsorship. Then you have to find an event that has not already been snapped up by one of its rivals. Then you have to present to a sporting federation committee.

“Trying to win over a 25-strong committee, each with their own agenda, is not easy.”

And Barrie Gill, chairman of CSS Stellar, adds: “It is a completely different culture. Advertising agencies have a role to play in sponsorship but they are not specialists.

“They should stick to what they are good at and that is creating advertising to support the sponsorship programme, such as Leagas Delaney’s World Cup ads for Adidas and even Wieden & Kennedy’s {guerrilla marketing} for Nike.”

Gill, who is also chairman of the European Sports Consultancy Association, says the group is currently conducting research among client companies. “Many have little sponsorship experience. They look to their consultancies to provide that.”

CSS was until recently part-owned by Delaney Fletcher Bozell but the company bought back Bozell’s stake so it could work with other agencies.

Yet if advertising agencies do start to make serious in-roads into the sports sector, they could soon face a situation where they are representing both the sponsor of an event and a client. Could this work?

Karen Beith, director of Leo Burnett’s sports marketing division, Leo Sports, thinks not. The agency’s main client is McDonald’s, sponsors of the Olympics and European football.

She says: “I wouldn’t be comfortable about representing rights-holders as well as sponsors, as some do. Sports sponsorship can be a pretty ruthless business.”

While most agencies do not have the resources to secure lucrative rights ownership, Octagon, which already owns some rights, believes it can exploit the sector.

Wheeler says: “IMG has been successful for nearly 30 years. But we believe there is enough room in the market for other global players.”

However, one observer warns: “Octagon’s main problem will be acquiring critical mass to compete at the highest level. IPG must open its coffers to secure major rights.”

The debate about who is more capable of handling sports sponsorship is likely to remain fierce but ultimately, Patten says, it will be determined by clients. “It is virtually unheard of for a brand owner to sign a major sponsorship deal without first consulting its ad agency,” he says.

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