The Internet gold rush has switched to a new frontier as dot-coms invade sports sponsorship territory. But as the stampede grows, the shockwaves are likely to be felt throughout the industry.
According to estimates from the IEG Sponsorship Report in the US, Internet companies spent about $100m (&£60m) on sponsorship and event marketing last year – and that figure is about to soar as more and more dot-coms attempt to stand out from the crowd.
At next weekend’s Super Bowl in the US, for instance, dot-com companies are dominating the event. Aside from the half-time show being sponsored by ETrade, Net players represent over half the 30 advertisers who have bought airtime during the game, for an estimated average of over $2m (&£1.2m) for a 30-second slot.
A quick glance around UK stadia confirms the emergence of dot-coms on these shores, with perimeter boards increasingly being taken up by Net advertisers. And, if industry speculation is right, Manchester United’s kit deal negotiations with two “strategic new entrants” will result in a dot-com being emblazoned on the most famous football shirt in the world.
But why have so many Net start-ups moved into the sector? Most experts believe sponsorship is the ideal medium for them. “The Internet is about getting as many ‘eyeballs’ as possible,” says one observer. “And sports sponsorship is one of the cheapest ways for dot-coms to propel their names in front of millions of people.”
In further evidence of the move, Website operator Sportal will sponsor Euro 2000 football championships in a deal worth about &£7m, as exclusively revealed in Marketing Week (January 13).
The company, which provides Web content for some of the top European clubs, including Juventus and Bayern Munich, has aggressive expansion plans and aims to use the sponsorship to catapult the brand into the public eye.
Last week, Sports.com unveiled plans for a &£5m marketing offensive, including a major radio sports sponsorship campaign on Virgin, Capital and the newly relaunched TalkSport. The activity will be supported by spot ads around key sporting events.
Matthew Patten, chief executive of M&C Saatchi Sponsorship, says: “Dot-coms face the same challenges as most new ventures – how to bring their brand to life. Sponsorship enables them to align their brand to a familiar event, but it must be relevant.”
His agency recently secured the UK launch of one of the leading US online gaming operations, Betmaker.com (MW January 13). Although he says sponsorship is likely to play a key role, it will be backed by major advertising, direct mail and online campaigns.
Stephen Pearson, former commercial director of the Premier League, is spearheading the naming rights programme for the new national stadium Arena 2000. He predicts: “In three to five years’ time, the likes of McDonald’s and Canon – which have already pulled out of the Uefa Champions’ League – will be replaced by dot-com companies. Sport has a worldwide audience and these brands want global awareness, so it is a natural fit.”
But not everyone is convinced that the dot-com invasion will benefit the sponsorship industry, with some observers believing it could compromise the sector. They cite the Super Bowl dot-com frenzy, which has pushed up advertising rates around the event and forced out many “traditional” advertisers.
Redmandarin chief executive Sally Hancock warns: “Some dot-coms have a lot of money to spend and in their eagerness to get noticed they are likely to spark a bidding war which will push up the cost of sponsorship.”
The Man United kit deal has already claimed at least one casualty after Emirates Airlines – which had offered up to &£30m over four years – was priced out of the negotiations (MW January 6).
And Hancock thinks many of the smaller sports are leaving themselves vulnerable to financial ruin if the Internet bubble bursts. “Some sports could get their fingers badly burnt,” she says.
Critics also believe sponsorship agencies are ill-equipped to handle complex Net operations, such as integrating sponsorship programmes into Websites and sorting out digital rights.
This skills gap could sound the death knell for some sports sponsorship consultancies, as new media agencies make in-roads into the sector.
As one observer points out: “Sport and the Internet are a perfect match, because of the Net’s ability to provide statistics and news. What’s to stop new media agencies from hiring a few sponsorship specialists and running the whole show?” A sobering thought for all those consultancies chasing Internet gold.