How brands use sports sponsorships to deliver commercial outcomes

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The commercial objectives of sports sponsorships

Following on from part 1 which focused on top & middle funnel sponsorship outcomes, many brands often use sports sponsorships to:

1. Drive customer acquisition & loyalty outcomes

2. Develop new commercial products and innovations to improve the fan experience, and deliver incremental commercial revenue

3. Cut operational costs (through contra deals)

4. Generate a direct financial return on their investment

Here’s some examples of how brands have activated Australian sports sponsorship to achieve the above commercial outcomes.

Hyundai have been converting Carlton FC fans to Hyundai Drivers for years

Hyundai have built a long-standing, and loyal relationship with Carlton FC supporters through it’s 20+ year sponsorship. Throughout its history, Hyundai have looked to capitalise on this relationship by running cash back offers that aim to convert fans to Hyundai drivers.

AIA Australia encourage AFL fans to join or switch their health insurance

AIA Australia have entered into new sponsorship agreements with numerous AFL clubs in recent years. To activate their sponsorships, they’ve provided fans from Collingwood FC, Essendon FC, St Kilda FC and North Melbourne FC with highly relevant acquisition offers, encouraging fans to join or switch their health insurance.

The wagering dilemma

Wagerer’s pay eye-watering sums of money for sports sponsorship (strong evidence that suggests sponsorship is highly effective) and this often creates a major ethical dilemma for sports teams and leagues. Many sporting organisations are increasingly under pressure to limit and/or remove their exposure to sports betting however these sponsorships remain prominent across many codes, including Australia’s two most popular leagues, the AFL and NRL.

SportsBet uses tactics to drive you to their bet slip

SportsBet are the major sponsors of both the AFL and NRL and activate their sponsorships to encourage fans to bet using various approaches.

1. Fixture integration

Both leagues leagues feature the odds on their respective fixture pages, creating the highly-convenient scenario where fans are only one click or tap away from entering the online betting journey.

2. Strategic media placements

Fans are also prompted to make last-minute bets by the many strategic media placements shown pre-game. The barriers to betting are quite low given that fans can simply place a bet using their smartphone once prompted.

The AFL and other rights-holders not only make huge sums of revenue “directly” through their sponsors, they benefit “indirectly” from all bets placed on the code as Gill McLachlan explains in the below…

@thesystemaus3@afl CEO explains the relationship that the AFL has with betting companies. He doesnt specify exactly how much, but “double digits” of turnover leads to believe the AFL is heavily reliant on the bookies. What are you thoughts? #afl #discussion

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Alcohol, FMCG and wagering products go hand-in-hand with sports which is why sponsorship within these categories is so prevalent - Asahi has just renewed its NRL partnership as the official beer, cider and non-alcohol beverage sponsor of the NRL.

Although this is the case, with the increasing pressure and regulation that some brands from these categories face, they’re often tasked to come up with creative ways to amplify their association and connect with sports fans…

The BetEasy Tower of Torp converted AFL fans to BetEasy members

At the AFL’s Footy Festival that attracts 270,000+ fans, BetEasy built a 12-meter high tower giving fans the opportunity to kick a footy into a 3-meter high replica AFL premiership cup to win grand final tickets. This activation was a massive acquisition and loyalty driver as BetEasy members received more attempts than non-members - as a result, those fans that weren’t already BetEasy members signed up on the spot.

Bundaberg Rum partnered with the NRL and Jimmy Brings to drive incremental sales

During the State of Origin series, fans could order a limited-edition Bundy Halftime Hero Bundle via the Jimmy Brings app and go in the running to have an NRL icon deliver it to their door (with a guaranteed 30 minute deliver time).

The NBL x Hungry Jacks Free Throw Promotion put cheeseburgers in the mouths of fans

During the NBL basketball season, they ran a promotion with Hungry Jacks, giving fans the opportunity to win free cheeseburgers.

The Mechanic:

If the AWAY team misses two consecutive free-throw shots in a single penalty, fans located in the state of where the game is being played within Australia can redeem a free cheeseburger at Hungry Jack’s. The shots must be two consecutive missed free-throw shots in a single penalty

Geelong FC previously ran a similar “Kickin for Chicken” promotion with KFC, giving Cats fans free Zinger Burgers if an opposition player kicked a set shot out on the full from inside 50m in the last quarter.

Although fans receive freebies, promotions like these are a tactic used to put burgers in mouths and drive incremental foot-traffic into stores, in the hope that fans spend additional dollars on upsizing their prize.

Four’N Twenty are another example of a brand that has effectively used sport sponsorships as a vehicle to sell pies - read more here

Education partnerships are a mutually-beneficial source of revenue

For what can easily be mistaken as a traditional sponsorship, AFL, cricket and rugby have partnered with universities to create something much bigger - sports related courses that offer students formal education and valuable hands-on experience within elite sporting environments. These programs are growing year-on-year, signaling that they’re mutually and commercially beneficial for both parties.

• RMIT University partnered with the Essendon Football Club and Cricket Victoria to create the Essendon Education Academy and Melbourne Cricket Education Academy respectively

• La Trobe University partnered with Carlton Football Club to create the Carlton College of Sport

• Swinburne University partnered with Richmond Football Club to create the Richmond Institute

• TAFE Queensland partnered with Brinsbane Broncos to create the Sport Business Institute

Contra-deals help rights-holders cut costs, and joint ventures create new revenue streams…

For some brands, a large component of their sport sponsorships agreements include contra. For others, partnerships are formed to co-create new projects and innovations.

Virgin Australia secures flight bookings through its AFL sponsorship

In 2021, Virgin Australia extended its 10 year partnership with the AFL and AFLW until 2025. As part of this partnership, clubs book approximately 16,000 seats per season. This deal also provides Virgin with business development opportunities and access to the AFL’s extensive portfolio or partners.

“Powered” by Telstra

Telstra recently agreed to continue to be the NRL’s naming rights sponsor for both the NRL and NRLW Premierships until 2027 – taking the partnership to 26 years. As part of this agreement, a dedicated innovation fund has been set up to collaborate on technology projects that enhance the digital experience and connection with fans. The NRL app which is “powered” by Telstra is central to this. Telstra is also a major sponsor of the AFL who have also outsourced their app development activities to Telstra.

Sports retailers use sponsorships to sell more products - Nike’s demand creation expense tactic

Lastly, sports retail brands have sponsorship deals with athletes, teams and leagues to:

1. Access IP, to assist marketing their brand and make their products more appealing

2. Secure exclusive supplier-distribution rights

For years, Nike has had an obscure line-item within its financial reporting called “demand creation expense” which encapsulates all spending related to sponsorship and media that creates demand for Nike products... an example are LeBron James shoe collaborations or the kit supplier partnerships with the world’s biggest leagues such as the NFL, NBA and MLB reportedly worth $100m+ annually.

Nike signed it’s first ever kit supplier deal with a sports league within Australia, partnering with Cricket Australia to supply all kits for the 2021/22 BBL season.