Examining Why Sponsorship Spend Now Makes Sense For Future Purchasing Behavior

BY ADAM GROSSMAN

It is difficult to think of any industry harder hit from COVID-19 than travel. Yet, there are reasons to think that this industry may rebound sooner than many would have anticipated. Examining why this is occurring has further application for how both sponsorship buyers and sellers should consider spending for the second half of 2020.

The decline in travel demand has caused an expected decrease in advertising from travel companies. For example, MediaRadar found travel-related programmatic ad spending decreased by 79% in Q1 of this year. It would be natural for that decline to accelerate in Q2 and Q3 (i.e. after March) when majority of the impact of COVID-19 affected the US economy. 

Yet, there is some data that suggests that may not be the case. While, Booking.com “has seen steep decreases in new room bookings, it's responding to an uptick in activity from ‘dreamers,’ or people scoping out vacations but not committing to booking a room yet, with promotions to keep users looking.”

The “uptick in activity from ‘dreamers’” from Booking.com’s analysis may seem surprising. However, it actually complements the analysis from a previous post featuring our Audience Inference Platform (AIP) that examined posts from followers of the @IRONMANLive account. More specifically, we showed that these followers are disproportionately talking about keywords and topics having to do with getting back to participating in racing and competing rather than COVID.   

The timing of this Booking.com analysis comes at an interesting point for the sports industry. In particular, many leagues have either re-started or have announced the restarting or resumption of competition. Most, if not all, competitions will occur in venues without fans being able to attend.

This has led to multiple leagues considering new ways to activate with a focus on new opportunities using technology such as on-field augmented reality and digital overlays on empty seats. Both Major League Baseball (MLB) and La Liga are examples of leagues that have recently announced that they are exploring new sponsorship opportunities of this type.

What is particularly notable about these opportunities is that they take advantage of the fact of the lack of fans. More specifically, leagues and teams are particularly exploring how to use technology for locations with media viewable signage that maximize their logo’s time on screen, location on screen, and clarity on screen.

This helps mitigate partner’s concerns about reduction in value due to a lack of fans at venues. Partners may still not purchase this new inventory, if companies are not willing to spend money based on perceived lack of demand for their products. Demand shock from COVID has caused “the advertising industry, as a whole, [to see] dollars disappear.”

The Booking.com and Ironman analysis shows that short-term demand declines create medium and long-term opportunities. More specifically, Booking.com shows evidence that people are already thinking about traveling again while Ironman shows that people are already thinking about competing again.

That can seem like music to sports properties’ (leagues, teams, events, and athletes) ears. Travel is one of many categories that spends a significant amount of sponsorship dollars. Teams can use insights, like the ones from Booking.com or AIP, combined with the restart of seasons and new inventory to show that now is the right time to spend on sponsorship.

This type of analysis is advantageous to partnership buyers. More specifically, there are deals available with sports properties because as a result of the “disappearing dollars,” new inventory is coming on-line that can more effectively reach their target audiences, and audiences are now looking to make purchasing decisions.

We fully understand that consumers in multiple industries will not spend money on items such as travel if there is a second wave of the coronavirus. If there is not a second wave, however, properties and partners should examine data around their consumers’ future buying patterns to determine whether now is the right time to increase sponsorship spend.