This is a guest post by Russell Silvers, senior vice president, AEG Global Partnerships
The state of the sponsorship industry has reached a crossroads. The rapid proliferation of technology and digitization of communication and culture has rendered traditional advertising methods ineffective as mainstays of sponsorships. In today’s era of digital innovation, brands, sports teams and properties all must think creatively on how best to reach and, most importantly, connect with consumers in order to achieve a maximum return on investment.
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In a recent research study, 93 percent of the millennials surveyed (18-34 year olds) like brands that sponsor live events. It’s no shock then that data unveiled at the Association of National Advertisers’ 2016 Brand Activation Conference says that brand activation is a large and growing part of advertisers’ budgets. According to PQ Media, U.S. brand activation spending hit $561.5 billion in 2015 and is expected to rise 6 percent to nearly $600 billion in 2016. So it’s clear that brands are quickly escalating their budgets to include – if not concentrate on – live event activations, but how do you estimate the value?
Often times, the value exchange in an activation is inherent for fans who can directly benefit from the experience the brand is offering, especially if that is through a series of bonuses. Merchandise, fast pass lines, exclusive access to VIP experiences, and more bring an obvious, nearly immediate tangible reward to fans attending live events. Brands, in exchange, benefit in a different way. Words such as “loyalty,” “word of mouth,” and “relationship” are often looked upon as bonuses for brands, but it can be hard to achieve an actual return on investment unless you are measuring your activation. This is where technology becomes not just a factor but also the main ingredient to many successful brand activations.
Digital, architectured experiences with a fan-first approach are what drive returns. Using technologies such as beacons, proximity-based messaging, and/or creating in-app experiences create multiple touch points in an activation and allow for brands to position themselves at the right time and in the right place in front of the right consumers. By incorporating these types of technologies into campaigns, brands can collect and grow from the data they are receiving from the people participating in the activation. Data capturing allows brands to measure the success of campaigns and track areas that have potential for growth. It also acts as a way to measure their return on investment in an immediate, actionable way.
It’s creating tailored experiences with technologies like the above – identifying what will best help a brand or event reach its audience – that have, for example, helped grow the Amgen Tour of California into America’s most prestigious annual cycling event. With more than a million fans slated to attend this year alone, the race has been able to grow over the past decade to a race that not only attracts a multitude of spectators but also demands top-dollar from sponsors.
Exiting the city of roses and on to #SantaClarita. Stage 2 of #AmgenTOC is officially underway. #LexusCycling pic.twitter.com/7TGMBZIHRG
— Lexus (@Lexus) May 16, 2016
Debuting for the first time at last year’s race, Lexus introduced cycling fans to its virtual reality Cycling Challenge. The experience, back again this year, gives cycling fans the opportunity to see what it’s like to compete on the professional circuit. Guests enjoy the ride within a virtual peloton, with 3-D spatial sound and a 360-degree view. With the Lexus F Sport bike on display, fans can channel what it’s like to be a professional cyclist through Lexus. By introducing activations such as this, the brand is able to communicate with consumers through a digital experience, delivering tailored content to a potential customer.
Brands and organizations that leverage technology build deeper connections with fans and consumers. By turning the focus from traditional sponsorships to experiential activations, brands can build a narrative at live events with their audiences and play the hero through customized experiences. When compelling experiences are created that blend the live event seamlessly with the activation, it becomes natural for event attendees to interact, talk and share it with their friends on social media – lengthening the life of the activation– and organically turning fans into brand ambassadors.
Technology has created a turning point in the sponsorship business and call to action for many. By embracing technology, brands can and have created smarter activations, with multiple touch points, that introduce a trackable value exchange – changing the game for everyone involved.