Sports sponsorship spend to increase the most in a decade, report says

Dive Brief:

Global spend on sports sponsorships by advertisers is predicted to total $48.4 billion this year, up 5%, according to a new report from marketing intelligence firm WARC shared with Marketing Dive. Such growth would be the strongest rise in a decade, per the report.
The 2020 Summer Olympics in Tokyo is expected to garner $5.94 billion in sponsorship dollars, with $1.95 billion coming from Olympic partners including Coca-Cola and P&G, double the amount sponsors spent at the previous games. The report also predicts that local sponsors including Canon, Asahi and Fujitsu will spend $3.33 billion, four times the amount spent during Rio's 2016 games.
The report also forecasts that brand investment in esports will total $795 million this year, up 23.1%, with $584 million going to sponsorships and $211 million to ad breaks.

Dive Insight:

Cyclical events, such as the Olympic Games, will be strong drivers of sports marketing activity this year, according to WARC's forecast. U.S. broadcaster NBC estimated that the Summer Olympics in Tokyo will set a record by surpassing the $1.2 billion in TV commercials it sold during 2016 games in Rio de Janeiro, per Front Office Sports. The company has already booked $1 billion in ad revenue commitments and the games are still almost six months away. Airbnb, Coca-Cola, Samsung, Visa, P&G and Panasonic are among advertisers for the event, per The Drum.

The WARC report also predicts that sports associations and their games will generate record spends in 2020, including UEFA EURO 2020 tournament, English Premier League (EPL), National Football League (NFL), National Basketball Association (NBA), Major League Baseball (MLB) and Indian Premier League cricket (IPL).

The focus on sports marketing by brands is apparent in the excitement surrounding the upcoming Super Bowl, for which ads sold out early, leading broadcaster Fox to explore options like floater ads to meet the strong demand from marketers. The interest in sports marketing can be attributed to the ability for popular live broadcast events to reach large audiences at a time when the growth of streaming is fragmenting the viewing audience and a fractious society makes it a challenge to find widely appealing programming.

"Legacy rights holders are set to benefit from a windfall in sponsorship revenue in 2020, as brands continue to vie for association with properties that provide access to engaged and enthused audiences at scale," said James McDonald, managing editor at WARC Data and author of the research, in a statement.

North America, which commands 82.5% of spend in this area, experienced a compound annual growth rate of 4.6% since 2011, per the WARC study. This year, ad spend will reach $18.8 billion alone in the region. Marketers in the U.S. are largely invested in partnerships with the NFL, NBA and MLB. NFL sponsorship is predicted to reach $1.53 billion in 2020, up 4.9% from 2019. MLB spend will reach $1.05 billion, up 5.6% and NBA ads are predicted to reach $1.39bn for the 2020/21 season up 7.1%, per the WARC study.