Coming back from an unprecedented 24% decline in sponsorship investment by businesses in Ireland in 2020, the Irish Sponsorship market is set for a return to growth of 7% in 2021 to reach €182m, according to a new report by industry experts ONSIDE.
The 15th annual ONSIDE Irish Sponsorship Industry Survey report estimates that 2020 struck €54m off the size of the sponsorship market in Ireland, dropping to €170m. 7 in 10 sponsors in Ireland decreased their sponsorship investment during 2020, with 91% of these attributing the impacts of the pandemic to their cuts. The scale of the ‘Covid effect’ is evident in the fact that just 16% of sponsors were originally planning to decrease their sponsorship investment in 2020.
According to John Trainor, Founder and CEO of ONSIDE: “Given the events of 2020, the sponsorship industry is showing good resilience, and the flexibility that rights holders and brands have shown in the past 12 months bodes well for a market recovery. While 6 in 10 sponsors have already entered difficult negotiations with their partners on how to account for the impact of Covid on their agreements, the overall ratings of the organisations that they sponsor is the highest on record.”
ONSIDE Founder & CEO, John Trainor
Despite lingering pandemic and economic clouds, including possible Brexit effects on the free movement of sport and entertainment, ONSIDE found 41% of sponsors are planning to increase their investments in sponsorship in 2021, compared with 38% a year earlier. However, the ONSIDE annual report flags that the pandemic is having a near-term impact internationally in terms of downward pressure on the value of sponsorship rights. The consultants note that “under intense pressure to bring in revenue absent due to the inability to sell tickets, many properties in mature sponsorship markets, particularly those below the top-tier national sports level, have agreed to sponsorship deals at rates 50% less than what they would have garnered pre-Covid”.
63% of sponsors in Ireland expect sponsorship fees to decrease in 2021 and although those conditions will ease with the expected return of fans later in 2021, Trainor notes that “previous experience with price elasticity in sponsorship indicates fees will not immediately bounce-back to pre-2020 levels. The silver lining in this situation is that it opens a lane for opportunistic buyers attracted by suddenly affordable opportunities and/or the chance to step into a vacuum created by the departure of previous sponsors. The longer-term upside should be an influx of new partners that otherwise would have spent money elsewhere and that have the potential to stick around if they find success and earn a return on their new investments”.
Hot sectors for sponsorship growth to watch in 2021 according to the ONSIDE research are ecommerce/online retail, supermarkets/retail, food delivery, pharmaceutical and banking, with a surge in activity among IT/tech firms also possible. The report also notes Covid-influenced spending uptick internationally from health and wellness products, such as at-home services and apps, online prescription eyewear, along with digital fitness trackers such as WHOOP, the PGA Tours latest partners in 2021. Non-alcoholic beer and spirits brands are also set to up their game.
For Irish businesses looking for a new sponsorship in 2021, GAA has rejoined Sustainability/ Environmental platforms as providing the top growth opportunities for sponsors. Cause-related and community-focused sponsorships, along with e-sports and radio sponsorships are also growing in sponsor appeal this year.
Sustainability / environmental platforms are one of the top areas that will provide growth opportunities for sponsors in 2021.
Reflecting on the activity produced by the collective Irish sponsorship industry in a largely locked-down Ireland in 2020, just 1 in 5 industry practitioners surveyed felt that sponsorship campaigns in Ireland in 2020 were ‘more effective’ than previous years – a drop of 17% year on year. Vodafone’s partnership with the IRFU was again voted by the industry as the best sponsorship of the past year, with others standing out including supermarkets SuperValu & Lidl, financial services providers AIB, Bank of Ireland and FBD and energy sponsors Bord Gáis Energy and Electric Ireland. Guinness was voted the most admired sponsor of 2020 in ONSIDE research with the Irish public.
Trainor believes that “the public will be closely watching for the sponsors that are committed to backing their favourite sport, entertainment or cause-related platforms as they look to get back on their feet. 7 in 10 Irish adults in our end of year consumer research called on sponsors to maintain or increase their spend on sponsorship as the economy recovers, and people will remember the sponsors that supported their favourite sport or entertainment platform in hard times”.
Among the sponsorship industry budget holders surveyed, Katie Taylor stretched her lead by 18% at the top of the most marketable personality list for 2021. Trainor noted that “there was a very definite swing towards non-sports talent seen as offering potential for consideration for brand ambassadorial campaigns in 2021, including Ryan Tubridy, Paul Mescal and Amy Huberman. Paralympic hopeful Ellen Keane and boxer Kellie Harrington also contributed to the growing numbers of female talent making up this year’s Top 10 ambassadorial prospects”.
3 in 4 sponsorship industry practitioners are optimistic that the sports industry will recover from the impact of Covid-19 in the next 1-2 years, compared with 2 in 3 in the case of the live entertainment industry. Early signs of changes coming out of the turmoil include 3 in 10 rights holders investigating ways to use new AR and VR technologies in the near term, while 4 in 10 are calling out a lack of diversity and inclusion in organisations that they align with as a significant concern.
Social Media and Content marketing will continue to lead in importance in sponsorship activation plans this year, while Business to Business activations are set to grow fastest as the area of marketing that Irish sponsors plan to do more of in 2021.
Considering wider forces at play, Trainor notes that “recent trends regarding investors and rights holders will also have ramifications for sponsorships. Private equity firms have purchased or are targeting large stakes in rugby union’s Guinness PRO14 and the Guinness Six Nations, the Williams and McLaren F1 teams, and the media and tech businesses spun off by the Bundesliga, La Liga and Serie A at the same time that more than a dozen special purpose acquisition corporations — often called “blank-check companies” - were formed in 2020 with the purpose of acquiring sports properties and related businesses”.
According to Trainor, “these new breed owners, and the need for returns on their investment, will likely have a major impact on the monetizing of sponsorship, media, and other rights and services offered by the properties they invest in. In some cases, they may push to further professionalize commercial operations beyond what previous owners required. In others, they could look to radically alter the structure of sponsorship agreements and terms to maximize earnings. In both cases, new developments will inevitably trickle down throughout the sponsorship business”.
The ONSIDE Irish Sponsorship Industry Report 2021 is a survey of key industry stakeholders in the Irish sponsorship market. The respected barometer conducted annually since 2007 gathers insights on the state of the sponsorship industry in Ireland tracking sponsor and rights holder spend, investment, strategy and opinion.
ONSIDE is a leading specialist in marketing and sponsorship consulting and research services — with a proven track record and strong industry experience in a cross section of sectors, ONSIDE is currently feeding into the marketing and sponsorship decision making of circa €50m+ of Irish spend — working on many of Ireland’s premier sponsorships — on sporting, music, cause-related, broadcast and other platforms.
