The sports broadcasting and sponsorship ecosystem is in for big changes with the rise of non-Western audiences and deep-pocketed tech companies looking to get into the lucrative field, according Sir Martin Sorrell. The WPP CEO spoke at CES 2018 on Friday, in a wide-ranging conversation with Angela Ruggiero, co-founder of Sports Innovation Lab and a former Olympic athlete.
Here’s what he thinks is in store for the industry.
The content rights bidding war will keep getting more crowded.
"The dogfight for content rights is going to intensify. You’re talking about some very big players becoming increasingly interested in sports rights," Sorrell said. That will drive the price up for everyone and push rights holders to start selling them off piecemeal, fragmenting the market.
Those big players are also more likely to be tech companies. Sorrell noted that Google, Facebook, Amazon and Tencent are all eyeing rights for sports leagues or have already started snapping them up. "Packaged goods top-line growth has been under pressure. They are looking much more rigorously at the sponsorship costs and activation costs, and they probably are less willing to invest than 5 or 10 years ago. The reverse is true of the technology companies."
Sports activations will become more important.
Sports teams are brands that fans have strong emotional ties to, and sponsors will need to find new and better ways to speak directly to customers through digital and social channels. "Activation is going to become increasingly important in terms of giving the sponsors opportunities to differentiate their products and services and build a relationship with you or I as the consumer," Sorrell said.
Niche sports will rise in popularity as brand partners.
Last year, Facebook tried to buy streaming rights for Indian cricket matches for $750 million. "If the pricing of the bigger sports rights is sucked up by competition," Sorrell said, "it means that all the sports with more limited audiences are going to become even more important and significant. There are a number of interesting opportunities for our clients." Sorrell was one the board of Formula One for 10 years, but he specifically called out surfing that’s likely to generate increased interest.
Sports ownership will no longer be a hobby.
For years, wealthy moguls have purchased sports franchises as trophy buys, or out of childhood nostalgia. But just as broadcasting and sponsorship is evolving, so will management. "Sports has been preserve of the amateur," Sorrell said. No more.
"It has to become more professional. You cannot have the sort of situations that we’ve seen—the corruption, the lack of a professional approach," he added. "Olympic sponsorship is a colossal investment. They have to be managed with the greatest care."
Look to virtual reality.
Tech companies are jockeying to create the largest, clearest screens and immersive, enveloping home entertainment systems, but nothing can match VR. "The thing I’m most interested in is virtual reality—augmented reality as well," he said, "but that’s where I think the most exciting opportunities are."