By Paul Nicholson
October 5 – The value of broadcast rights will continue to rise driven by demand for premium content and spending power of the five digital giants from the US – Amazon, Apple, Facebook, Google and Microsoft – and China’s Alibaba and Tencent, said Martin Sorrell, CEO of ad agency WPP.
“There is tremendous disruption and change taking place…These are half trillion dollar companies. They are all going to be demanding and bidding for content,” said Sorrell, speaking at the Leaders Sports Business Summit in London. “Demand is going to be so strong and so varied. Live events will become more premium and in general content demand will exceed supply.”
While emphasising rights holders had to think in a new way in an industry that is in transition, he also issued a chilling warning for FIFA referring to its corruption crisis and reform processes saying: “I am not sure there has been enough done yet.” A disturbing message to the leaders of world football from the world’s biggest advertising agency that clearly sees FIFA as an organisation that is not progressing in the new world.
However, he did point to the 2026 World Cup in the Americas and the 2028 Olympics in Los Angeles as a “fantastic opportunity”.
It is an opportunity being driven by changing “trends in media, production and distribution which will have major implications for people in this pop-up tent,” he said, referring to the specially created new conference area reaching outside the Stamford Bridge stadium that Leaders CEO Jimmy Worrall had previously described as a bouncy castle. An apt analogy given the breadth of opportunities and new thinking needed to tackle them that was being pinged around this meeting space.
The emphasis from Sorrell was that sport has “to change its thinking” and “to think carefully about proving value and return on investment.” While rights values will continue to rise it would not be a case of easy money.
“The industry is in transition, there is also disruption in management. There needs to be a more professional approach. It is no longer a hobby or a pastime. There has to be professionalisation of management,” he said, specifically referring to content, ROI and corruption issues.
Looking at the advertising markets and how brands approach sports sponsorship, Sorrell pointed to pressure of low growth, low inflation and low pricing forcing the packaged goods brands to focus on costs which, for sports sponsors, means a focus on “how to make properties with greater clarity around their ROI. These are hard edged commercial decisions. Every rights holder has to identify as precisely as they can.”
However, he said “pricing will rise faster for rights holders that will find better ways of activating brands.” In terms of sponsorship activation where brands on average need to spend $3 on activation to every dollar on sponsorship, “brands may have to go further”, perhaps as far as doubling that activation spend.
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