Friday, May 24, 2013

Microsoft Steps Up Sponsorship Game with New NFL Deal

As an observer of the sponsorship industry for the past 17 years, I have seen many changes and innovations. Price tags have ballooned to sponsor marquee sport properties, technology has added new sponsorship inventory via digital and virtual signage, and social media enables sponsors to communicate their association with a sports brand on any screen used by their target market. These three developments are noteworthy, but they are secondary to what I see as the most significant development in sponsorship practice: A more strategic focus on selecting and activating sponsorship. The days when many decisions on sponsoring a sports property were influenced by the personal preferences of the decision maker are largely a fond memory. Today, the financial stakes of sponsorship deals and the urgency to demonstrate return on investment call for viewing sponsorship as a vehicle to drive business growth.

The Future of Sponsorship
The agreement announced this week between Microsoft and the National Football League is a great example of what the future of sponsorship will look like. Microsoft has extended the association of its Xbox brand with the NFL and created a new association for its Surface tablets. Of course, the standard rights we expect with a sponsorship deal are present:
  • Xbox remains "The Official Game Console of the NFL" and will also become "The Official Interactive Video Entertainment Console."
  • Microsoft is "The Official Sideline Technology Sponsor of the NFL."
  • Surface by Microsoft and Windows are "The Official Tablet and PC Operating System of the NFL."
These official partner designations would have been the crown jewels of this kind of deal in 10-15 years ago. Then, the sponsor would have begun the process of figuring out what to do with the exclusive partner designations they had bought. That process is increasingly playing out before sponsorship deals are signed.

Sponsorship as Business Strategy
The future of sponsorship will be deploying it as a vehicle in support of business strategy, which is a far more significant role than sponsorship being viewed primarily as a communications channel. Two products that are critical to Microsoft's success, Xbox and Surface, are centerpieces of the relationship. These products are at two very competitive positions in their respective categories- Xbox is established as the market leader in the video game console category. But, Microsoft is keen on developing new consumption options that go beyond the video game. The partnership coincides with Microsoft's unveiling of the next generation of Xbox: The Xbox One. Users will have be able to have interactive experiences that brings exclusive NFL content to their consoles, offers an enhanced fantasy football experience, and offers personalized options for getting content on games, teams, and players fans care about most. 

In contrast, the Surface tablet is a distant third in tablet market share. Its 7.5 percent share at the end of Q1 2013 is not bad considering it was not even on the market at the same time last year. But, its market position is overshadowed by Apple (48 percent) and Android (43 percent). The Surface is a big gamble by Microsoft in that its strength historically has been developing software, not hardware (remember the Zune music player?). A sponsorship in which the Surface brand was merely featured on signage and some unimaginative marketing promotions devised would do little to help the product compete. The NFL sponsorship calls for Surface tablets to be used by coaches and players on the sidelines. Say goodbye to seeing coaches and players viewing paper photos of formations- they will now be using Surface to analyze information. NFL fans seeing Surface being used in this way may develop new beliefs about the brand and its capabilities, not to mention increasing brand awareness and recall by its presence on the sidelines.

A New Sponsorship Game
We should expect to see more sponsorship deals like the Microsoft-NFL partnership in the future. Sponsors must broaden traditional views of sponsorship as a communications platform. A sponsorship ideally is a business platform- associating with a sports brand should present opportunities to achieve business objectives. Sports properties must rethink what they have to offer to their corporate partners, too. Selling the idea that 18,000 people will see your logo on signage every time the arena doors open may be ego boosting, but that will do little to acquire customers, sell products, and build relationships. The next post will continue on this topic of the future of sponsorship.