Pandemic starves entertainment of billions in sponsorship dollars, but will they return? –

Concert tours and music festivals will stay sidelined for months to come because of COVID-19—which continues to create a dearth of sponsorship opportunities for marketers that have spent the last year scrambling for ways to keep their brands front and center with consumers of entertainment. 

IEG projects that, as the pandemic drags on, it has caused a $14 billion loss in entertainment and sports sponsorship deals, affecting 120,000 sponsor agreements and 5,000 brands. What’s more, certain industries on which the brand sponsorship business relies, like travel and tourism, are expected to take longer to return to normal, pre-pandemic levels. Airlines, hotel chains, auto brands and rental car companies together represent nearly 20% of the top 100 sponsorship spenders in the U.S., responsible for some $1 billion in rights deals, according to IEG.

Companies dependent on sponsorship—many of which have struggled to weather this storm, instituting layoffs and other cuts—are working overtime to make up that difference as best they can and to keep business afloat. 

Many are embracing virtual events. In January, the world’s largest live entertainment company, Live Nation, acquired a majority stake in the live streaming platform Veeps, launched by Joel and Benji Madden of the band Good Charlotte. Despite a reported loss of $7 billion last year, the company last month saw its stock price hit all-time high on the promise live shows will be making a comeback soon.

And yet, the company is still embracing streaming in a big way. Aside from its purchase of Veeps, the company last year partnered with the platform Twitch on a Live Nation channel that enables brands to interact with fans through live programs. Through the pandemic, it has helped marketers like Cisco Webex and Cadillac create virtual content and immersive experiences. 

“When the pandemic hit pause on live music, our team quickly reimagined how brands could connect with people during live music moments and reexamined what the future of experiential marketing would look like,” said Russell Wallach, global president of Live Nation Media and Sponsorship. “Brands were an integral part in changing the digital frontier in music this past year and elevated expectations for fans moving forward.”

Digital turn

During these unusual times for the industry, entertainment companies and their brand marketing partners have landed on innovative ways to connect with consumers as music venues, movie theaters and Broadway remain dark. Naturally, that shift has largely been focused on digital.

A look at who’s spending on advertising—and who’s not—is telling. Measured media spending by live events took a 57.8% dive last year January through September compared to the same period in 2019, while the movie studios dropped 69.2% and the broadcast and cable TV networks declined by 60.5% and 26.4%, respectively, according to an Ad Age Datacenter analysis of Kantar Media data. Meanwhile, OTT streaming services’ spending soared 71.4%.

Consumers’ continued migration to digital platforms does not bode well for the return of many of those dollars. In a recent poll released by MediaNews Group’s Adtaxi, a Denver-based marketing agency, 49% of consumers said streaming services have made movie theaters obsolete, while 28% said they canceled a cable subscription last year and 31% of remaining cable customers signaled that they plan to cut the cord this year. 

“When you look at the 18-34 audience, 77% are not reachable through traditional linear TV, so how are marketers going to think about that?” said Chris Loretto, exec VP of digital at Adtaxi, noting that game-changing strategies like Warner Bros.’ plan to release feature films on the HBO Max platform have turned the industry upside down. “Six months ago, a movie that was on-demand for 20 bucks on my cable service or Amazon Prime, I would have never watched—but now, we rent movies all the time for 20 bucks and don’t bat an eye,” he said. “There is an acceptance of price point there, and once you change consumer perception it’s hard to change it back.”

Tom Cunha, CEO of the New York-based entertainment marketing firm Brigade, which is heavily focused on theatrical releases and whose clients include Disney and 20th Century Fox, is not in the camp that thinks cinemas are finished, predicting they’ll be back once the pandemic is over. That said, the dramatic shift toward digital cannot be underestimated. “The interesting thing is that entertainment consumption has gone up given everything that’s going on, because people are home,” he said, noting that much new business has opened up for the agency over the past year due to the explosion in streaming content. (Netflix and HBO are also clients.) 

Livestreaming and video games have been particular areas of interest lately for Jenna Fidellow, senior VP, director of client leadership at media agency Havas Media Group in New York, as each is positioned to give consumers a unique, brand-supported entertainment experience during this locked-down life. “Carbon copies of experiences in the virtual space won’t cut it,” as Fidellow put it. “Brands need to take back control of experiences and embrace new formats or they will fail to thrive.”

Havas’ integration with Vivendi and its entertainment and media properties, notably Universal Music Group and Canal +, has given it a leg-up in regard to brand relationships this past year. Fidellow pointed to Vidiyo, an TikTok-like app UMG launched with Lego recently that enables kids to direct, produce, star in and share their own music videos set to songs from the UMG catalog—a welcome “edutainment” innovation for parents working from home and balancing a second role as homeschool teachers. Vidiyo is the first product launch from the partnership between UMG and Lego announced last year.

Not a pivot

For some marketing firms, digital was already at their core, making for an even smoother ride. “We’re such a digital company that pivoting into this digital strategy wasn’t a pivot for us,” said Lewis Smithingham, director of creative solutions at S4 Capital’s MediaMonks, the Netherlands-based company that has created digital experiences for clients like Mercedes-Benz and Lenovo, with which it partnered on a virtual concert by The Jonas Brothers in December. “We take interactive, modern, digital experiences and merge them with traditional media and create things that are really, really fun,” said Smithingham.

Added Eric Shamlin, the company’s senior VP, growth and head of the entertainment category, “Brands have been trying to do digital transformation for the last decade, but 2020 accelerated that. Digital transformation became almost past-tense for a lot of brands—they had to figure it out fast.” 

To facilitate those ambitions, Creative Artists Agency in August inked a deal with MediaMonks to connect marketers with players in the entertainment and sports worlds. MediaMonks has also been active in the video game space, getting funding from Epic Games, the maker of the insanely popular Fortnite, to work with Oreo to develop cookies (the kind you eat, not the kind that track you online) in CG. As Shamlin pointed out, “Hollywood has always wanted money from brands and brands have always wanted the sex appeal of Hollywood.” Noting the rise of video-on-demand platforms, he said, “It’s the platinum age of content right now. Brands are aware of the relevance that has to their target audiences, so you’re seeing more and more partnerships to develop content.”

That goes beyond merely having a presence on a platform or in a video game. As Lewis said, “It’s not enough to say you’re going to livestream a basketball game on Twitch. Instead of just turning on a spigot, we lean into figuring out interactive forms and ways to engage directly with fans.” 

Focus on philanthropy

Nashville-based entertainment marketing agency FlyteVu executed an array of digitally driven campaigns this past year—from a virtual baby shower sponsored by Carter’s childrenswear and hosted by Kelly Clarkson to a virtual date for Bumble featuring Tiffany Haddish and Common. The agency’s co-founder Laura Hutfless said that from a brand perspective, the pause in live entertainment has yielded fresh opportunities to connect with consumers. “A lot of talent is off the road—they’re not shooting, they’re not touring, Broadway is not performing—so they’re looking for opportunities to engage and create,” she said.

Marketers have also put a spotlight on philanthropy during the pandemic, particularly efforts geared toward assisting frontline workers and everyday citizens impacted by the economic crunch of COVID. FlyteVu’s campaign for Carter’s, “ShowHER Love,” which also encompassed brands like Drybar and Shutterfly, was born of the insight that mothers-to-be during the pandemic were not surrounded by family and friends as usual. Many were also struggling due to financial hardship. The campaign benefited the nonprofit Baby2Baby, which provides children living in poverty with diapers, clothing and other necessities. Not only did the promotion meet the emotional and practical needs of consumers, it also translated to business for Carter’s, driving $2 million in sales, according to Hutfless. 

“Gone are the traditional experiences where the consumer sits and watches, like an awards show or a concert or even commercials,” said Hutfless, pointing to Lil Nas X’s concerts in November on the video game platform Roblox, which were watched by 33 million fans across two days. (The rapper’s label, Columbia Records, was a partner.) “It has evolved from a one-dimensional experience to an interactive one where fans can become part of the event, and brands have the opportunity to bring that experience to consumers.”

Darkened theaters

Even the Great White Way has embraced digital. In September, New York theatrical agency Serino Coyne and the Broadway production “Ain’t Too Proud: The Life and Times of The Temptations” teamed with American Express and its agency Momentum Worldwide on a livestream hosted by Whoopi Goldberg. Nordstrom was also a partner. With more than 50,000 views and 40 million impressions in its first week alone, the event was one of the most-watched pieces of Broadway content this past year, illustrating how hungry theater fans are for live experiences.

Serino Coyne, which is part of Omnicom Group and also handles campaigns for shows like “The Lion King” and “Wicked,” has kept busy since theaters went dark in mid-March, thanks to the diversification of its business beyond Broadway (Netflix and the observatory at the World Trade Center are clients) and its continued association with events like The Atlantic Festival, which went virtual last year. And yet, pulling the plug on multichannel campaigns in support of a $2 billion business was no small undertaking for the agency, as CEO Matt Upshaw admits. When the pandemic hit, Serino Coyne immediately put its in-house media planning and buying team to work renegotiating contracts with long-term clients to protect its financial outlook. 

Crucially, it has also continued over the last year to nurture established relationships with social media influencers on platforms like TikTok. “Word of mouth remains a principal factor in theater goers’ choices, and influencer marketing is the modern, digital manifestation of word-of-mouth,” as the CEO put it. As for promoting those returning productions with big, splashy campaigns, the agency has those all queued up and ready to roll once it gets the green light.

More than anyone perhaps, Upshaw anticipates a return to live entertainment. The question everybody has is, when? While many unknowns remain, he is confident Broadway will be back by this summer. “We are eager to be at the forefront of that relaunch,” he said. “And we certainly will be.”

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