Convergence to complicate sponsorship negotiations

With some 30 years' experience in media advertising, sponsorship marketing, direct marketing and public affairs, Peter Case recently established his own communications and marketing consultancy in Toronto. While the opportunities presented by a converged media universe appear limitless, there's no...

With some 30 years’ experience in media advertising, sponsorship marketing, direct marketing and public affairs, Peter Case recently established his own communications and marketing consultancy in Toronto.

While the opportunities presented by a converged media universe appear limitless, there’s no doubt it will present a host of dangers for event sponsors, particularly those with media exposure on their minds.

In a world where the same event might be carried on multiple media channels, locking up the ‘cyber rights’ will require a new standard of negotiating know-how. For while the new media order will probably mean a bonanza for event rights holders (the sellers in this equation), sponsors (or buyers) are facing a lot of uncertainty – enough to scare chickens at a barbecue, as someone once said.

Always a challenge of wills and skills, the negotiation of sponsorship deals by Canadian companies is not for the faint of heart. Sponsors that have traditionally bought media extensions – usually TV – to support their event commitments are about to become much more vulnerable as broadband telecasts and Internet Webcasts become increasingly commonplace.

Sponsors have already become accustomed to the vagaries of rights holders that change the rules as an event or relationship evolves. Sponsors who sign a deal today frequently discover three months from now that a more recently signed sponsor has been sold rights that overlap or contravene theirs.

Or, the sponsor purchases a proprietary and exclusive element within an event – the event’s principal ‘showcase’, for example – only to find that it is suddenly overshadowed by a late-arrival new idea that happens to be sponsored by another company.

Savvy sponsors have learned to put together comprehensive if not exhaustive contracts designed not only to maximize the opportunities in a relationship but also to protect its future. I’m referring here to the real and very much alive world of ‘competitor ambushing’ – in which a competitor uses we’ll-try-anything tactics to dilute a sponsor’s position within the event. (We’ve all heard of companies that buy media time around a high-profile event such as the Olympics, but don’t actually sponsor it. They are almost invariably companies that compete with the event’s ‘official’ sponsors.)

But fending off competitors in traditional media is child’s play when it comes to navigating the converging streams of media.

The need for strict contractual agreements is about to be ratcheted up by the increasing availability of digital set-top boxes. When hooked up, these boxes provide TV signals and Internet access on the same TV screen or monitor, thereby allowing viewers to enjoy two streams of content simultaneously.

To illustrate just how complicated rights negotiations can become, let’s use a hypothetical example. A major cereal manufacturer is the exclusive breakfast-food sponsor of a specific sporting event, one that will be televised by the TV broadcaster who buys the rights to do so. The same broadcaster undertakes to provide a Webcast of the same event, which viewers can pick up from the Internet through a digital set-top box on their TV. The cereal folks have a choice: advertise in one or both media or, to be really adventurous, provide some sort of interactive information or contest for on-the-couch viewers.

But here’s the rub: There’s no guarantee the rights holder will be able to control distribution and content, so it can’t protect the exclusivity of the event sponsor or the advertisers within both the TV broadcasts and Webcasts.

First of all, what’s to stop competition from sneaking in the back door? Although iCraveTV was effectively shut down by a barrage of lawsuits from program producers and broadcasters, who’s to say there won’t be similar challenges to rights holders in the future?

And, because Webcast event coverage might possibly be carried by an Internet Service Provider (ISP) that has no formal link to the sporting event and its cereal manufacturer sponsor, the prospect of ambush-driven advertising or promotions becomes an uncomfortable possibility.

And what about this curious prospect? Let’s suppose the sporting event’s rights holder also has an event Webcast deal with an ISP such as Lycos, AltaVista or Sympatico. With such a partnership in place, to what extent will the rights holder be protective of the cereal manufacturer’s sponsorship exclusivity for the event as well as its commercial time purchase on broadcast TV? How will the rights holder sell the combination? And at what price?

Suppose the rights holder is also in a position to actually produce program content through its own proprietary production arrangement. In this instance, the rights holder owns the event, produces the program content and has an ISP partner for distribution. Where will that leave the sponsor who has purchased just the event and broadband commercial TV inventory? Will rights holders write separate deals with TV broadcasters and Webcasters?

Anything seems possible. If a rights holder happens to have an ISP as a formal sponsor, either for an event or as a longer-term partner, the potential for content clutter and reduced sponsor protection becomes significant. Some larger rights holders such as the IOC (International Olympic Committee), along with U.S. broadcaster NBC, has recognized the issue and I’m told NBC has its franchise well protected.

Here’s a telling example from an article that followed BCE’s recently announced interest in CTV. The newspaper article suggested that if BCE gets control of CTV, it would not necessarily deny other Web properties access to CTV content.

A BCE official was quoted as saying: ‘The stuff that we will produce, we will try to give preference to our portal. In the news and sports area we will certainly try to give preference to our portal, but in the broader content area, there’s no intention on our part to give an exclusive…We do believe that you get better economics by producing something that goes after many mediums to get the broadest reach rather than make exclusive arrangements inside the family.’

So, for sponsors, just knowing the lay of cyberland becomes a compelling prerequisite.

I don’t pretend to have a clear sense of what will eventually unfold. And, in making a few telephone calls, I’ve discovered that few others do either. But the questions are real and it’s important they be asked. When it comes to sponsorship marketing and the related use of media, the need for strategic clarity and tactical care are beyond dispute.

No company entering into sizeable sponsorship deals today should do so without anticipating what might come out of left field as the lines of media blur. It’s unsafe for sponsors to sit back and wait to see what happens. Pencils need sharpening. Foresight, agility and contracts will rule.

Broadcasters and Webcasters will say that there’s immense opportunity in the making and I’m inclined to agree. But at what price? At whose expense and with what sacrifice?

The art of protecting mega-buck sponsorship investments is about to move to the post-graduate level.

Peter Case can be reached at (905) 762-0182.

In Brief: The Garden picks CDs to take on daily creative leadership

Plus, Naked names two new leaders of its own and Digital Ethos comes to Canada.

The Garden promotes two creative directors

ACDs Lindsay Eady and Francheska Galloway-Davis have taken over responsibility for day-to-day creative leadership at The Garden after being promoted to creative director roles.

The pair will also help develop the agency’s creative talent, formalizing mentorship and leadership activities they have been doing since joining the agency four and three years ago, respectively. In addition to creating the agency’s internship program, the pair have worked on campaigns for Coinsquare, FitTrack and “The Coke Challenge” campaign for DanceSafe.

Eady and Galloway-Davis will continue to report to The Garden’s co-founder and chief creative officer Shane Ogilvie, who is stepping back from daily creative duties to a more high-level strategic role, allowing him to focus on client relationships and business growth.

Naked Creative Consultancy names new creative and strategy leadership

Toronto’s Naked Creative Consultancy has hired Yasmin Sahni as its new creative director. She is taking over creative leadership from David Kenyon, who has been in the role for 10 years and is moving into a new role as director of strategy, leading the discipline at the agency.

Sahni is coming off of three years as VP and ECD at GTB’s Toronto office, where she managed all the retail, social and service creative for Ford Canada. She previously managed both Vice Media and Vice’s in-house ad agency Virtue.

Peter Shier, president of Naked, says Sahni’s hiring adds to its creative bench and capabilities, as well as a track record of mentorship, a priority for the company. Meanwhile, Kenyon’s move to the strategy side, he says, makes sense because of his deep knowledge of its clients, which have included Ancestry and The Globe and Mail.

Digital Ethos opens a Toronto office

U.K. digital agency Digital Ethos is pursuing new growth opportunities in North America by opening a new office in Toronto.

Though it didn’t disclose them, the agency has begun serving a number of North American clients, and CEO/founder Luke Tobin says the “time was right to invest in a more formal and actual presence in the area.” whose services include design, SEO, pay-per-click, social media, influencer and PR,

This year, the agency’s growth has also allowed it to open an office in Hamburg, Germany, though it also has remote staff working in countries around the world.

Moray Hickes was the company’s first North American hire as VP of sales, tasked with business development in the region.