Exclusive Super Bowl Sponsorships Are Dead – So What’s Next for Live Sports Advertising?

Is the Super Bowl still the biggest game in town for advertisers? That’s the question many brands may be asking after Pepsi and Anheuser-Busch abandoned decades-long exclusive Super Bowl sponsorships — a reflection not only of the championship’s diminishing cachet in an evolving media landscape, but also the uncertain future of sports advertising with a recession on the horizon.

While the Super Bowl continues its reign as the year’s most-watched broadcast — drawing 112.3 million viewers for this year’s contest between the L.A. Rams and the Cincinnati Bengals — the value it provides advertisers is shrinking in an increasingly fragmented entertainment space, experts tell TheWrap. And now the NFL must worry if other major brands will follow Pepsi and Anheuser-Busch’s lead as they reassess the best way to spend their marketing dollars.

“Sponsoring the Super Bowl halftime show, buying a Super Bowl TV spot — it isn’t what it used to be,” an Anheuser-Busch insider told TheWrap. “No one cares if James Bond is drinking a Bud Light.”

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Why Pepsi and Anheuser-Bush moved on

The soda company’s 10-year exclusive Super Bowl halftime sponsorship deal was valued at $2.3 billion, with an additional $1.3 billion in marketing expenses. Anheuser-Busch, meanwhile, was paying upwards of $250 million annually to be the Super Bowl’s sole beer sponsor.

Pulling out of these deals “is likely due to a rise in costs and a difficulty keeping such a high-stakes event fresh,” Michael Lyons, chief investment office of JuiceMedia.io, a media activation agency for global brands and direct-to-consumer companies, told TheWrap.

Both companies have diversified their product offerings over the years. It’s no longer about a single soft drink or beer choice. Now, each company is focused on promoting a plethora of ready-to-drink cocktails, hard seltzers and new carbonated flavors. As spending has increased and the market has segmented over the last decade, chasing incremental growth for one product has become less important than an efficient allocation of resources.

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“The goal of Bud Light and Budweiser isn’t to grow their categories, it’s to maintain and avoid losing any market share,” the Anheuser-Busch insider said. “Why spend the bulk of your annual budget on a product that we’re just trying to hold the levees on and prevent a flood?”

Pepsi didn’t immediately respond to TheWrap’s request for comment.

A rep for Anheuser-Busch cited a statement from VP of connections Spencer Gordon from June: “Over the past several years, we’ve been on a journey to lead future growth. This requires us to constantly reassess where and how we deploy our investments, to rebalance our portfolio and stay ahead of consumer trends. When it comes to sponsorships and media, we are evolving our investments so that our brands reach the right consumers, at the right time, in the right place, with the right messages.”

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Will other brands follow?

The exit of high-profile brands may not immediately set off a widespread panic among major NFL partners, but it might open the door for competitors who have been shut out due to category exclusivities.

“This decision will, at the minimum, make brands take pause when pursuing all-encompassing and exclusive deals with major cultural events such as the Super Bowl,” Gerry Ramirez, VP partnerships development at My Code, the largest multicultural digital media platform in the U.S., told TheWrap. “If industry giants apparently don’t see the value in these types of deals, it’s unlikely that other brands will over-invest moving forward.”

Across major North American sports, atypical sponsors have grabbed increasing visibility, from the renaming of the Staples Center as the Crypto.com Arena — home of the Los Angeles Lakers, Clippers, Kings and Sparks — to the Chicago White Sox’s Guaranteed Rate Field and the Miami Marlins’ LoanDepot Park. Hellmann’s Mayonnaise and Huggies became unlikely Super Bowl advertisers last year and the noisiest cultural ads this year came from new and unexpected sources (hello, cryptocurrency).

“If anyone fumbles, falters, missteps or stutters, there will always be someone to fill the void,” the insider said of would-be NFL sponsors.

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Where is that money being rerouted?

Companies are looking to move marketing money into new arenas with digital and over-the-top (OTT) spending taking on even greater importance as the early pandemic created an increased focus on at-home viewing. “Even as people return to real life, I don’t see that media consumption habit changing all that much,” a national media buyer told TheWrap. “That’s here to stay and money continues to be shifted from traditional TV to streaming, similar to how it moved away from print and towards digital in its infancy.”

The push to reach millennial and Gen Z consumers through social media influencers is driven in part by a desire to garner predictable engagement that is more easily measurable. This includes inspiring more user-generated promotion by funneling resources to festival events — such as the California country music festival Stagecoach and New York City’s music, art, and food event Governor’s Ball — with activation areas that can be shared across various social platforms.

Experimental marketing — such as Red Bull’s partnership with extreme sports and Airbnb’s move to provide experiential events such as food tours and yoga classes — is now considered a great way to differentiate a brand and garner more attention in an increasingly crowded marketplace. It’s a stark juxtaposition with the linear Super Bowl ad model, which has remained largely unchanged for decades. (Since hitting a 21st-century high of 114.4 million linear viewers in 2015, the Super Bowl has dropped below 100 million in two of the last three years).

“These big traditional shows like the Super Bowl still reach the highest number of eyeballs, but the efficiency isn’t there,” the national media buyer said. “Experiential media, street teams, out-of-home advertising — a lot of these mediums are coming back.”

Both Pepsi and Anheuser-Busch will continue partnering with the NFL, just no longer through exclusive (and expensive) Super Bowl deals. Pepsi will promote around the NFL Draft and other player awards events. Anheuser-Busch, which will remain the exclusive beer and hard seltzer sponsor of the NFL, will “rebalance our media investments in key moments all year, both during football season and during the summer selling season,” as Gordon said in his statement last month.

“Both companies are seeing the writing on the wall and are taking a more targeted approach to maximize their investment,” Ramirez said.

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What’s next for the market?

The 2022 Super Bowl still garnered record-topping fees and that in an ever-fragmented media universe, Lyons said, adding, “the Super Bowl delivers scale and relevance in one full dose.”

Still, with a recession looming, insiders expect a dip in overall sponsorship spending surrounding all major sports over the next two years. And if the financial pinch worsens over the next eight months, some speculated that the newer companies these leagues have partnered with in recent years may not be able to make scheduled payments. If any pro sports organization is left scrambling to replace lost ad inventory, the balance of negotiating leverage shifts in favor of new advertisers looking to fill the void. Overall, though, the next few years may bring short-term pain as part of a larger long-term stabilization.

“There’s no reason teams and leagues should be shaking in their boots about big sponsorships,” the Anheuser-Busch insider said. “The market has to regulate a bit and this is a natural correction.”

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