Digital advertising is broken and almost everybody is aware. Sponsoring is a sub-category of advertising and, as such, also requires an update. Frankly, it needs to be rethought to work in the digital era. With the introduction of Sponsored Tokens, we are doing exactly that.
The Digital Sponsoring Problem
Let’s take a look at sponsorship and how it works in the world of sports today. Historically it is a tactic rooted in mass-market era brand advertising. Perimeter ads at the side of the pitch and logos on jerseys promote brands while you watch a game. It’s all awareness-driven advertising, developed in the mass media age and optimized for mass-market companies.
With the advent of the internet and social media, in particular, the mainstream audience’s media usage changed. And along with it did the logic by which companies go to market and advertise their services. Hence, both sponsors and rightsholders started to think about ways to translate sponsoring to the digital world. As is often the case with the advent of new technologies, the first steps were merely adaptations of analog forms into the digital realm. Think of club websites full of banner ads for example. Of course, such digital sponsorship activations are not particularly relevant and often even annoying for users.
The next big trend was content marketing, including related forms such as native advertising or branded content. Because users have almost unlimited content options in the digital world they simply couldn’t be bothered to look at dumb ads. Thus, brands started to realize that their digital marketing needed to be more relevant for the user if they wanted to succeed. As a result, rightsholders started to create content with and for their sponsors and distributed it to their fans, mostly on social media. This was certainly a step in the right direction. When done well (admittedly not always the case) it created more genuine touchpoints between sponsors and the fans of the sponsored entity.
Still, content marketing does not address another challenge that arose. An entirely new generation of companies was born in the digital age. Many of those businesses don’t operate by the laws of mass media and industrial mass markets. They are not primarily interested in awareness — so that fans would buy their products at the point-of-sale — but in conversion, so that users could turn into clients with the click of the mouse or a tap on the screen. Sadly for the sports and sponsoring world, rightsholders usually don’t have the tools to offer attractive solutions to these companies. Often the most interesting options they can offer are posts on social media. But most advertising budget is spent directly with the social media companies because they offer advanced and integrated advertising platforms. The rightsholder is barely a middleman with little added value.
Long story short, sponsoring is not an attractive option for most performance-driven companies. Alas, most new companies that are predicated on the internet’s existence operate by this new logic, for example, all the direct-to-consumer and e-commerce companies. That’s bad luck for rightsholders because many very attractive companies fall in this category.
Sports Need Platforms
What is the solution? To answer this, let’s take a step back. Sponsorship is the mass media age’s way of turning the attention and passion of fans into a business. To do this successfully in the digital world, you need to understand its rules.
The fundamental change to the mass media era is that demand is key, not supply: entertainment options are no longer limited but effectively endless. Online, users can simply go wherever they are best served within seconds. As a result, you only succeed in the digital marketplace if you manage to attract users who love your service. Hence, successful digital businesses are all about the user.
That is why the big platforms such as Instagram, Facebook, etc. succeeded: they are (in some cases used to be) radically user-centric. Users choose to use them every day. Therefore, platform owners have great digital businesses. Meanwhile, those who have the content people care about, yet no platform, have by and large been degraded to — usually unpaid — content suppliers to the platforms. That’s where sports’ at.
To fix the sponsoring problem outlined above, rightsholders need to
- a) build their own platforms,
- b) attract a user base, and
- c) develop attractive solutions for their sponsors.
Of course, that’s not as trivial in practice as this 3-point list suggests. While the potential user base exists — teams and athletes usually have an established fan base — a) and c) are fundamental tech challenges. Most rightsholders simply don’t have the capabilities to solve them. Nor should they.
What they need is a sound digital infrastructure that solves the tech challenges for them so that they can focus on their core business: entertaining the fans. Fortunately, I have good news for you: a) is what we built LT Fan Platform for. And c) is why we roll out Sponsored Tokens starting now.
LT Fan Platform
In case you are not yet aware of LT Fan Platform, let me give you a quick introduction first. LT Fan Platform is a customizable fan engagement platform and token-powered digital business engine. Our paradigm is “your fans, your platform”.
Our current focus is on sports where our clients range from top teams like Borussia Dortmund to athletes such as NBA star Dennis Schröder and to individual creators such as WLTVRN. (Of course, our platform works for everyone who has fans, sports or beyond.)
The best way to think about LT Fan Platform is as a modular toolkit that you use to power your digital business. In that sense, you can compare how we approach fan engagement to Shopify’s approach to e-commerce: We give you the tools to build your own social, interactive and gamified platform where you can create engaging and rewarding interactive experiences for a digital generation of fans.
On top of this, you can build various business models around your fans’ passion and engagement. To this end, LT Fan Platform utilizes so-called social tokens.
Your fans can use those social tokens to access exclusive content or participate in various community activities such as votings, ask-me-anythings, or ideation missions. And how do they get tokens? There are several options. First, your fans can earn them by contributing actively to the community. Second, they can purchase them. Depending on your strategy, tokens can be sold either in individual packs (similar to what you might know from many games) and/or as part of a subscription — think your own OTT service or membership program. Now, we introduce the third option with Sponsored Tokens.
Sponsored Tokens: Digital activations that fans love
Sponsored Tokens present a new and highly engaging opportunity for brands to connect with the fans of the entities they sponsor.
Our goal with Sponsored Tokens is straightforward: we aim to create value-additive messaging formats that are relevant to fans, can generate attractive conversions for sponsors, and open an entirely new market segment for rightsholders with a new digital-native inventory category.
Unlike most digital advertising, we are building Sponsored Tokens to allow brands to place their messaging within a rewarding user experience, not in an intrusive one. Here’s how it works: Our first implementation of Sponsored Tokens is in the context of free token giveaways. My colleague
Ron Jaradat explains this in more detail in his piece over here.
The gist of it: you can reward your fans with free tokens for many actions they can take on your platform, from opening the app to inviting friends or adding a great idea to an ideation mission. And these rewards can be presented by your sponsors who have various options to be incorporated into the experience with their messaging. The result: your fans interact with you and your partners reward those interactions with social tokens which your fans can use for various attractive experiences.
Let’s look at this from all involved sides: fans receive the communication from your partners in a context where they actually are engaged and receptive to the messaging. They don’t simply watch an ad but receive a digital item that is valuable to them. It’s a digital activation that benefits them directly.
Partners, on the other hand, get all the advantages that come with performance-centric digital marketing such as being able to drive conversion, performance tracking, and more — yet in a much more user-friendly experience than most traditional online advertising.
LT Fan Platform clients, meanwhile, now have a new type of innovative digital inventory which they can offer to their partners. Not only can this create additional revenue with ease, it also creates a new inventory category that is attractive to a market segment they could not cater to before, performance-oriented companies made for the digital age.
In the upcoming weeks and months, there will be many more ways in which we incorporate Sponsored Tokens on LT Fan Platform. All of them will be guided by one of our core design principles:
Make it great for the fan
Because that is the only way to fix digital advertising and overcome the digital sponsoring problem.