Speaking to Campaign Asia-Pacific from London, Chime director and CSM executive chairman Lord Sebastian Coe called it an “exciting” time for the company, with the Providence acquisition enabling greater leeway to accomplish the company's goals.
“It means greater flexibility and the ability to be proactive,” he said. “We now have deeper pockets and the freedom to make sensible decisions to grow the business and allow us to be a truly global company.”
Announced in July of this year, the deal sees Providence and WPP paying about £374 million (US$584 million) for the company founded by Margaret Thatcher's former media adviser, Lord Tim Bell.
WPP already owns a 20 per cent stake in London-based Chime, which derives a significant proportion of its business from big sporting events, including the Olympics and the FIFA World Cup.
CSM Group, the company’s sports marketing division, which spans 850 people in 24 offices in 19 countries, generated 43 per cent of the group’s £300 million of revenues last year.
Chime plans to grow its non-UK business from about 30 to 50 per cent of overall revenue within a couple of years, with the US and Asia among the target regions. In 2014, the company’s overseas income accounted for 24 per cent of its total.
CSM chief executive Zak Brown told Campaign Asia-Pacific that Asia is the fastest growing region in the world for sponsorship, with sports sponsorship accounting for three quarters of all sponsorship spend.
Brown reported that in India alone, the English Premier League has enjoyed robust growth. “The value of deals is now around £140 million when just two years ago the number was £40 million,” he added.
In addition, Brown said that Asian brands already account for half of all global partnership deals with football club Manchester United, a CSM client.
The global sports sponsorship market had an estimated value of almost US$40 billion in 2012. According to PriceWaterhouseCoopers, the market is estimated to reach around US$45 billion by 2015.
“This is an exciting time for the world of sport,” said Brown. “We will see many changes in sport, from governance and the role of sponsors to fan engagement and evolving sport formats.”
Seizing the Asian opportunity
The company has already started working with new owner Providence on a growth plan that will include both acquisitions and organic growth.
Coe said that Asia in particular provides the company with great opportunities. It boasts six of the top 10 fastest growing economies and is hosting a staggering number of world sporting events between 2018 and 2022, including three Olympic Games, two Asian Games, a Commonwealth Games and a Rugby World Cup.
“This will be an extraordinary decade for sport in the Asia-Pacific region, and we have significant experience and expertise to share,” he added.
The company intends to build on its strong base across Asia and will open a new office in Japan.
“Japan is a market that has embraced sport for a long time, and it makes sense for us to increase our presence there,” said Brown. “We are also looking at other high-growth markets in the region, with Indonesia being one of them.”
Brown added that the company already has 75 people in the region and will continue to accelerate the growth of its operational strength.
He also pointed to the acquisition of People Marketing Sport and Entertainment Hong Kong (PMHK) in 2013, as an example of how the company intends to significantly expand its reach in the region. The sports marketing and communications agency, based in Shanghai, provided access to the Chinese and South East Asia markets.
“Home-grown companies such as PMHK gives us access to the nuances of local markets which they serve, which we can augment with our knowledge and expertise of the global sports arena,” he added.
Asked to put a monetary figure to the amount of investment CSM will be making in Asia, Brown quipped that Providence, currently manages more than US$40 billion in assets.
“Now I’m not saying that we’ll be using all of that but we do have the money to spend on good investments that makes sense,” he added. “I can see us spending hundreds of millions in Asia in the next decade in total but it’s hard to peg an amount to it. All I can I say is, it will be substantial and driven by opportunity.”
Coe said that in Asia, many markets 10 to 15 years ago were still immature when it came to sports marketing opportunities.
“But in the last few years, some have moved into the maturity stage with many governments also articulating national ambitions centred around sports,” he said. “Governments from Qatar to Indonesia are more concerned about the quality of life of their citizens and are committed to promoting sports and fitness.”
Youth and the power of sports
According to statistics provided by CSM, 51 per cent of the world’s population and 60 per cent of the world’s population under 24 years old live in the Asia-Pacific region.
Coe said that within this opportunity also lies the challenge, in a landscape populated by an increasing number of distractions and interests for youth to choose from.
In addition, Coe said that companies make a lot of wrong assumptions about young people and social media.
“They think they’re communicating but they’re not,” he said. “I was at a conference in Sweden and it was revealed that most brands are not effective in their social or digital efforts, the kids are ignoring them and embracing their own relationships instead.”
Brown added that such mistakes are typically made because brands do not have the right experts on board to consult on properly activating their spend and crafting brand relevance in enhancing the fan experience.
“My advice to brands is to not go at it alone,” he said. “It’s not that you can’t do it alone, but you wouldn’t be able to maximise your investment.”
This is where, understandably, both Coe and Brown believe the value of sports marketing comes into play in capturing both attention and loyalty.
“Sport is the greatest human connector and the most effective social network on the planet,” said Coe.
Brown said sports still fits in this new digital paradigm, adding that the power of sports marketing lies in the loyalty given by fans to supportive brands. “Fans support brands that support the sport they love,” he added.
As consumer habits continue evolve and traditional advertising methods become less effective, Brown pointed out that nothing tops a live sporting event.
“As fragmented as consumption habits get, people will still stop what they’re doing to watch a live match,” he said. “It’s a shared experience, that hasn’t changed since the earliest days of sport and remains an effective way to connect with consumers in a non-solicitous manner.”
Asked about challenges CSM will have to face in the months to come to fulfil its growth ambitions, Coe pointed out that the sports marketing business is no longer an isolated endeavour.
“If you’re in this business, you’re not hermetically sealed off from everything else that’s going on in the world, you have to be politically and economically aware,” he said.
He added that global competition is toughening up with cultural savvy becoming an increasingly important competitive edge.
“Sports matters in different ways in different countries," Coe said. "Perspectives can vary vastly from Southeast Asia to South Asia. You have to really understand what state the market is in and where it’s going to be successful.”