Pro Athlete Endorsements: Breaking Down the Lucrative World of Sports Marketing
Pro Athlete Endorsements: Breaking Down the Lucrative Wor...
By Jocelyn Alano August 24, 2024 07:08
Endorsing products by professional athletes is nothing new; it has been happening, at least since the early 20th century, but it didn't come close to being in full bloom until the 1980s and '90s. The power of consumer marketers has started to realize that there is a commercial utility in an athlete's ability to affect purchasing and perception through their followers.
Michael Jordan was the first basketball player to become an idol at a shoe company, courtesy of one of those great deals that athletes rarely make with corporations and their ilk; his $2.5 million contract with Nike expanded over 30 years into what became known as Air Jordans. In 1984, Nike signed Jordan to a $2.5 million per year $500k/yr for a five-year deal, which was unheard of at the time. For one, it changed the sneaker game forever and gave birth to a new form of athlete endorsement in fashion.
Here Are Some Other Examples:
Tiger Woods: Nike's investment in Tiger Woods, who turned pro in 1996 with a smile.
David Beckham: English footballer remains among the highest-paid retired athletes, with many endorsement deals including Adidas, Pepsi, and H&M.
LeBron James: The prospect of LeBron James' lifetime deal with Nike surging past the $1 billion mark is a reminder that corporate America has often pegged untold worth to star athletes.
How is an Athlete's Endorsement Value Calculated?
- Marketability: An athlete's marketability, likeability, and public perception help him draw more people to his event.
- The sport's popularity: An athlete who plays a popular worldwide sport, say football, basketball, or even tennis, can command much higher endorsement fees.
- Performance: Winning awards or performing to a level that increases an athlete's life trend value.
- Number of Followers: An athlete's social media presence has a massive effect on the type and number of endorsements they are offered.
- Demographics: Companies also pay a lot for certain demographics, and brands will value athletes who are popular with the most important consumer age group (18-34) or have high-end use customers.
The Power of Athlete Endorsements
Athlete endorsements obviously can spur significant consumer behavior and influencer perceptions of brands. Indeed, research in this area has shown that not all the time but certainly a lot of associations consumers have of an athlete, e.g., success, capability attractiveness, can be transferred onto a brand endorsed by said player, and such heightened awareness plus their better attitude towards brands tends to bump up purchase intentions too.
For example, in an analysis of the effects on stock returns for stocks endorsed by individual athletes, a study found that winning performance positively affected athlete-endorsing behavior in golf, tennis, and track & field events. This illustrates how many dollars and cents successful athlete endorsements can cost a company in its coffers.
Nevertheless, such risks aside, successful athlete endorsement leads to new buyers positively associating with creating brand equity over time. For example, Nike signed Michael Jordan to a deal that created the billion-dollar revenue-generating monster known as The Jordan Brand, which is still popular years after MJ retired from playing professional hoops.
But endorsements prove to be great moneymakers for players, allowing them to earn well into their post-playing lives. The sad thing about retired athletes is that they can get paid so much from their commercials long after retiring.
Key Trends to Look Out For in The Future of Sports Marketing
Growing Social Media
Many athletes are starting to cash out on their own brand because now they can go straight through fans for endorsements, and their beloved needs this level of personality. This model leads to more authentic endorsements between an influencer and the fans.
Better Data Analytics
Brands will be able to analyze vast quantities of cross-channel and multi-device-level data with more robust technology in place, enabling more salient hits, which would better align with the highest focus-based partnerships with athletes.
Cause-Related Marketing
Athletes will continue to work with like-minded brands, increasingly serving a cause from which the professional has taken an interest in aligning perfectly with today's socially aware consumer.
Virtual and Augmented Reality
A fresh new angle on endorsements is made possible through using interactive, immersive experiences by brands in their campaigns without having to physically be there.
Micro-Influencers
Going through emotional engagements, a picture that was recently more than enough to sell out products before the launch. Not everything should be mega-deals for big-name athletes like Bryce Harper, who signed another $330m deal, or Tom Brady, regardless of their ridiculous ability.
All in all, player endorsements will also continue to evolve with sports. With the brands who have and will adapt, capitalize on new technology, remain authentic in their partnerships, and are all set for continued success as we move forward into this evolving landscape of entertainment.
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