Are sports sponsors looking for local and digital too?

Two articles crossed my desk yesterday which I think are important for sports marketers to read.

First, an Ad Age article by Josh Benoff of Forrester Research in which he predicts digital advertising will grow from 12% of spending to 21% of spending over the next 5 years, even while overall ad budgets remain flat or down.

. From Ad Age – Unlike the last recession, digital marketing is no longer experimental. Now it looks more like advertising is inefficient, relative to digital. More than half of the marketers we surveyed said that effectiveness of direct mail, TV, magazines, outdoor, newspapers, and radio would stay the same or decrease within three years. In contrast, well over 70% expected the effectiveness of channels like created social media, online video, and mobile marketing to increase.

This is huge.

It means we are all digital marketers now, since digital is at the center of many campaigns anyway.

It means media is in trouble, or at least in the middle of a transformation.

And it means that social “media,” which will account for $716 million this year between social network campaigns and agency fees, will generate $3 billion in five years. And this doesn’t even count displays ads on social networks (which are in the display ads category.) Of all the parts of digital marketing, social network marketing one is poised for the most explosive growth (Read more at Ad Age)

Sports properties need to develop not just their Websites and social networks. They need to understand the value these properties hold in terms of their potential to connect sponsors with valuable markets. If sports properties do not learn to value their digital assets, and if they don’t go out and tell their sales stories to sponsors, these assets will remain undervalued even as demand for digital is in the rise.

Second, a Fast Company article which proclaims that 74% of Facebook’s ad revenue is geographically target to LOCAL markets

From Fast Company – Facebook now has 250 million users spanning the globe, but when it comes to serving up ads, the social network is benefiting from a decidedly local approach. Ad research firm Borrell Associates says that of the $310 million in ad revenue it expects Facebook to rake in during 2009, three-quarters of it will come from local, location-based ads.

By comparison–if MySpace is still considered comparable–Borrell estimates MySpace will derive only 27% of its 2009 ad revenue from local ads. Moreover, Borrell says only 20% of social-network ad spending will come from local advertisers, essentially declaring Facebook the social-network local ad leader by a wide margin. (Read the rest at Fast Company)

If the biggest social media player is generating most of its revenue from local, that should send a signal to sports properties, shouldn’t it? Now the biggest player in sports media is pointing its guns at local too. Just this week, in fact, ESPN launched local Websites in several US cities.

Sports teams have huge upside potential in this area. Not only do team Websites deliver local audiences, teams can combine their digital channels with the stadium experience, the local radio broadcast, etc to offer an integrated program for sponsors who want to engage local fans.

Underlying this point is a challenging question: can sports teams become true marketing partners? Teams are sometimes criticized by sponsors for not providing deeper services to help sponsors activate. Clearly, sponsors will need help to tap the digital channels. Seems to me that teams have a big opportunity to increase revenue if they can ramp up their efforts in these high growth areas.