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November 11, 2016

A Closer Look at Sports Sponsorship

One of the most popular ways today for a retail binary option brokerage to get its name out there is to team up with a well-known sports personality or international sports group. Billions of dollarsare spent by online financial companies for sports sponsorship each year.

Combining binary option trading with leading figures in baseball, soccer, wrestling, golf, American football, auto racing and even sailing, is a win-win situation for both sides. And despite the high cost involved in the partnership, brokers are eager to develop close marketing relationships with key sports figures or teams, sometimes on a 2-year renewal basis but often alternating their selection each year as the reputation for the sports figures change course.

Football Sponsorship Most Popular

Football sponsorship leads the sports partnership/brokerage arena and currently accounts for 58% of deals concluded. This matches the demographics of males 18-45, who dominate the sports markets.  

A survey conducted recently lists the % split of total sponsorship investment by online trading brands between 2010-July 2016. Motorsports-including racing cars, motorbikes etc.-account for only 17 percent of the sponsorship during those years. Sailing came in at 4 percent and golf and rugby were each sponsored only 1% of the time respectively.

Along this line, it is worth noting that although the percentage of female traders has increased substantially over the last few years sports partnerships continue to focus their marketing endeavors on the male population, a loss of a substantial percentage of their potential customer base.  

The Juventus Football Club, an Italian soccer team and the reigning Series A champions and 24Option, a binary options broker based in Cyprus with offices in several locations, have been partners for the last two years and have recently renewed their agreement for an additional two seasons. 24Option is one of the world’s largest binary options brokers and the partnership extension follows a successful year for both groups. The two organizations also produced a promotional video together for the UEFA Euro 2016 championship.

24Option is always one step ahead of the game and has taken a new turn in its marketing efforts by signing a sponsorship agreement with Conor Anthony McGregor, an Irish professional mixed martial artist who is the current UFC Featherweight Champion and is signed to the Ultimate Fighting Championship (UFC). The agreement with Conor is for 6 months with an option to extend it for additional seasons. Conor joins German tennis legend Boris Becker who became an official partner of 24Option.com in February 2015 and French Ligue 1 football club Olympique Lyonnais, which signed an exclusive trading partnership for two years in June 2015.

The main drive of most retail broker sponsorships is to be noticed and recognized since an association with a sports person or team usually conjures up positive responses and this leads to increased motivation for people to sign up and place trades with their broker. Additionally, the high cost of the sponsorship suggests the broker’s credibility and financial strength as well as helping to promote its global brand recognition.

Marketing Tools

Most financial brokers choose to market their connection with a sport’s person or team by simply posting an expressive picture of the latter on the brokerage website along with an announcement that an official partnership exists. This marketing technique is often sufficient for promoting the organizations.

Other times, brokers and a sports figure get together in order to support a charitable cause and there are many creative approaches to this form of marketing.  A simple idea, used by several leading binary option companies is for the sports team or person to set up a trading account with an initial trading balance and to work with the brokerage for a certain period of time.  Whatever profits are made is donated to the assigned charitable organization. Sometimes, more than one aid organization is selected to be the beneficiary of the largesse. Sometimes the financial company guarantees a minimum contribution, usually double the amount deposited in the account to begin with.
Sponsoring a specific product—such as the sport’s team’s shirt or cap—has become another popular marketing tool for brokers.

Despite the millions of dollars being poured into sports partnerships by binary option brokers, it is difficult to knowif these sponsorships are profitable for most retail brokerage companies. Some brokers stay away from sports sponsorship and focus primarily on marketing strategies towards the main aspects of the firm’s product. But these are the minority.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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Item Reviewed: A Closer Look at Sports Sponsorship Rating: 5 Reviewed By: EconMatters