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AGENDAAGENCIES GO FOR GROWTHInternational <strong>sports</strong> marketing agencies are exp<strong>and</strong>ing <strong>the</strong>ir presencein emerging markets to drive business. Andy Fry reports.GROWTH IS BACK on <strong>the</strong> agenda <strong>for</strong> <strong>the</strong> world’smost influential <strong>sports</strong> marketing agencies aftertwo years of relative belt-tightening <strong>and</strong> clothcuttingduring <strong>the</strong> <strong>global</strong> economic downturn.In many cases, this upswing is being drivenin by <strong>the</strong> strength of <strong>the</strong> E7 economies, whichinclude China, India <strong>and</strong> Brazil, as <strong>the</strong> leadingplayers chase growth in regions <strong>and</strong> <strong>sector</strong>s where<strong>the</strong>y have identified opportunity <strong>for</strong> expansion.The economies in <strong>the</strong> Far East, once knownas <strong>the</strong> ‘Asian Tigers’, have also perked up <strong>for</strong> <strong>the</strong><strong>sports</strong> marketers. A case in point is <strong>the</strong> RTLownedUFA Sports agency, which this summeropened up an Asia division in Singapore - to beheaded by regional specialists Tom Houseman<strong>and</strong> Jeff Chue.Explaining <strong>the</strong> rationale, UFA Sports MDStefan Felsing called it “a compelling statementof intent at a time when <strong>the</strong> <strong>sports</strong> businessin Asia is undergoing an important transition.There is still huge untapped commercialpotential <strong>and</strong> UFA Sports Asia will play asignificant role in delivering value.”So how does that assessment sound toMarcus Luer, who founded Total Sports Asia(TSA) 15 years ago <strong>and</strong> now has a network ofseven offices across <strong>the</strong> region, including twolarge offices in Mumbai <strong>and</strong> Delhi.“There’s no quick fix out here - but anyinternational <strong>sports</strong> agency worth its salt needsto have an Asian strategy - that’s <strong>for</strong> sure. It’s<strong>the</strong> fastest-growing region in <strong>the</strong> world <strong>and</strong> hasopportunities everywhere.“TSA will have a record year in 2010.Broadcasters <strong>and</strong> corporate clients arespending again after a dry spell in 2009.Across <strong>the</strong> board, I’d say <strong>the</strong> enthusiasm to usesponsorship as a ‘localised’ marketing plat<strong>for</strong>min Asia is back.”The o<strong>the</strong>r market attracting attention is Brazil- which is no surprise when you consider thisgrowth economy will host both <strong>the</strong> 2014 FIFAWorld Cup <strong>and</strong> <strong>the</strong> 2016 Summer Olympics (inRio De Janeiro).Octagon, <strong>for</strong> example, has had a reducedpresence in Brazil since it parted company withlocal partner Koch Tavares a few years back. Butin September it rectified that by acquiring B2S, awell-established firm with offices in Rio <strong>and</strong> SaoPaolo. The deal, says Octagon, will “streng<strong>the</strong>nOctagon’s offering in light of Brazil’s ascendancyas <strong>the</strong> capital of <strong>sports</strong>.”Clearly, <strong>the</strong> melding of two businesses mightresult in duplication. But <strong>the</strong> overall picturein Brazil is of agencies seeking to invest in acountry were GDP growth is seven per cent ayear <strong>and</strong> advertising growth is an even moreimpressive 13-14 per cent. A media report thatPublicis is set to acquire Brazilian agency Talent<strong>for</strong> $200 million is indicative of <strong>the</strong> M&A feverthat has overtaken <strong>the</strong> market.In terms of <strong>sports</strong> specific developments,Brazilian football legend Ronaldo revealed tha<strong>the</strong> is to partner WPP in a new agency (9ine)– while Chime Communications chairmanLord Bell told <strong>the</strong> Financial Times he is seekingpartners ahead of <strong>the</strong> World Cup <strong>and</strong> Olympics.Unquestionably, geographic expansionamong agencies has also been aided by <strong>the</strong>International Olympic Committee <strong>and</strong> FIFA,whose decision to award mega-events to Brazil,China, Russia <strong>and</strong> South Africa is providingfuel <strong>for</strong> growth. A classic case in point is HavasSport & Entertainment, whose activities haveincluded a new office in South Africa, an Asianfacingalliance with TSA <strong>and</strong> reports of a newpartnership in Brazil.But territorial expansion is not <strong>the</strong> onlymeasure of growth. Octagon, <strong>for</strong> example, hasnot just targeted Brazil – it has also beefedup its <strong>global</strong> hospitality capability <strong>and</strong> addedan Australian surf management agency calledRevolver to its fold. For o<strong>the</strong>r agencies, growth isabout drilling deeper into a vertical area ra<strong>the</strong>rthan exp<strong>and</strong>ing horizontally.Around 95 per cent of agency Kentaro’sbusiness, which has grown at a record 20 percent year-on-year over <strong>the</strong> last two years, isfootball. But that isn’t viewed as a weaknessbecause “<strong>the</strong> sport is growing rapidly,” saysKentaro co-CEO Philipp Gro<strong>the</strong>. “The US, India<strong>and</strong> China all represent big opportunities – butso does <strong>the</strong> expansion of activity in Europeanrights. We have just exp<strong>and</strong>ed our office inSweden, <strong>for</strong> example.”The fact that Gro<strong>the</strong> sees <strong>the</strong> US as a growthmarket is interesting, since you’d expect suchan advanced <strong>sports</strong> marketing society to besaturated. But he’s not alone. IMG, <strong>for</strong> example,has made an aggressive play in <strong>the</strong> US college<strong>sports</strong> space in <strong>the</strong> last three years. That hasinvolved a stunning level of investment, mostrecently <strong>the</strong> $80-$100 million acquisition ofcollege <strong>sports</strong> specialist ISP Sports, havingpreviously picked up Collegiate Licensing <strong>and</strong>Host Communications <strong>for</strong> $200 million.This vast outlay hasn’t stopped IMG seekingopportunities in o<strong>the</strong>r markets – <strong>for</strong> examplea partnership with India’s Reliance Industriesthat could lead to <strong>the</strong> <strong>for</strong>mation of an Indianprofessional basketball league. As part of a 30-yeardeal, <strong>the</strong> Basketball Federation of India (BFI)has granted <strong>the</strong> IMG Reliance joint-venture allcommercial rights to basketball. Notwithst<strong>and</strong>ing<strong>the</strong> popularity of cricket in India, IMG CEO TedForstmann has called it “a gigantic opportunityto build a big <strong>sports</strong> ownership business in aphenomenal country that’s growing like crazy.”One company which provides a detailed<strong>insight</strong> into <strong>the</strong> <strong>sports</strong> marketing <strong>sector</strong> isInfront Sports & Media – with its 500 employeesacross 24 offices <strong>and</strong> an annual turnover of€500 million.Wolfgang Streit, executive director Finance,Legal & Administration, acknowledges thatmedia rights, sponsorship <strong>and</strong> hospitality haveall had a tough time, but that Infront grew ata double-digit rate in 2008 <strong>and</strong> 2009 <strong>and</strong> “weare positive that we will achieve our equallyambitious targets in 2010.”Streit says innovation, high st<strong>and</strong>ards ofdelivery, technology-driven efficiencies <strong>and</strong> adiversified business base have helped Infrontbeat <strong>the</strong> slump.As <strong>for</strong> <strong>the</strong> future, he says Infront is growing14 SportBusiness International • No.161 • 10.10
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