Why brands need to carefully consider esports sponsorship and include termination clauses

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Over the past week we’ve seen several sponsors terminate or re-consider their agreements with Activision-Blizzard and the Overwatch League. This comes on the back of several allegations and lawsuits aimed at AB for mistreatment of female employees.

Kellogg’s is the first to terminate while State Farm and Coca-Cola are considering their positions. This situation comes after what happened last year with NEOM. NEOM sponsorship of the League of Legends LEC and BLAST Pro Series in CS:GO ended following a backlash from the respective game communities.

Both stories bring in to focus the responsibility of sponsors, not just for esports but any type of sponsorship. Brands should take the time to fully analyse the property being considered, the community involved with the property and any potential implications of association.

In the case of Overwatch League and AB it can be difficult to understand ahead of time whether there are any issues with company culture or things that might come to light. Therefore, it is important for brands to ensure agreements contain clauses that enable easy termination.

For the property owner it is also important to consider the implications of aligning with certain types of sponsor, and how any agreement will be perceived by customers or communities. The financial benefit of a sponsorship agreement may not outweigh the potential long-term damage to the business if customers or users leave.

In our “10 parts of an esports campaign” article we highlighted that messaging is an important consideration for campaigns. In the context of sponsorship, it isn’t just about messaging that is relevant to the audience and aligning with terminology but it also about what underlying message the sponsorship sends to customers or communities. A single campaign generally has more flexibility in terms of how it is perceived by a game community because of the short-term nature. Sponsorships are normally an alignment between brand and property for an extended period so the community can be much less forgiving. Customers and communities can negatively perceive a brand that sticks with a property that becomes questionable and they can negatively perceive a property if the property aligns with questionable brands.

This balancing act can be challenging for both sides which is why it important for all parties to conduct sufficient due diligence. These two tales of AB and NEOM also highlight why it is important to have agreements with clauses that enable easy termination.

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