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The MrBeast Effect: How YouTube's Biggest Star is Transforming Sports Sponsorship

A common practice among creators is engaging in brand deals, where companies pay creators, often on a CPM basis, to feature their products.

The world's most prominent YouTubers employ various methods to generate income. They may sell merchandise, offer subscription services, host events, accept donations, create online courses, and provide social media consulting services to brands. However, a common practice among creators is engaging in brand deals, where companies pay creators, often on a CPM (cost per thousand) basis, to feature their products or services in their videos in exchange for payment.

The challenge arises when some of the most significant creators become exceptionally popular, like Jimmy Donaldson, known as MrBeast on YouTube, with his main channel boasting 189 million subscribers and videos frequently surpassing 200 million views. While this is a great achievement for MrBeast, it poses a problem because, to pay him fairly based on views and impressions alone, many companies simply cannot afford it. In an interview, MrBeast explained that his videos' massive viewership translates to costs that are nearly half of some companies' entire annual YouTube budget.

To address this issue, MrBeast has realized that, instead of relying solely on brand deals to fund the expansion of his channels (which have incurred over $100 million in production costs in a single year), he is better off using his distribution reach to create and promote his own brands. A notable example of this approach is Feastables, a chocolate bar company founded by Jimmy Donaldson in collaboration with Night Media's venture arm in 2022. Donaldson introduced the company with a Willy Wonka-style golden ticket contest and promoted it through his YouTube videos and social media platforms. Feastables' success has been remarkable, with its chocolate bars now available in retail stores such as Walmart, 7-Eleven, and Target. MrBeast indicated that the company is projected to sell over 100 million chocolate bars in a single year.

Taking this endeavor further, Feastables recently signed a multi-year deal to become the exclusive jersey patch sponsor for the NBA's Charlotte Hornets. This partnership grants Feastables exclusive logo placement on all Charlotte Hornets uniforms, including their sister teams in the NBA G League and 2k esports league. The company's branding will also be prominently featured in the Charlotte Hornets arena and on media backdrops during the team's press conferences and interviews. While the financial details of the deal are undisclosed, the Hornets' previous jersey patch agreement with LendingTree was valued at $5 million per season. Notably, Feastables is the first creator-led brand to secure an NBA jersey patch sponsorship, and this unique partnership benefits both parties.

This trend isn't limited to MrBeast alone. Other notable YouTubers like Logan Paul and KSI have ventured into professional sports through Prime Hydration, a sports beverage company. Prime has secured partnerships with athletes like Erling Haaland, Israel Adesanya, and Alex Volkanovski, as well as teams like the Los Angeles Dodgers, FC Barcelona, and Arsenal. They have also signed agreements with entire leagues, including the UFC. These partnerships, combined with free marketing from Logan Paul and KSI, have contributed to Prime's substantial sales, with a 5.8% market share, putting them in competition with established brands like BodyArmor and Powerade.

In summary, creator-led brand partnerships in sports offer a mutually beneficial arrangement. Sports teams and athletes remain powerful marketing platforms for consumer products, and partnering with a brand or personality that provides additional value beyond financial compensation is a compelling choice. While there may be reputational considerations, creators are becoming more strategic, building teams to incubate brands and create enterprise value. As a result, sports teams are poised to benefit significantly from these evolving collaborations in the future.

Austyn McFadden


Friday, October 6, 2023

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