05 Dec Sport is not just for fans, it is also a business platform.
Sport is not just for fans, it is also a business platform.
This is a sports business article translated from https://www.zdnet.com/article/sport-isnt-just-for-spectators-its-a-platform/, written by Stephen Bourke.
Digital platforms, such as Uber and AirBNB, are experiencing tremendous economic growth in our society. Considering that sport is a microcosm of society, Stephen Bourke, a specialist in sports business, says that the sports industry has also become a platform for business.
Data as Sports Entertainment
Stephen Bourke, an opinion leader in the world of sport, sits on the board of the SEAT (Sports Entertainment Alliance in Technology) and runs an online educational program with the Sports Business Institute in Barcelona entitled "Managing the Digital Transformation in Sport".
Stephen: "In university, I had the chance to study sports history. A famous professor taught me that sport is a microcosm of society. This postulate must be confronted with the reality of our digital age - this is what I will deal with in this article. If, like me, you were to search for microcosm in the dictionary, you might come across the following definition: "a community, place or situation that contains the characteristics of something much larger". Sport, as a microcosm, is a reflection of people, their cultures and the history of their communities. This is why the relationship to sport and the behaviour of fans vary so much from country to country - or even from region to region.
By transitivity: sport being a microcosm of society, its economy is therefore a microcosm of today's digital society. Let's explore this path with the examples below!
The social media are part of the sporting experience
The world has become "social" thanks to networking platforms such as Facebook, Twitter and Instagram. Connecting with others, sharing thoughts and experiences in real time: these are the latent desires that the emergence of these networks has revealed.
In our society, the most engaging and impactful online conversations are those formed around sporting events.
Sharing on social media has become such a common reflex that clubs, leagues and events have geared their business models to integrate it into their offerings - and build a marketing programme of engagement around the club throughout the year.
The activation of social media in sport has created a very specific fan engagement behaviour - what we might call second or even third screen. </span
Data as Sports Entertainment
As society becomes increasingly impacted by numerical data, sports structures have gradually integrated the analysis of these data into their economic model. The key to this analysis lies in discerning which data is most useful for decision making, marketing automation and overall club revenue growth.
Consumers, too, use data to make their decisions: TripAdvisor for travel, Yelp for dinner, Google for any search.
Beyond its use by sports organisations and consumers, data in sport has evolved so much that - like social media - it is now fully integrated into the experience. Data in sport brings a playful dimension to the fan experience, as fans rely on the statistics of their players/teams to become more engaged, to the point of becoming totally immersed in the event.
To satisfy the appetite of its audiences, sport is the only industry to make a large amount of data available to the public. As consumers, we never look for the occupancy rate of our favourite hotel, nor the latte/macchiato ratio of our barista. However, when it comes to the much-anticipated match, we are fond of all possible and imaginable statistics - both historical and current - accessible at our fingertips on our second favourite screen (tablet, smartphone).
Sport has a statistical twin
Kleiner Perkins' Web 2017 Trends Report has stated that society is tending to focus more on human-computer interaction than on direct personal contact. If sport is a microcosm of society, how can we value interactions with machines in sport? The answer lies in the evolution of top-level players towards the e-sport sector, a mastodon on the march.
E-sport has become too popular and commercial to be left behind by traditional sports - many leagues are now creating their own e-league. E-sport is creating another entry point into the world of fans, as it is likely that the first experience young people have with sport is digital - via the well-known FIFA, NBA 2k or Madden NFL.
The report found that 27% of Millenials have a strong affinity for their favourite e-sport team - the same proportion as for their favourite traditional sports team.
In the future, it is likely that the studies measure the impact of the popularity of e-sport on younger generations of potential sports fans. Sports and e-sports specialists are already observing this in the new behaviours of young fans.
Sport is no longer competing with other codes or fan communities; it is now competing with digital hobbies such as social media or video streaming.
The business platform
Studies and numerous examples in recent years show that inevitably, any digital transformation requires the establishment of a platform economy to stimulate the growth of the digital economy.
At the first level, digital platforms allow structures to exchange data and interact with their consumers. Because the platforms are online, they are scalable and accessible worldwide. Ray Wang, founder of Constellation Research, has prophetically observed that "If a company's business model is not based on at least 20% data, the company will have no place in the digital age. »
Of course, we have in mind the example of the unicorns Amazon, Netflix and Uber that revolutionized the market and redefined consumer behaviour. While their success is being celebrated, the legacy companies have embarked on their silent revolution to harness the power of platforms to improve connection with audiences and facilitate operations.
Sport is no exception to the rule. So much so that digital leaders have noticed the level of transformation in the sector, notably Satya Nadella, CEO of Microsoft, who has observed that "sport is a very important part of our business."there is no other sector but sport so fundamentally transformed by data and new technologies.".
We have previously observed that social media, data and e-sports are strongly influencing the sports experience and helping to break the codes like never before.
The evolution of traditional sport
In traditional sports, fan data can come from many sources: ticketing, merchandise, web, social media, mobile, the event app and other digital touch points. As a result, sports organisations are able to integrate data from individuals and fan segments that go far beyond traditional demographics. They are able to deploy lifestyle characteristics, such as purchasing behaviour or preferences. In fact, teams need to build human and personal relationships with their fans - the value of lifetime loyalty is priceless.
In fact, sports organizations are developing powerful and relevant data platforms. They have the opportunity to use these platforms for a wide range of purposes - including creating ultra-customized experiences, triggering ultra-targeted marketing and making relevant decisions about product pricing.
These fan data platforms are also becoming an increasingly strategic asset for companies partnering with sports structures: this is where the concept of "sport as a platform" has emerged.
Professional sports clubs can now offer their sponsors access to their data - a very attractive and valuable consideration. Digital activation of partnerships, "brand content"The new "Fans & Facts" platform is a way of attracting fans and their data to the brand's platform - or the event/sponsor co-platform created especially for the occasion.
A few examples:
To give just a few examples: the pioneers of the fan-engaging platform model are Real Madrid in the La Liga, who have focused on aggregating data from their 450 million followers. Long-term sponsorship agreements, such as Real's lucrative 10-year contract with Adidas, demonstrate the strong alliance possibilities offered by digital platforms.
Also worthy of mention are German club FC Bayern Munich, the team with Europe's largest financial surface area; and Orlando Magic, an NBA midfield team, pioneers in creating " money can't buy " moments for their fans.
Sponsors are moving away from "analog awareness", i.e. the hope that the fan will combine his passion for the club with passive loyalty to the sponsor. Sponsors are now looking for a "digital relationship", where the brand engages with the fan-consumer from its own platform. Unique offers, games and competitions allow sponsors to generate valuable fan data.
The return on investment of sponsorship is increasingly measured by the proportion of fans that the sponsor is able to convert - from the pro club platform to the sponsor platform. This is not the realization of Big Brother; it is the result of a true exchange of value offered by the brand to the fan - and the realization of our definition of sport as a microcosm of the wider economy!
The transition from analog to digital sponsorship is revolutionizing all the traditional processes in force.
Now that the world of sport is in competition with players from outside the sector, what was inconceivable a few years ago is no longer so: the decline in the number of traditional viewers of sporting events.
For example, despite more than 100 million American viewers of the 2018 Super Bowl on NBC, it was 7% less than the previous year. The Rio Games (2016) were 25% lower than the London Games (2012) - and so were the Winter Games. The NBA, the English Premier League and the pro tennis circuit also reported a decline in traditional viewers. This decline is not about to slow down: 38% of Millenials follow the sport (McKinsey study), while there are 45% in Generation X (born in the 60s-70s). And the rate of sports participation is also declining worldwide.
In this context, one would expect that corporate investment in sport, whether in sponsorship or infrastructure, would be in line with this trend. But nay!
According to the World Advertising Research Center, the revenues of sponsoring sports structures will increase by 5% in 2018, while PWC expects 5.5% growth in sports advertising and sponsorship. This is the second largest area of growth, behind digital media rights (11%), but well ahead of merchandising, ticketing and traditional TV rights. This growth is due to the potential economic value created by data platforms. As sport is a microcosm of society, the sports industry has become a virtual platform for economic business.
A few tips:
In order to make the most of this commercial advantage, sport as a platform can conquer new digital playgrounds. Currently in traditional sponsorship, only 19% of advertisers say they can measure their ROI. And just for measuring the impact of a campaign, only 37% of the executives surveyed by MKTG say they have an analysis tool for digital and social media.
On the other hand, according to a 2018 PWC survey, 56% of sports industry leaders believe that the world's largest sponsors are out of date when it comes to understanding the changing behavior of Millenials towards their sports media consumption. The respondents believe that sponsors should focus their strategy on ultra-personalized targeting of fans using the data CDM collected - and thus maximize ROI. Brand content is also recommended for their own digital media as well as for rights holders.
In other words, sports industry leaders recommend that sponsors adopt a similar approach to their own to engage fans - via a digital platform. Brands should view sponsorship of sporting events as direct sponsorship of fans. This requires a complete rethinking of established mechanisms and processes.
However, maximizing ROI does not only depend on sponsors. Rightsholders need to work hand in hand with brands to maximize the value of their respective data fan/consumer platforms. By understanding each fan's behaviour in detail, rightsholders can choose brands with the right feel for the fans - and build a long-term relationship, such as the 10-year agreement between Real Madrid and Adidas.
Don't forget creativity
It is fortunate that social media is now part of the overall sporting experience. The integration of digital has extended the sports event from a simple weekend to a year-long entertainment experience. As a result, sports organisations have found ways to monetise the reach of their online communication efforts.
Indicators are moving towards engagement, interaction and ROI - objectives shared with partner brands. Rights holders are gradually becoming social enterprises, prompting market leaders to view professional teams as media in their own right.
As media, through content distributed over digital and social channels, sports organisations are bringing the value of their digital rights into spheres that are highly attractive to brands - hence the global growth in brand investment in sports sponsorship.
Sport, like society, is in perpetual evolution; and this is good news for sports organizations as well as for brands that are adapting to this new playground of algorithms, analysis and, above all, entertainment!
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