This year's Super Bowl provided a good reminder of just how big the sports business has become. Fox Sports averaged $4 million for 30 seconds worth of ad time during the game, according to media buyers. This is significant as advertisers clamored to fight for the eyes and attention of the millions upon millions of sports fans who watched the Seahawks dismantle the Broncos.
But the sports business isn't immune to the risks that could potentially stump its growth. From the threat of chord cutting to the somewhat fickle nature of fans, sports organizations have a lot to think about. The impact of technology and new media consumption trends has also left many sports organizations scratching their heads.
Thankfully, the very same people who fuel the sports industry itself can also help answer its most pressing questions: the fans. Here are the top seven issues facing the sports business and how fan insights have been able to help:
- Developing corporate partnerships
The right sponsorships can create a win-win situation both for the franchise and their partners. But sports sponsorships can also pose a risk for brands, especially if the organization doesn't perform well in completion, takes a hit to its brand or if the players run into PR issues. While partners have various reasons for signing sponsorship deals, their main goal is to get tangible ROI.
Potential partners want to know the audience that they are reaching when sponsoring a sports organization. They want to know if the fans are already aware of the sponsor's brand; they want to test advertisements and positioning, as well as measure impact, call of action, and brand lift. Most importantly, they need to see the needle move.
Having an idea of what the fan base looks like helps to demonstrate the business value of these partnerships. For instance, if an organization is trying to court a global auto manufacturer for a sponsorship deal, it might be useful to know what percentage of that organization's fans plan to buy a car in the next 3 to 6 months. One might even ask fans how they perceive the auto manufacturer, its competitors, the brand fit and many other attributes related to promotional offers. Insights directly from sports fans can provide specific, relevant and timely information to secure new partnerships and renew existing ones.
Having an idea of what your fan base looks like helps to demonstrate the value of corporate partnerships. (CLICK TO TWEET)
- Forging media rights partnerships
Execs in the sports business are looking to media rights to help drive growth and to continue expanding their reach.
"It's probably the top business priority right now," said Adam Silver, NBA commissioner, about the upcoming negotiations between the league and its media partners - ESPN, ABC and TNT - over their next rights deal. "It is so important for us in terms of it's our how our games reach the vast majority of people, through our national partners."
One projection shows that media rights fees will grow 7.7% a year through 2017, driven partly by live sports' opportunity to grow in regional networks. "Our growth's going to continue to come from media," said Torrey Galida, COO of Richard Childress Racing, at the Ivy Sports Symposium last year.
Since networks know the potential profitability of live sports, different networks are usually at play with TV and broadcast rights negotiations in addition to the sports organizations and ownership groups. Understanding fan behavior, purchase habits, psychology, and general media consumption are critical to illustrating the value of bringing these eyeballs to the TV and broadcast networks. Developing the audience base by incorporating the insights of sports fans will further bolster the TV and broadcast networks' ability to secure ad sales dollars.
- Increasing season-ticket sales.
Gates revenue remains the single largest source of revenue for sports teams. The key to long-term profitability in the business is to eventually convert casual fans to season ticket holders through a somewhat complicated sales funnel. Doing so, requires more than just brand awareness: for fans to make the financial commitment to buy season tickets, they need to love the team and players, as well as find the in-game experience second to none.
Converting casual fans into season-ticket holders requires an intimate knowledge of sports fans in market. For the casual fan, for instance, it makes sense to examine their awareness of the brand and understand team perception, as well as package offer testing. On the other hand, leveraging insights with lapsed season ticket holders can reveal drivers of churn and reposition or test messaging to win them back.
Not all sports fans are created equal: insights help to support the season-ticket funnel by bringing a valuable intangible factor to the table.
- Improving ROI from marketing investments.
Just like many businesses, sports organizations often struggle to measure the impact of their marketing activities.
Many sports organizations now have branded apps as part of their marketing mix. But for the most part, apps can do more to give fans what they want. While apps can be a huge revenue-generating platform (where fans can buy merchandise, join social media communities, ask questions, and receive customer service), many sports organizations aren't taking full advantage of this opportunity just yet.
Leveraging sports fan insights can help to refine and improve marketing tactics as well as prioritize investments into usability, new platforms, and general development. Insights from fans can help to drive the marketing development of not just the small stuff (testing posters and other promotional materials), but also on the big marketing decisions (such as brand development, logos, jersey design, etc.).
Using sports fan insights can help refine and improve marketing tactics and prioritize investments. (CLICK TO TWEET)
- Keeping up with technology and shifting media consumption (fans going global)
Smartphones and tablets are radically changing the way fans watch games. Sports fans are turning to digital media over TV, as more fans want the option to be able to live stream sports on their mobile device and enjoy the game on the run
On the flip side, social media (specifically Twitter) has transformed how fans engage with teams, players and with other fans. Social networks also provide a voice for fans to talk about off-season happenings, including drafts, trades and coach and staff changes. Separating the opinion of true or informed fan from the noise has become an increasing focus for sports organizations as they seek to understand their brand and reputation within their market.
With the tech industry not showing any signs of slowing down, sports organizations should expect fan consumption to continue to change over time and become increasingly dynamic with new apps and forms of engagement beyond just the game itself. Engaging sports fans regularly can help identify tech and consumption trends that are relevant to the sports organization: A community of fans can help sports organizations monitor ongoing conversation about their brands and more accurately evaluate the real impact of that chatter to their brand.
- Enhancing reputation.
Branding is critical for sport teams; it fuels the passion of the fans, puts people in the seats and drives merchandise sales.
But branding for sport organizations today is trickier than most industries - especially with the impact of new tech and media consumption. It is driven by the strong personalities of the players, coaches, owners, and staff in the sports organizations despite the aspirations that the actual brand goes well beyond what happens in the game itself.
While social media can provide some indicator of brand health, there's also a lot of noise from both fans and distractors. Fans, to varying levels of affinity and education, can provide a better diagnosis of a sports organization's brand health. Through longitudinal studies, sports organizations are better able to track how fan attitudes towards the brand changes over time as new positioning, in-game events, team structure (coaches and players) and other peripherals (logo) evolve.
Social media can provide indicator of brand health, but it also has a lot of noise from fans and distractors. (CLICK TO TWEET)
- Taking advantage of emerging opportunities
The sports business is already pretty big, but it still has a lot of room to grow. For instance, sponsors are increasingly demanding a more seamless integration with the sports organization's brand, putting their name in front of the fans in a non-intrusive fashion.
"Sponsors are really looking to be part of an event," said Craig Barry, SVP, production and executive creative director for Turner Sports, at last year's Cynopsis Sports Business Summit. Achieving this can be beneficial to both the team and its corporate sponsors while avoiding impacting the in-game experience
Marketing to female fans is yet another emerging opportunity that is ripe for the picking for many sports organizations. While the sports business is stereotypically focused on men, stats show that up to 50% of fans are, in fact, women. It's worth exploring how female sports fans react differently to various marketing activities and positioning, and how their media consumption is different from male fans. As an example, just take a look at the latest line of NFL merchandise targeted directly at the female sports fan.
As you can see, sports fan insights can provide an edge in the highly competitive sports business. In using research tools such as insight communities, sports organizations are in a much better position to grow their fan base and increase revenues from a various of opportunities as well