No Venue Left Behind

No Venue Left Behind

In the world of sponsorship assets, sports venues are about to enter a Golden Age as the epicenter of fan engagement and monetization. What more could a team owner want?

And, we are only seeing the very beginnings of what will ultimately be an extreme makeover for dozens of venues, as teams attempt to 1) get closer to fans with all sorts of gimmicks (as well as real technology breakthroughs – more on that in a minute) while at the same time 2) maximize revenue from every square inch of the stadium, inside and out (and the air in between and above the stadium).

To be clear, venue revenue is crucial for a team for two main reasons:

1) It’s accretive to the bottom line: Nearly all teams in all sports get to keep most of the revenue that comes from the venue – advertising, concessions, luxury seats – whereas sponsorship revenue is often shared with the league and other teams. So, cracking the code on the in-stadium fan experience equals potential big dollars for team owners.

2) Putting big revenue numbers on the board is a way for a team to flex their muscle during complex negotiations with sponsors: Make no mistake, the stronger a team’s venue revenue, the better leverage they have from a sponsor in the overall relationship, which often can amount to $10’s and $100’s of millions for multi-year agreements.

And, nailing the fan experience is often the best path to strong negotiations with sponsors. Avid and engaged fans equals stronger negotiating power with sponsors. The most cutting-edge stadiums of today (i.e. Dallas Cowboys’ $1B new stadium) are getting closer to cracking the code on fan experience.

But, we’re about to see a renaissance of innovation regarding the in-stadium experience and nearly all of it revolves around the use of technology. Sure, food quality is better and the “walking around” experience is higher end, even Beverly-Hills-Mall-like, but those are easy upgrades that owners didn’t do in the past because of cost considerations and lack of need by fans.

Now, wifi is being deployed across entire stadiums in anticipation of fans engaging with massive TV screens that are 25-50 yards long – in fact, one could argue that TV is the only platform that matters for the NFL. Therefore, nailing the in-stadium ‘screen’ experience is crucial. On the technology front, companies such as Gimbal, PoGoSeat and Audience Entertainment are reinventing (and reinvigorating) the fan experience by providing powerful vehicles for sponsors to engage more deeply with fans.

From in-game seat upgrades and geofencing to extending social media to engaging fans outside the stadium, the fan experience is top of mind for team owners. The teams that nail this wave of innovation will also reap the financial rewards.

World Cup Digital War Room is Here

For those of you in the sports arena (or with clients in sports), SponsorHub’s World Cup “Digital War Room” is now up and running, monitoring billions of fan reactions (and, notably, quantifying them). 
We’re tracking all of the World Cup teams and the Top 50 most influential athletes, bringing this unique ’sponsorship science’ to you. Digital impressions mean absolutely nothing unless you can measure and observe the reactions of the fans – who is reacting and why? How do they feel about the Cup? A team? An athlete? Your brand? Other sponsors? Our automated dashboard is cutting through the noise to show which impressions matter most, and why. If you would like to gain access to the dashboard, please let me know.
Also, our Win8 App landed as a “Staff Pick” today and the editors at Microsoft described the app perfectly:

“The new SponsorHub app for Windows provides a next-gen way to discover and rank your favorite athletes in professional sports. Using Xscore – Sponsorhub’s proprietary algorithm – you can track the true value of an athlete by combining the perfect mix of that athlete’s performance, social following, and fan sentiment.

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Personally, I like using the search feature on top athletes to quickly find their Xscore, links to news articles, quick background breakdowns, current season and career stats, and the right links to social media sites like Twitter and Facebook.

At its core though, SponsorHub is a data company that allows brands and agencies to efficiently quantify the impacts of their sponsorships. By leveraging its proprietary big data platform and metrics, clients optimize their marketing spend on sponsorship rights and activation tactics to deliver best-in-class sponsorship portfolio value.”

Sponsoring MLB Players – Who’s On First?

It’s spring, and that means the baseball season is off to a roaring start! But which player is on first when it comes to delivering exposure for sponsors?  Sponsorhub’s proprietary XScore algorithm combines the perfect mix of athlete’s performance, social following and fan sentiment to help the advertiser judge the likely impact on their brand from sponsoring that athlete.  Let’s play ball!

Xscore MLB Sponsorhub

Big Scoring Opportunities with the World Cup

The 2014 World Cup is poised to be a record-breaking sport marketing event offering massive payoffs for advertisers who play their cards right.  Advertisers can capitalize on this worldwide quadrennial event to build a global brand and amass a global following.  Similarly, marketers can realize both short-term benefits such as incremental sales and brand awareness and long-term benefits, including increased equity and brand loyalty.  The numbers to be generated by the games are expected to be huge in every category.

While preparation for the games started long ago, the June 12 kickoff marks the official start of the month-long event which stages matches in 12 cities across Brazil.  An estimated 4 Billion fans will watch on television or other social media, up from the 3.2 Billion that viewed the 2010 World Cup.  An additional 500,000 fans are expected to head to Brazil to attend the games, bringing in considerable revenues for hotels, restaurants, retailers and others in the travel and hospitality industries.

The Federation Internationale de Football Association (FIFA) will likely take in over $4 Billion in sponsorship and television rights from the World Cup, including $1.4 Billion from sponsorship revenue and $2.6 Million from television rights.

FIFA has a new, three-tiered sponsorship structure for the World Cup, with twenty-two corporations participating as either FIFA Partners, World Cup Sponsors or National Supporters.  The six FIFA partners are afforded the highest level of involvement with FIFA and associated with all major FIFA events and the development of soccer around the world.  The FIFA Partners are Addidas, Coca Cola, Hyundai, Emirates, Sony and Visa who collectively have paid $730 Million for their partnership with FIFA.  The eight middle tier World Cup Sponsors have sponsorship rights for the World Cup and the Confederation Cup and together ponied up about $500 Million for participation.  The eight National Supporters, which represent the third tier, paid $170 Million and have the right to promote their association in domestic markets.

The traditional television broadcast outlets will be streaming the games continuously for roughly 30 days, offering a lot of advertising punch.  Globo, Brazil’s TV network, will receive  $600 Million from 8 companies (including AmBev, Banco Itau, Coca-Cola, Johnson & Johnson, Hyundai, Nestle, Oi and Magazine Luiza), which represents roughly $75 Million per sponsor for advertising rights.  For their commitment, each television sponsor will get 1,120 video insertions, including 451 30-second television commercials, plus 359 mini 5-second ads and several mentions by the game announcers with visuals.   Also, digital billboards, posters and banners in each host city and stadium provide additional advertising outlets.

Traditional broadcast marketing will no longer be the sole primary focus for advertisers.  Social media now plays a starring role too.   Because the games are typically played in continuous action without timeouts, television broadcast advertising is somewhat limited.   Also, the newer, broader social media landscape offers a new dynamic to the games and will likely be the main reason for record setting exposure.  While Facebook, Twitter, YouTube and other social media platforms and mobile marketing were up and running four years ago, they were nothing like they are today.   These outlets offer real-time, emotive and interactive platforms and integrated brand content able to reach audiences across the globe 24/7.  Moreover, these audiences are not only watching and following the games, they are watching and following the teams and the players individually, which gives advertisers any number of ways to link to the event.  To understand the reach one need to look no further than Christian Ronaldo who has 25.1 Million Twitter followers and 76.4 Million Facebook friends and Neymar who has 10.1 Million Twitter followers and 18.7 Million Facebook friends.  And the fan base will continue to grow from the games.   With thirty-two teams and stars on each team, many different advertisers have the chance to jump into the marketing game.

The potential rewards of connecting with the 2014 World Cup do not come without risks, however.  No matter how hard they plan, sponsors, advertisers and the media cannot control the upcoming narrative of the Cup.  Brazil faces numerous social problems, including poverty, substandard living conditions, income disparity and other economic and humanitarian issues.   Many Brazilians and others around the world have been unhappy about the Brazil hosting the Cup with their primary concern that FIFA is benefiting more from the Cup than the people of Brazil.  The amount of spending on the Cup, the stadiums and the infrastructure bothers many who argue the money and efforts should be directed towards public and social services not spectator sports.   Last year demonstrators rioted against hosting the Cup, and marketers must be prepared or face the possibility of backlash.   Those marketing in connection with the World Cup must be sensitive to these issues and be smart, prepared and flexible to adapt their message and communications depending on what unfolds just before and during the games.   They need to manage risks and have alternative plans and responses.

The upcoming World Cup will undoubtedly be the most popular worldwide sporting event ever and likely set records for viewership, social media exposure and advertising expenditures.   The payoffs are potentially enormous for those lucky enough to get in on the action.  However, advertisers must be socially aware and sensitive to the citizens of the host country.   If they do, they can be among the lucky who score big at this record event.

March Madness’s Runaway Success Fuels The Pay-to-play Controversy

March Madness is a financial winner for just about everyone except the athletes playing the games. The NCAA, the media, sponsors and advertisers, the participating schools, the host cities and businesses all profit from the tournament, while the players enjoy media exposure but do not share in the financial windfall. In our changing marketplace, it seems like the time to pay college athletes may be here at last.

The March Madness Tournament generates billions of dollars of revenue every year amid skyrocketing popularity, trailing only the Super Bowl as the highest ranked sports advertising event. The NCAA will take in an estimated $777 million this year, most of which will come from broadcast rights for the tournament. A $10.8 billion, 14-year broadcasting deal gives the NCAA plenty to smile about in the future.

Broadcasters themselves do very well during the three-week tournament — ad revenue for the 2013 tournament was approximately $1.15 billion, according to Kantar Media. The level of unpredictability requires live tune-in, which is great news for advertisers, who shell out from $100,000 for a single spot in the opening round to almost $1.5 million for the championship game, according to TRA, Inc.

In addition to the money the colleges receive from the NCAA’s tournament revenues, they also take in huge sums from merchandise sales and alumni giving (not to mention the recruiting benefit and profile exposure).  Many athletic directors and coaches receive bonuses for participation in the tournament as well. The cities that host the games earn a profit, and so do the restaurants and bars that draw fans for the telecasts.

That’s a long list while omitting the players themselves. Many feel the time has come to change to economic structure of college sports, and while the debate about compensating student athletes is not new, the stakes have risen as the success and the profitability of the tournament grow.

Those opposed to paying student athletes argue that these players are amateurs who are amply compensated through scholarships and the current system is needed to keep in place the amateur nature of college sports and the educational goals of the NCAA.

Moreover, they argue that paying athletes will wreck the competitive balance in college sports, eroding the integrity and leading to exploitation of the athletes.

The counterargument is that the old system fails to reflect the realities of today’s market and the motivations of the NCAA and the universities. Many find that one of the biggest hypocrisies is the NCAA’s argument that academics take precedence. On average, college athletes spend over 30 hours a week practicing their sport and regularly miss significant class time due to athletic obligations.

Those absences intensify during tournament season, when the athletes and their schools get major lifts in visibility. For example, heading into this year’s Elite 8, Creighton’s Doug McDermott connected to the largest audience of any participating athlete, according to SponsorHub’s internal measures. It’s safe to say many hadn’t heard of McDermott or thought about Creighton prior to the tournament.

Schools leverage this visibility by selling school and player affiliated paraphernalia — witness how quickly teams don NCAA approved t-shirts after winning big games. Players, who face career-ending injuries each time they play, do not see a dime of this tournament income, even though they are the real revenue source. The players should be able to receive some sort of cut of the pie, not matter how small the slice is.

Of all those who stand to gain from the players’ performance, it is the players who need it the most.  For those athletes who have few professional sports prospects, visibility and earning potential is highest during their college years. More than 80 percent of college athletes on scholarship live below the poverty line, and therefore compellingly need the money.

March Madness and its built-in unpredictable outcomes will continue to grow as a TV rights and sponsorship behemoth. But that success will naturally fuel the debate on whether to pay the student participants. It may not be long before the players are shown the money.