How technology will change sports’ commercial model
Updated: Nov 17, 2020
If there is a silver lining for the sports industry from COVID, it’s that many of the outdated business practices in the sector are going to have to disappear. Most of these came from taking the status quo for granted: that the fans would always be there, that sponsors would be happy with loose media value metrics and viewers would keep lapping up whatever content they were given. There was limited incentive to do things differently.
But the world has changed. As a result, sports organisations are going to have to change and will need to significantly improve their commercial operations. That will mean working in new ways and valuing different skill sets in their people. For example, an ability to understand data or the willingness to learn from trying things will both be important. It may also mean sports organisations radically changing their approach to budgeting. The overall marketing & sales budget at a team or league may now be smaller than it was but the proportion given to digital and data is likely to grow significantly. It also means that teams and leagues will need to invest in tools to help them work more effectively and offer better experiences to fans, rather than viewing such tools as a “nice to have”. That’s where Sports Loft comes in. In recent months, we’ve had dozens of sports organisations coming to us, wanting to know about the new and emerging technologies that should be considered to improve their commercial operations.
There is no doubt that empty stadiums have proven how important fans are to their sport, both from the perspective of the revenue that they generate but also because the TV product without fans in the stands just isn’t that good. It doesn’t matter how many video screens you or fake fan noises you put onto the broadcast, the feeling of the occasion and the “big event” just isn’t there without the fans.
Now that the fans have gone, the teams and leagues have realised how important the fans really are. It follows that we should expect the fan experience to improve both in the stadium and at home. Some teams are now re-examining the whole “customer experience”, a phrase rarely heard before when thinking about sports fans. How can fans best get the information they need? What should the fan experience be on game day when fans are not at the stadium? What’s the experience before, during and after the game? How can the food & beverage, wayfinding and stadium entry experience be made better for fans when they are at the stadium? Companies such as Satisfi, an “interactive answer engine” with investment from Google, have shown how they can use conversational AI to serve fans at home as well as at the stadium. On the back of their work with MLB, fans asking for “who has hit the most home runs for the Yankees this year” are returned a video of Aaron Judge hitting a homerun along with his stats, all within a native app, WhatsApp, chat or Facebook Messenger conversation. Equally, within the stadium, fans could ask what beers are available and the answer provides the beers, the prices and where to get them from. This improves the fan experience at scale, in the stadium and at home.
With no matches to host, many teams and leagues quickly realised that content was the best way to engage with fans. This led to some very creative uses of their archives and some teams have created entirely new content genres to keep engaging with their fans. However, it also meant that they needed tools to create quality content. Companies such as Slate are enabling the content functions at teams to meet the demand for content to be delivered quickly but also to maintain the brand consistency across multiple channels without lots of files passing back and forth between designers. This brand consistency has also helped to provide partners with extra activation opportunities. Equally, Greenfly has been able to help teams and leagues utilise the reach of their athlete’s social media accounts by collecting photos and videos from just about anywhere, organising and curating the content, and then delivering them in real-time for the athletes to share. Making the process easy for both the content teams and athletes naturally leads to more content being shared and is a great example of how the commercial operations of a team and league can be improved by the technology.
Another area that is crying out for improvement is the ticketing experience. Why should fans have to buy the same seat for a season and sit next to the same people every game? Shouldn’t the experience of buying a ticket be much more akin to that offered by leaders in the retail sector rather than the clunky and uninspiring ticketing websites that we are used to? In a post-COVID world with potentially lower disposable incomes, shouldn’t fans have greater options for how they pay for their tickets? Companies such as FEVO, who are turning the e-commerce process into a social experience, are especially well suited to changing the ticketing experience, by enabling fans to buy with their friends and for teams to reward the fans that organise groups of their friends.
Equally, teams will need to segment their fans and audiences. Fans have different lives away from the teams they support, the level of “fandom” differs between individual fans, they respond differently to different types of content and they will want communication in different channels. All of this requires sports organisations to have a much more nuanced and detailed understanding of each fan if they are going to improve their commercial operations. For content owners, companies such as Covatic are providing a unique view of each fan’s day, identifying “windows of opportunity” which are best to deliver content to fans resulting in higher engagement rates and higher completion rates.
Another area of the commercial operation that is going to have to change, is the approach to partnership sales and activation. Not least because the pandemic has created winners and losers of entire industries. How many airlines can now afford a major spend on a high profile sponsorship? The challenge will lie in meeting the needs of different industries and providing brand managers with the tools to make smart decisions when all budgets will be under greater scrutiny. The standard term sheet of stadium based assets, such as signage and hospitality isn’t viable, while many digital assets that have previously been given little value should now become important.
This means that teams and leagues are going to have to develop new ways to sell partnerships and show value to the sponsors that they are selling to. Teams are going to need more than the tired “equivalent media values”. They are going to need to be able to evidence segmented fan data, making it clear which fans are relevant to a specific sponsor. This means showing what content they engage with, what platforms they use, how many of them there are, what other brands these people engage with and how they buy the sponsor’s products or a competitor product. For example, Dallas-based Pumpjack integrates multiple data sources into a “customer data platform” that provides teams and leagues with a complete view of the activities of each fan. This enables them to present potential partners with a much clearer idea about which fans will be relevant to that sponsor, to understand their activities and potential value to each sponsor, as well as the best ways to engage with them.
At Sports Loft, one of our focus areas is the technologies that will help improve a team or league’s commercial operations. So, if you are working in a team or league’s commercial function, get in touch as we can show you the companies that you should be looking at as you navigate the changes facing the industry. Equally, if you are a tech startup that can help in this area, we’d love to talk to you.