As sport begins to look to life after lockdown, when fans are allowed back into stadiums and events can take place as normal again, WePlay Founder and CEO, Luca Massaro - a Sport Industry NextGen Leader - looks at the impact that the pandemic's pivot to digital will have in the future and explores how sport can take advantage.
Winning in sport is easy to define, far less so in business. I like to keep it simple - winning is delivering business growth. Sure, that’s a good soundbite, but what exactly does this growth look like and how can organisations achieve it in this new Digital Age we find ourselves in? Well, that’s the question I’m here to tackle.
First, let’s look at what I mean by the new ‘Digital Age’. As traditional sporting revenues such as ticketing have declined amidst the disruption of COVID-19, the revenue opportunities of digital channels have come of age. Global advertising spend decreased by 4% in 2020, yet digital media grew by 8%. At a macro level, it indicated the power of digital as a medium to reach and engage sporting audiences in an increasingly isolated world.
The San Siro became your sofa; Centre Court became your kitchen and with that, digital became your window to the sporting world. Digital offerings that facilitated this process saw explosive growth. E-Commerce has been a big winner, seeing a 200% increase in sales of sporting goods year-on-year. However, as our sporting environment shifted, so too did our content habits: home streaming consumption saw a 95% increase, social media users increased by 10% to nearly four billion people, or 50% of the world’s population.
We have seen major investments in these areas from our own clients as they cater to the shift in demand. A strong e-Commerce infrastructure has become integral and advertisers, now aware of the data-driven efficiency and accountability of digital, are seeking-out new digital partnerships. Subscription video services have experienced explosive growth and the fears of subscription fatigue seem unfounded, with our campaigns observing a 30% drop in churn rates year-on-year. The truly exciting thing is this is only the beginning.
As the world of sport and digital become irreversibly intertwined, the game has been taken to a new playing field - one that has growth firmly between the goalposts. Growth is critical to the long-term survival of any business and if you’re not moving forward, you’re moving backwards.
In the digital world, growth is fuelled by two sources: audience and revenue. In passion platforms such as sport and entertainment, audience is a direct driver of revenue. So, investing in building your audience is a sure way of future-proofing your business.
What does ‘audience growth’ actually cover? Typically, it is growth in the scale and coverage of your audience - the number of people you are reaching - as well as the engagement of your audience - their purchase intentions and level of interest.
As long-suffering sports fans, we’re all victims of sport’s unique ability to trigger our emotions and capture our engagement. The challenge for the sports organisations who facilitate this engagement - from rights holders, broadcasters, clubs, and governing bodies - is to develop a clear commercial model for monetising that audience engagement. When you consider that, compared to prospects, engaged audiences are twice as likely to purchase a product or service and spend twice as much when they do, it’s a strategy that’s worth the investment.
Over the past year, WePlay has worked incredibly closely with our clients to understand their businesses and to help them capture the growth opportunities of the Digital Age. The result is a framework that was born from adversity but built for opportunity. Our 3Ps of Audience Monetisation represents a blueprint for sports organisations to unlock the power of their audience to drive sustainable and incremental revenue growth:
The ability for organisations to market products directly to their audiences, rather than through intermediaries. It includes:
• Ticketing - General attendance and hospitality
• E-commerce - Online and in-store sales of merchandise and licensed products
• OTT/SVOD - Annual, monthly, or one-off subscriptions to a content viewing service
• Memberships - Subscription and loyalty programmes
The digital packaging and promotion of rights and content for commercial partners. Digital enables organisations to directly understand what their audience and their assets are worth - a pretty powerful position to be in when entering a sales process. It typically comes in three forms:
• Digital Asset Valuation - understanding the value of your digital assets, such as website advertising inventory, social media audience, email marketing database, and official mobile applications.
• Digital Asset Packaging - packaging digital assets and promotional material to sell to potential partners.
• Digital Partner Activation - the promotion of the partnership, in accordance with the agreed rights, assets, and partner-led objectives.
3. Programmatic Monetisation
The monetisation of audience and content through self-serve digital platforms and advertising inventory. It covers three principal ecosystems:
• Web & Mobile Advertising - utilising the advertising inventory within owned and operated platforms, such as website and mobile applications.
• Social Media - platforms such as Facebook, Instagram, YouTube and Snapchat all have self-serve functionality that enables you to monetise your content through advertising inventory, once certain eligibility criteria is met.
• Affiliate Partners - indirect revenue generated from affiliate platform advertising, usually from a revenue-share model negotiated with affiliate partners.
2020 was the year for sports organisations to survive. However, 2021 is the year the sports industry revives, and begins to thrive. Those that not only embrace the commercial possibilities of digital, but develop and execute an effective digital strategy to capture them, will open up a wealth of revenue opportunities to place themselves at the forefront of this very revival.
Welcome to A Brave New World.