1. From Fan Experience to Fan Immersion
Teams, leagues and events have been relentlessly pursuing fan engagement (a term unique to sport – for other industries it’s customer experience) since social media came along and gave voice to their followers. This was the game changer for sport businesses who now needed to service their community rather than the traditional mode of providing the experience (such as it was) that they wanted their fans to have.
Then social media combined with mobile, analytics and cloud technologies to create what are now the digital experience essentials that fans have come to expect in the on-demand economy. For business, it has been challenging enough getting the balance between legacy and transformation right since changes happen in society and technology faster than business and regulation. Now a new breed of digital technologies has emerged that further challenge enterprise foundations – and data management.
Every time a new technology reaches scale in society sport quickly needs to figure out how it is going to re-define the sports experience – since any change in society is reflected in sport. It’s possible to imagine a collective groan ring out across the sports industry as leaders think ‘not another one now’ such is the relentless pace of change in this digital technology era. In 2017, this didn’t just happen once but three times with the alphabet soup of tech that reached market relevance – AI, AR and VR.
These new ‘digital experience enhancers’ are already driving the high-tide mark of personalization, relevance and innovation to new levels. As with any of the digital technologies that have come before them, understanding the behaviour that they induce and how it relates to the strategic purpose (which hopefully has been updated in the digital era) needs to come first.
2. The Big Guns are Playing in Esports Now
If 2016, was the year that Esports gained mainstream attention, then 2017 is the year that the biggest brands have become involved.
When Dallas Cowboys, as the most valuable sports team in the world, invest in team ownership it really is time to pay attention to the inroads that the electronic version is making on traditional sports.
The Cowboys are unabashedly a sales driven organization and after they got the nod from their marketing agency that the sponsors of the Esports team they were considering purchasing, complexity, would also resonate with their Cowboys fan base they knew there is money to be made.
On the brand side, it was interesting to note that McDonald’s ended their association early with the IOC as a Worldwide TOP Olympic Partner which they had been since 1976 and were also committed to until 2020. That they signed on as a League of Legend’s World Championship sponsor in Australia in the same week may be either coincidental or ironic. Time will tell.
One thing is certain, younger people are valuing computer interaction over physical participation in sports highlighted by Kleiner Perkins Internet Report 2017 which found that the equal numbers of Millennials ‘strongly prefer’ their favourite Esport as those that feel the same way about their traditional Sport.
3. Sport Sponsorship Revenues now Compete with Online Advertising
As if fragmenting of attention between linear TV, subscription services and online streaming aren’t set to disrupt the economics of the broadcast rights market, there is a new threat to the sports revenue model. This year has seen emergence of CMO’s preferring to invest in online advertising rather than with sport as sponsors whose appeal to reach niches had been without peer in pre-digital times.
Online advertising is big, big business and it’s growing rapidly thanks to mobile usage and video consumption habits. This year, advertising online surpassed linear TV advertising for the first time and it is Google and Facebook Ads that are dominating this landscape almost as a duopoly.
The appeal of online advertising with Google and Facebook is understandable and compelling. Firstly, the amount of personal data about the likes, interests and preferences that individuals exchange to interact with these platforms is powerful data in the hands of advertisers (or political parties for that matter!). Secondly, these companies have advertising executives which allows brands to bypass media buying companies.
In sports, modern brands now enter into arrangements with rights-holders for the access to individual fans that the association between the two parties uniquely provides them. The mantra of personalization and relevance at scale now applies equally to the rights-holder / corporate partner dynamic. The more a team, league or event is able to share data at the same level as Google and Facebook with partners the more attractive they are as a sponsorable property. Sport enterprises need to adopt a platform based approach to their business model transformation - and staving off competition from the tech giants for their sponsorship revenues is one of the reasons why.
From PWC’s Sports Survey 2017
4. Globalization is Going Physical
Social Media gave teams and leagues a global audience and those that have worked with a clear international strategy, enabled by digital technology, have amassed followers in the multi-millions from outside of their own jurisdiction. More than 90% of fans and followers will never attend a match.
This was then followed by regionalization of sponsorship as part of the commercial reality of the global approach - with Manchester United offer a leading example in this area.
From Manchester United Website
One-off matches and tours by leagues and teams have been happening for a few years now into those regions where follower numbers justify those visits. Now to sustain, and grow, their affiliations in other countries, leagues and teams are physically investing in those areas with a year-round presence. As well as connecting in a meaningful way with local communities, sponsors and broadcaster’s, sport organizations are able to tailor their content even more as a result of their immersion in the, usually, Asian or Latin American cultures. For instance, La Liga has opened five offices in the APAC region as they battle for the football lover’s attention away from the English Premier League and Bundesliga.
Recently, FC Barcelona upped the physical presence game by approving a football academy in New York ‘because this project will serve as a tool for growth in an area of strategic importance for the Club: the USA, and in particular the New York area which has a great influence locally and around the globe.’
From ‘Presentation of the Barca Academy in the USA’ Report, FC Barcelona website
5. Digital Transformation is Catching On
One of the interesting changes in the digital pulse that I have observed over recent years is the emergence of more urgency and importance from businesses in any industry to undergo their own digital transformation.
In 2014-15, there was an attitude of ‘the digital economy is new and best practice is only now emerging so there is no rush to transform at scale across the enterprise’. Now the mood has changed and the essential need for transformation is catching on. Digital is the only growth market there which means that anything less than all-in is underperformance.
This growing interest in digital transformation is captured well in this graph from Google which visualizes the significant growth in searches for this term (now, if I had a technology that enables transformation, I could go to Google and target my advertising to people who they know from this search are interested in the topic).
In November of 2017, the Australian Government’s Australian Sports Commission released their Digital Vision to ‘better understand how technology was impacting the Australian sports Industry and how the industry needed to respond’ as a government initiative to support the digital transformation requirements of the nation’s sporting bodies.
There are three main reasons why digital transformation is the hottest business topic
- Unprecedented pace of technology development
Technology development continues to accelerate based on open access to higher levels of processing power, unlimited storage capacity and cost effective cloud computing. As one Silicon Valley investor observed;
As a result of social media, personal behaviours have changed and we come to expect personal and seamless cross-channel experiences at any time. As digital anthropologist says, digital has created a society of ‘accidental narcissists which is forcing companies to keep pace or risk redundancy.
- Competitive pressure from new digital businesses
The digital era is different from the dotcom boom of the late 1990’s which was based on the Internet technology only. New businesses now emerge based on the behaviours and preferences of consumers (think Uber, Netflix and Amazon), and for sports - Esports.
These five factors will surely become more transparent through 2018 and no doubt the year will throw up even more macro-trends as we collectively move deeper into the digital economy. Exciting times!