Future of Sports
Chatting Sports Tech

Edition #3 : Fan Controlled Football

Why Your Organization Should Pay Attention to the Fan Controlled Football League

Have you ever become infuriated watching your favorite football team’s play calling suck? Or screamed at the TV when your coach opted for a cowardly punt on fourth down? Well then, can I interest you in an analysis of the recently launched Fan Controlled Football?  

Wait, what the heck is Fan Controlled Football?

Fan Controlled Football or FCF is the latest re-imagination of professional football. Unique aspects of league gameplay include:

  • Streamed on Twitch
  • Seven player versus seven players
  • Short 50 yard field
  • No kicking or special teams
  • One hour games

However, the real innovation surrounds the fan experience: 

  • Fans vote on all the plays during the games on Saturdays
  • Fans also vote in live player drafts on Wednesdays to fill out the roster of players
  • Essentially, there’s a loyalty program, Fan IQ. The more a fan interacts with the league, the more powerful his or her vote becomes
  • Drone cams, helmet cams and VR provide alternate views
  • Players and coaches take part in live weekly shows to give fans another chance to engage with the league

Currently there are four teams in the FCF: Glacier Boyz, Zappers, Beasts and Wild Aces. 

Each team is led by a group of high profile owners:

  • Glacier Boyz are led by rapper Quavo and professional cornerback Richard Sherman
  • Zappers are led by social media star Bob Menery and NY Met Trevor May
  • Beasts are led by former all-pro RB Marshawn Lynch and WNBA player Renee Montgomery
  • Wild Aces are led by online personality Greg Miller and LA Charger RB Austin Ekeler

Creating the league was an endeavor several years in the making. The founders have been very thoughtful about organization and how to give control to the fans. Check out this podcast to listen to the plan straight from one of the founder’s mouths. 

What’s preventing the FCF from going the way of the AAF or the XFL?

In my mind, there was a large strategic difference in how these leagues were constructed. Each of the following paragraphs could be a standalone 10 thousand word blog but since no one wants that, let’s run through the argument why I think the FCF has serious staying power. 

Some context: the Alliance of American Football (AAF) didn’t even make it through its inaugural season before folding in 2019 while the latest iteration of the XFL ended prematurely due to COVID in early 2020 before filing for bankruptcy in April. 

When analyzing the now defunct leagues, the main thesis behind starting them was the public’s appetite for professional football could sustain additional leagues to the NFL. These leagues introduced some slight tweaks to NFL gameplay (e.g., different special teams formats) but for all intents and purposes it was the same old 11 versus 11 football. What these leagues failed to consider though was the significant step down in talent on the field versus the NFL. The AAF tried to address this by hiring high profile coaches, but who has ever turned on an NFL game for their favorite coach?

All the while, these two leagues relied on a similar business model as the NFL. Professional sports leagues like the NFL rely on four primary buckets of revenue: Media rights, Gameday revenue, Sponsorship and Merchandising. The NFL is currently the richest professional sports league with all 32 teams profitable because of the growth in its massive media contracts (current deals expire within the next two year and negotiations are ongoing with 100%+ increases being floated in the news). 

The XFL and AAF mimicked the NFL’s media strategy, choosing linear television for primary distribution. But when the expected eyeballs never materialized, the leagues’ media partners unsurprisingly decided to back out, collapsing an essential revenue pillar that led to the leagues’ demise. 

Turning the attention to the FCF and considering lessons from the previous leagues’ failures, there are three main reasons I don’t think FCF will have the same fate:

  1. The League Doesn’t Want to be the NFL – Unlike the AAF and XFL, the FCF drastically changed the gameplay, opting for 7 on 7 rather than the traditional 11 on 11. While Bleacher Report had an article all the way back in 2013 detailing the rise of this new format, it has never made its way into the public conscience. Yet the fast paced emphasis on passing offenses appeals to a scoring obsessed fan base (hello fantasy football lovers).
  2. The League Is Not Beholden To Its Media Partners – By choosing streaming on Twitch over traditional media, FCF doesn’t have the same issue of over reliance on media partners like the AAF and XFL had. Networks have a finite number of time slots and incentive to run the best performing programming to sell to advertisers but Twitch is a completely different animal built on a different business model. No one has to buy the rights to the FCF for the league to operate. Plus, the FCF is meeting the consumer on a platform that they are already familiar with. Check out this article for some statistics on Twitch’s meteoric rise as a platform. 
  3. The League Recognizes the Value of StoryTelling and Personality – Whereas the NFL’s goal is to put the optimal product on the field by grabbing the most talented individuals, the FCF understands individual stories are often much more compelling. Players in the FCF’s initial pool were often selected for having the most interesting backgrounds and not necessarily the most talent (though they aren’t necessarily slouches). In addition, the owners of the teams are established personalities and bring their own fan bases, often from outside the typical sports fan realm.

The FCF is now two weeks into its inaugural season. How has performance been to date?

I can’t find numbers from the second weekend yet (games are streamed on Saturdays) but opening weekend metrics were strong. Highlights include: Most downloaded free sports app for a three day period, over 700K live views on twitch, greater than 250K plays called by fans, more than 70% of fans called more than 5 plays. From an engagement perspective, all of those are positive.

The league has been fairly successful to date gathering sponsors before a single game was played. Wendy’s is the big brand name as the official field-level partner, but with WHOOP, Vroom, Kinexon, Black Box VR and Schell Games also on board, the league also attracted several sponsors who share an interest at the intersection of sports, technology and gaming. 

I do want to raise a cautionary tale though. The opening game of the XFL’s 2001 original launch was considered a success with a 9.5 nielsen rating as plenty of people tuned into the broadcast of the love child of wrestling and football. But interest dwindled drastically throughout the season when fans realized play quality was low and so-called innovation were mostly gimmicks. The league’s championship drew a pathetic 2.1 rating, helping lend to the easy decision to fold the league.

Anything else interesting from a business perspective?

Yes. The league offered a small percentage of each team’s equity to the public, offering another avenue to give fans skin in the game. It’s a creative strategy that helps solve for how to create team loyalty when 1) there’s no geographical location tying you to an organization (i.e., I’m a Yankee fan being born and raised in New York) and 2) the majority of players are unknowns.

In total, what the FCF is building goes directly along with the last edition of this newsletter about the power of building a community. Every decision leading up to the league’s inception revolved around the goal to drive engagement and make the fans part of the experience. The FCF doesn’t want an audience; it wants a community. 

What lessons can I apply to my organization?

Let’s summarize takeaways into three lessons that can be applied to every organization:

  1. Know Your Audience – I truly believe the AAF and XFL failed because of an inability to properly evaluate potential customers. As the tech world would say, no product market fit. Reminds me of the epic failure of Quibi and mis-reading the market. Meanwhile, the FCF is targeting a different customer with a unique value proposition and meeting them on a platform they’re already familiar with.
  2. Adapt Your Business Model To The Times – A big trend I haven’t touched on in depth is the growing power of influencers. The FCF is clearly taking advantage of having popular influencers as team owners while the AAF and XFL failed to capitalize on the same trends. A similar example is the current status of boxing. While traditional boxing has been experiencing a steady decline in interest for the past several decades, celebrity boxing leagues are sprouting up and capturing much higher viewership levels. For example, the dual exhibition matchups of Logan Paul versus Nate Robinson and Mike Tyson versus Roy Jones Jr generated over a million pay-per-view buys, the highest boxing pay-per-view buys in a long time.
  3. Build a Community to Keep Customers Coming Back – Hopefully I don’t have to explain this one again….

That’s all for now. Next week’s full edition will explore the Future of Ticketing.

Until next time,

– Charles

Add me on LinkedIn and follow me on Twitter @ccampisi_EES. Feel free to share some feedback on the newsletter or just pass along interesting findings in the sports tech space via email (charles@engagemintpartners.com).

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Future of Sports
Chatting Sports Tech

Edition #2 : Power of Community

Welcome back to your regularly scheduled Chatting SportsTech with Charles programming. This edition will go deep on The Power of Community in Sports. Unlike Edition 1.5 – I’ll avoid confusion and use integers only going forward – this format will more closely follow Edition 1. I’m going to start at the macro level to understand why an increased emphasis is being placed on building digital communities, talk about applications in the sports world including how to use communities to drive revenue growth and end with a deeper discussion of some emerging sports tech companies. 

Jump to the last section if you’re only interested in reading about the sports tech companies.

Let’s dive in…

Why talk about community building now? Hasn’t the human race been forming communities since the dawn of time?

You aren’t wrong about that last point. What has changed though is the vast library of available tools and technology allowing community formation previously constrained by physical geography. 

What really drove me down this rabbit hole was this Andreesen Horowitz article. For those of you unaware, Andreesen Horowitz is one of Silicon Valley’s most prestigious VC funds with ambitions to become a major force in media.*  The author uses the terminology ‘Social+’ to describe companies that build a social experience around a single category, like music or gaming. This graphic gives examples of the categories moving to social:

While I disagree with Peloton’s classification (there is a strong social component) and recognize the author has an agenda to promote Andreesen Horowitz portfolio companies, I agree with the inherent benefits to a social+ company. A social+ company ensures faster feedback loops and helps drive customer retention, creating a defensible moat.

Before proceeding, it’s important to highlight the large difference between an audience and a community. You have an audience if you’re lecturing from your soapbox or  pushing notifications to a group of followers. That’s why Andreesen considers ESPN a ‘non-social’ company. You have a community when there’s consistent interaction not just between you and your followers, but between members of that follower group. Humans are social beings; we crave the interaction that keeps us coming back.

That makes a lot of sense. Tell me more how this all fits in with the world of sports. 

In my opinion, the sense of community with sports is the number one reason why people invest so much of their time and effort following a team, players and / or a league. It’s why grown adults wear the jerseys of much younger adults to display their loyalty to a team. It’s how two complete strangers can immediately bond by sharing experiences from a common fanhood. It’s why I spent $2,000+ as a recent college graduate to watch Notre Dame battle Alabama live at the 2013 BCS Title Game (let’s not rehash what happened during that game).

The lack of a community is what has made 2020 and beyond so challenging. The pandemic stripped us of all the joys of serendipitous gatherings at a bar for the big game. Without the traditional gameday experience, fans are missing that emotional attachment to a team. In most places, television is all we have, since fans aren’t allowed in stadiums or arenas. 

With the rise of mobile, the ‘second screen’ experience has been the natural evolution for fans feeling connected to a larger population while watching the game from home**. Essentially, viewers have sports on television while simultaneously playing on their phone (or computer). I’ve heard Twitter, my platform of choice, described as the World’s Greatest Sports Bar for its ability to facilitate interaction between people from across the globe as it relates to live sports contests. 

As technology has advanced and the pandemic introduced barriers to in-person interaction, social watch party technology has emerged as the next frontier. The rapid rise of video game streaming on Twitch and other free platforms has shown a tremendous appetite for social viewing. Sports had been slower to evolve given the complications of media rights ownership. However, multiple new companies are tackling social watching in the sports space to replicate the community aspect. I’ll touch on some of the vendors in the sports tech section below.  

So I understand the trends but how does building a community help a sports organization generate more revenue? 

The Harvard Business Review published a good article titled, “Want More Loyal Customers? Offer a Community, Not Rewards.” My favorite line: “In the modern aspiration economy, people develop true brand affinity only when it gives them a sense of community.”

This concept links directly to the pareto principle pareto principle, which says the 20% of your most loyal customers contribute 80% of your company’s revenue. Customers who have true brand loyalty are usually ingrained in that company’s community. By identifying those top 20% loyal customers, you can concentrate marketing efforts on this segment to increase sales of tickets, merchandise, digital products, etc. 

Sports organizations face a significant problem though. For the longest time, community building was outsourced to the existing social media platforms. For example, Facebook fan groups made sense since people already spent a large portion of their time on Facebook. But Facebook was the sole beneficiary of these allegiances, improving their individual consumer profiles and optimizing their advertising algorithms. Meanwhile, sports organizations received no visibility into who their fans really were, passing up valuable data and sacrificing the ability to drive better conversion rates. The good news is that organizations are quickly recognizing the value of first party data, while more sports tech companies are popping up with solutions to address this data capture. 

That’s a great segue. Give me some sports tech companies who are set up to thrive.

I’ll explore two different segments: 1) Capturing first party data and 2) Watch party technologies. 

Let’s start with sports tech companies focused on building or mining communities to capture first party data. There’s been a significant shift over the past decade from team-centric news apps to a more robust gameday app experience complete with mobile ticketing, mobile ordering, social media and other gamification integrations. Professional teams and leagues have led the charge – see YinzCam as the official partner of the NFL – and I expect colleges to start following the trend (shameless plug – we’re helping several D1 institutions evaluate options. If you’re reading this and are in the market to revamp your digital strategy, feel free to get in touch with EngageMint Partners. The app providers who will win in the  long term understand the value of backend data analytics and the ability to segment and / or personalize fan experiences within the app. 

TopFan is a company whose value proposition revolves around the premise that customer data is organizational gold. A white-label mobile platform allowing organizations or influencers to build direct relationships with fans, TopFan has created a mobile community for the Denver Broncos separate from their gameday app. With TopFan, organizations or influencers have six-figure plus revenue upside by selling subscriptions to exclusive content, merchandise using exclusive drops and sponsorship inventory throughout. Initial results have more than doubled industry benchmarks, with average customer session length on the app exceeding 15 minutes (vs. 6 minutes for comparison).

Then there are companies like Pico that take a different approach to resolving an organization’s lack of first party data. Pico uses gamification and other digital activations across existing social media platforms to identify fans and collect data that can then be migrated to an organization’s CRM. Using Pico’s tools, an organization can have much lower customer acquisition costs versus other methods like Facebook ads while creating new sales channels for tickets and merchandise.

Pivoting to watch party technologies, companies that have emerged include Bleachr, Sceenic, Hot Mic and Maestro. All four have different value propositions and target customers: 

  • Bleachr introduced a new CrowdView Live platform several months back aimed at providing a more interactive watch party. Sports organizations choose events to host through the platform and invite fans to share the experience. 
  • Hot Mic is aiming to be the Twitch for Live Sports. Brands or sports organizations can tap a host to create and facilitate a new watch party, while all the viewers can watch a game altogether.
  • Maestro offers a white-label turnkey platform to clients for interactive video channels, fan-driven draft parties and virtual tailgates. Fans are able to create breakout rooms and watch together. 
  • Sceenic targets more media companies and leagues but like Maestro, provides a white-label software solution for friends and family to watch programming together. 

I fully expect watch party technology to continuously evolve given that most of these products emerged as a Covid response. There’s a possibility that AR / VR type technologies become the dominant social watch technology in the future, but in the meantime, social watch parties represent a powerful tool for potential sponsorship activation. The organizations able to use the tools most creatively (i.e., having a popular analyst or influencer host) can generate significant fan interest and truly enhance loyalty within their existing communities.

Let’s wrap there since you’ve probably had enough sports tech talk to last the week. 

Until next time,

– Charles

Next week, I’ll release an analysis of the recently launched Fan Controlled Football League, since a lot of the league’s strategy fits in with this Building a Community theme. Think of that as a mini-edition. The next full edition in two weeks will explore the Future of Ticketing.

Footnotes:

*Investment platforms creating their own media outlets is another major trend: Cutting out the middlemen and controlling your own narrative. I’ll explore this as part of a larger DTC edition in the future.

**We’ll dive into some of the metrics behind second screen experience and the overall trend in more detail in a later edition.

Disclaimer – EngageMint Partners does not have existing financial relationships with any of the sports tech companies discussed. However, as part of our day to day, we have frequent conversations with companies to better understand their business models on behalf of our clients. If you’re interested in further insights on specific companies and sectors, do not hesitate to reach out. 

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Chatting Sports Tech

Edition #1.5 – Super Bowl Post-Mortem

Since Edition 1 of Chatting Sports Tech went deep on the Super Bowl’s importance to the media industry, I wanted to craft a quick post-mortem after viewership numbers were released. Hence, Edition 1.5. Most of the insights are from people who follow media numbers way more closely than I do, but I’ll add my spin and link back to concepts touched on in Edition 1.

Edition 2: The Power of Community in Sports will still be posted toward the back-end of this week, following the regular bi-weekly schedule. 

Let’s dive in.

First off some facts

  1. The Super Bowl drew an average of 96.4 million viewers. That represents a 15% decrease from the previous year (Sports Business) and made it the least watched Super Bowl since 2007.
  2. The TV specific average was 91.6 million viewers while the digital stream averaged 5.7 million viewers (SB Viewership).
  3. The number of digital streamers represented a 65% increase while the number of at-home specific TV viewers decreased by nearly 9% from 2020 
  4. The median age of viewers was 50.6 years, up from 49.1 a year ago and 46.1 three years ago (Sportico).

This Super Bowl was marketed as GOAT versus the heir to the throne and should have been a ratings bonanza. But that clearly was not the case. What’s the immediate takeaway?

The honest answer – everything is relative and a little more context is necessary before jumping to conclusions. In other words, simply comparing viewership versus the prior year is a fool’s errand.

One of my favorite twitter follows and great storyteller, Joe Pompliano, wrote a good piece here. Some of the most relevant points:

  1. The finals of every single other major sports event was down significantly during the pandemic. Compared to the year over year performance of the Stanley Cup (-61%) and NBA Finals (-49%), the Super Bowl’s decrease doesn’t look as bad. Granted it’s not a great comparison given calendar timing and a more crowded Fall sports schedule, but the point remains that decreases have plagued all major sports.
  2. The Super Bowl still significantly outperformed every single other television program of the year. By a lot. Not surprising at all. When that’s no longer the case, media executives and Roger Goddell can officially start panicking.
  3. Given NFL regular season ratings were down 13% on the year, the Super Bowl viewership numbers are fairly in line.
  4. There are way too many factors to attribute a single cause for the decrease.

I’ll add three other things playing a part in depressed ratings / decreased viewership over the course of the night:

  1. Pandemic impact – I’m assuming the pandemic prevented the typical Super Bowl watch parties (“assuming” because everyone seems to have their own guidelines in place for what constitutes ‘safe’ behavior). Under that assumption, the people who care less about the football game but watch due to social pressure and the forced next day water cooler talk may have skipped watching the game altogether. Expect this to rebound next year, according to Fox Sports Head of Strategy.
  2. The blowout didn’t helpSportico’s article provides the number of viewers at different points during the game and predictably, the number of viewers dropped precipitously once Tampa ran away with the game. Compare that to Eagles-Patriots in 2018, where there were actually more viewers watching the game’s end versus the halftime show.
  3. The Refs Ruined The Game! – I’m stretching here, but based on my twitter feed, you would have guessed the referees all padded their 401Ks by wagering heavily on Tom Brady and his quest to conquer natural aging based on the lopsided penalty calls for Tampa. But I wouldn’t be surprised if a small portion of viewers just gave up on the game out of frustration.

Will these Super Bowl viewership figures influence future NFL media rights?

No. Almost certainly not. This Super Bowl represents only a single data point. Meanwhile, as Edition 1 mentioned, the NFL retains the most dominant position in the television world. The league’s relative strength versus other programming has actually increased with cord-cutting. In other words, the NFL remains appointment viewing when non-sport and news programming continually shift to on-demand, OTT platforms. 

Based on figures floated in the media, the next round of media rights should represent a significant increase on the current deals. The NFL is pushing to get a deal done before March. Why the rush? Given 2020-2021 losses due to a lack of ticket sales and that the salary cap is tied to league wide revenue, locking in new guaranteed media payments could allow the NFL to get creative and smooth the salary cap going forward instead of taking a massive hit for the upcoming year. 

What are the long-term takeaways?

The most obvious long-term takeaway is that cord-cutting isn’t going away and may even accelerate. Per the Sportico article, 17.8 million fewer people were watching TV on Sunday night compared to one year ago according to Nielsen. With every media company throwing its weight and attention behind its streaming platform, the writing is on the wall for Pay TV. An eMarketer survey conducted as of July projected 27.1% of households would have cut the cord by 2023. I’d guess that projected 2023 number would realistically be closer to 35% given pandemic effects and increased number of streaming options. Meanwhile, though plenty of people in the media championed the 65% increase in Super Bowl streaming, the absolute number of streamers is still a small fraction of overall viewers. I’ll dive more into cord-cutting in a future edition so let’s move on.

The aging population of viewers represents an alarming trend for the NFL though. Part of that aging is being captured in cord-cutting statistics as the typical cord-cutter skews younger but don’t expect the NFL to see this statistic and sit idly. Capturing the 18-49 year old demographic is crucial for the longevity of the major sports. I’ll also address targeting the youth population in a future edition since it’s a major priority of all the leagues.

A less obvious takeaway is that gambling has already fundamentally changed our appetite to watch sports and will only become more prevalent with increased legalization. Research shows people are more engaged with skin in the game (every sport tech company addressing gamification preaches this non-stop). Once it was clear Super Bowl LV was out of hand, any gambler not personally invested in a team is no longer interested in a game’s outcome if their wagers are dead. Compare this year to last year’s big game, where the Chiefs staged an exciting fourth quarter comeback to knock off the 49ers. The result was always in question and viewership remained high throughout. Yeah but it’s the Super Bowl. Don’t you want to watch until the end? I’d argue 21 weeks of watching sports rooting for outcomes over teams (e.g., the favorite needs to win and cover versus simply win) instills a certain sticky behavior that even the Super Bowl cannot overcome.

Now that the game was played and viewership numbers are in, are any of the trends highlighted in Edition 1 of Chatting Sports Tech impacted?

Let’s revisit edition 1’s three trends: 1) Greater Marketing Discipline, 2) Experiences > Stories and 3) Importance of Building Goodwill. 

Starting with the easiest one, nothing about Super Bowl LV changes the importance of building goodwill in my opinion. Several other brands besides Budweiser came forward and announced foregoing their annual Super Bowl ad in favor of good causes.  

Regarding marketing discipline, I would expect the soft Super Bowl LV ratings result in future ad prices remaining relatively flat, possibly a bigger impact than my initial prediction of gradual increases. I’d expect recency bias to cause brands seeking timeslots towards the back end of the game to approach with more hesitation. The risk of a blowout means potentially less eyeballs and less eyeballs equals a worse ROI for advertisers (though the opposite argument applies if later time slots are cheaper and the Super Bowl then remains close). 

Reiterating the experiences over stories trend, several other brands followed Pepsi’s halftime lead, using their ad slots to drive traffic to other activations. Bud Light stands out, reuniting the subjects of its most famous campaigns around its Bud Light Legends Campaign but don’t forget Reddit purchasing 5 seconds from another company’s timeslot, causing thousands of people to hit rewind. Activations and experiences will slowly become the norm. 

Anything else?

One more point on advertising revenue. I found this chart of Youtube versus Netflix advertising revenue pretty interesting. Since fixed advertising budgets create a zero sum game (i.e., an allocation to one platform takes from another platform), Youtube drawing more advertising dollars means less dollars devoted to traditional media.

I hope you didn’t bet on my Super Bowl Prediction (Insert Smiley Face)

Shoot me an email and let me know what you thought. Would love to debate or discuss any of the above in more detail.  

Only ~350 days until the next Super Bowl,

– Charles

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Chatting Sports Tech

Edition #1 – Super Bowl Special

Using the Super Bowl to Examine Changing Themes in Sports Advertising

Welcome to the first edition of Chatting Sports Tech with Charles. If you want more background about this newsletter and my background, check out the background edition. Today’s newsletter is a special Super Bowl Edition, using the Big Game to examine some underlying trends in the traditional advertising market.

What is the Super Bowl’s – and the NFL for that matter – significance in the overall media landscape?

There’s a reason the term ‘Super Bowl’ is synonymous with the biggest event in a given field. It’s by far the largest television spectacle of the year, averaging well over 110 million total viewers across the past decade (SB Viewership). For reference, the current population of the United States is around 330 million. 

While no one is surprised the Super Bowl is the most watched event, the viewership numbers are quite staggering when compared to other programming. The audience of 2020’s Super Bowl was nearly two and a half times the audience of the next most-viewed program (the NFC Championship game) and four times the most-viewed non sports program (the Oscars)* (2020 Top Rated Shows). (Note – After I finished my draft of this newsletter but before releasing, Sportico published this article Sportico SB Ratings going into depth about the Super Bowl’s reach. Check it out for more details)

When you dive into the list of 2020’s most viewed programming, you quickly realize the NFL is king of traditional linear television. Seven of the top ten and 28 of the top 100 telecasts were NFL games. Remove election coverage and the NFL occupies a significantly higher percentage of the top 100 in a non-election year.

We’ll save more discussion on cord-cutting and the sky-rocketing valuation of NFL media rights for a future newsletter but hopefully these figures illustrate why some media executives speculate that Pay TV’s future is solely as a distribution platform for football. 

How does this translate into dollars and cents?

In simplest terms, advertisers pay for eyeballs. Therefore, the Super Bowl commands the highest dollar amount from advertisers given the expectation of the largest audience. 

The network pays for the broadcast rights as part of their broader media rights package with the NFL – CBS for this year but rotates among the NFL’s media partners – and then breaks commercial slots into mostly 30 second windows. That inventory of time slots is then sold to brands looking to promote their products and services.

Since the Super Bowl retains a dominant position in the television market even as cord cutting and lack of appointment viewing increases, the amount of a 30-second ad window has skied upward. The chart in this business insider article (SB Ad Cost) shows the exponential rise, from $1 million per slot in 1994 to $3 million per slot in 2010 to $5.6 million per in 2020. Per media reports, CBS is maintaining the 2020 price and selling 2021 Super Bowl ad time slots at ~$5.6 million.

Doing some back of the envelope math and assuming an audience of 112 million for this year’s game, advertisers are spending $50 CPM or cost per thousand viewers, the most common measure in advertising. When compared to the cost of advertising (CPM) through other channels – I’m not an expert but from a quick google search anything above $30 appears to be high – the Super Bowl is incredibly expensive for a marketing department. 

Is there anything interesting about this year? 

Yes, in my mind. Multiple giant brands are staying in the dugout this year (Warning – I can’t resist a good sports wordplay). Budweiser, whose parent AB-InBev was the largest Super Bowl advertiser last year with $41 million of buys, announced it would not run an advertisement for the first time in 37 years, instead choosing to donate the money toward a COVID vaccine initiative and other charitable causes. Coca-Cola (possibly the most iconic SB ad of all time Coca Cola SB) and Hyundai (smaht pahk) have also announced they’ll be sitting out. But the company that caught my eye was Pepsi.

While Pepsi remains the half-time show sponsor for the 10th year in a row, the company decided not to run any 30 second ads during the game. That’s a big shift for a company that spent $31 million on in-game ads last year and often buys some of the first time slots to deliver a bang (Pepsi Steve Carrell). Instead, the company is choosing to promote the halftime show this year through a multichannel campaign (This commercial played no less than 20 times during the NFL divisional round) and a special website (PepsiHalftime.com) with behind the scenes videos and an augmented reality experience on instagram. 

Do you think these actions represent trends that are here to stay?

Let’s highlight three emerging trends in advertising that these companies’ actions illustrate:

1) Greater Marketing Discipline – Whereas the largest marketing budgets would jump at the opportunity to showcase themselves on the grandest stage in the past, more and more companies are re-evaluating this approach given 1) the astronomical cost of an ad buy and 2) challenges introduced by the pandemic this year (marketing costs often dry up as a response to top line revenue pressure). With improving tools to measure ROI on advertising spend and increasing numbers of channels to reach potential customers (e.g., social media), the value proposition of purchasing 30 seconds for $5.6 million – which doesn’t even include the production costs necessary to make a splash – is declining.  

2) Experiences > Stories – This touches on Pepsi’s strategy change. Interactive experiences are more likely to shape a customer’s opinion of a brand versus watching a short advertisement, however comical it may be. Sponsors are no longer satisfied with slapping their name or logo on an event. The key becomes what activations make sense with a sponsor’s brand and the event.

3) Importance of Building Goodwill – Company stakeholders are demanding more ESG (environmental, social and corporate governance) responsibility from companies. In addition to being beneficial to society, actions generating goodwill often result in a greater monetary impact than a typical advertisement by increasing customer loyalty and eventually purchasing. This came to my mind with AB InBev. I’d be interested to see if there was an internal profit-loss calculation behind their decision.

All that being said, I still believe there will always be a market for Super Bowl advertisement given you cannot replicate that scale of viewership. But I wouldn’t be surprised if the rapid increase in prices for a 30 second Super Bowl ad spot begins flattening out going forward. 

How does this translate to the world of Sports Tech?

I have a lot of thoughts here but to avoid being too long winded, let’s focus on two areas:

First, if you are a sports property, you’ve probably noticed sponsors pushing more activations and experiences to supplement current sponsorships and create memorable moments for fans. Historically, a majority of those activations occurred on-site, on gameday. But the pandemic upended that. 

To combat this, I’m really interested in the potential of augmented reality (AR) and virtual reality (VR) to create new sponsorable inventory. For AR, Snap first comes to mind with its use of filters but there are plenty of smaller players adding features to their mobile capabilities focused on the sports industry. Companies like Fanisko (https://fanisko.com/#product_ar) allow fans to show their fandom through an AR lens and then publish to other social media channels. Throw a sponsorship on the filter and that brand will generate impressions across multiple social platforms without much work from their own marketing teams. For VR, companies like LiveLike (https://www.livelike.com/vr/) can build white label apps for sport events to create new virtual experiences. Fans can join in with their own VR headset and enhance the traditional viewing experience. In the process, these VR companies have created new ways to plug sponsors in.

Second, with fans demanding more personalization and individualized experiences and products in general, advertising will also have to adjust. Thankfully for advertisers, technology is creating the potential for dynamic advertising as well as new advertising platforms. 

That’s why I’m monitoring companies like FanServ (http://fanserv.com/), which can integrate live scoring data into ads and opens the opportunity to tailor messages depending on how a game is going. Additionally, the rise of streaming and Gen Z flocking to Twitch as a TV replacement has forced brands to strongly consider these platforms for advertising dollars. Companies like StreamHERO (https://streamhero.com/) are enabling this advertising spend with streamers, offering brands the opportunity to reach new audiences.

We could spend all day discussing more emerging sports tech start-ups capitalizing on these trends but I’ll save that for future newsletters.

Last question: What’s your Super Bowl Prediction?

Mahomes gets revenge against Brady for the AFC Championship in 2019. Chiefs 35 – Bucs 27. Not that anyone is asking. 

Until next time,

Charles

The next newsletter topic will be The Power of Community in Sports: How are Companies Capitalizing on this Trend?

Add me on LinkedIn and follow me on Twitter @ccampisi_EES. Feel free to share some feedback on the newsletter or just pass along interesting findings in the sports tech space via email (charles@engagemintpartners.com).

*Excluding the Season 3 The Masked Singer Premiere which received a post Super Bowl bump

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Chatting Sports Tech

Intro to Chatting Sports Tech

Welcome to EngageMint’s newest newsletter, Chatting Sports Tech with Charles. This edition will set the stage with my background and what this newsletter will be going forward. If you’re interested in the exploding world of sports technology and how emerging new companies can impact your organization, this newsletter is perfect for you. 

So who are you?

My name is Charles Campisi and my official title is VP – Enterprise Solutions (more below on this). I graduated from the University of Notre Dame with David back in 2011. After seven years in multiple client service roles at Ernst & Young focused in the financial services industry, I pivoted to earn an MBA at University of Pennsylvania’s Wharton School of Business, soak up as much knowledge as I could and transition into sports and entertainment.

Yeah, but who are you really?

Well, I’m the guy who drew plays for his intramural business school basketball team so we could advance in the playoffs even though no one else cared. Hopefully that provides a strong mental image of my personality.

In all seriousness, ever since I can remember, I’ve been fascinated with how the collective success of teams can punch way above individual talent levels. In sports, the most successful coaches and teams find ways to exploit the smallest edges and capitalize on their strengths. As someone with minimal physical athleticism, I was driven to perfect the little things I could control and use all the tools at my disposal in order to compete with bigger, faster and stronger individuals. This mentality can be directly applied to scrappy companies in the business world (often without the winner take all environment).

What do you bring to the EngageMint Team?

Whereas the rest of the EngageMint Team is laser focused on customer experience stemming from their Disney days, I bring a different, albeit complimentary skill set.

At Ernst & Young, I led due diligence efforts for mergers and acquisitions in the financial services sector, interviewing C-Suite executives to understand potential transaction red flags. While pursuing my MBA, I primarily focused on strategic management and finance, while advising several early stage sports start-ups on strategic and operational goals.

In layman’s terms, I’m good with financial models and evaluating whether transactions generate value.

Why is the newsletter called ‘Chatting Sports Tech with Charles’?

My goal is to make this newsletter more interactive than your typical prose article. Hence, the structure will be the form of a mock interview. In other words, a fake chat where the reader asks the questions prompting my answers.

Each newsletter will focus on happenings in the world of sports business, discuss the technology emerging in the space and share my observations and predictions.

The plan is to release a newsletter every other week. I’ll generally share the following newsletter’s topic at the end of the current newsletter allowing you, the reader, to submit any questions on your mind.

What is EngageMint Enterprise Solutions?

Enterprise Solutions is the brainchild from a conversation between David and myself, nearly six months in the making. You can read more about the service offering at our website but a quick explanation:

The sheer number of sports technology start-ups has exploded over the past several years while increased levels of capital has entered the space in the form of specialized VC funds (Sapphire Sport, Will Ventures, etc.), Mega fund VCs (See Andreesen Horowitz’ led $20M round in fantasy app Sleeper) and Private Equity (Arctos Sports Partners, Bruin Sports Capital, etc.). However, technological adoption in the sports industry has lagged other parts of society. Word of mouth and cold email pitches represent the dominant method of introducing new solutions to sports properties. If an organization does manage to identify a potential technological partner, the challenge shifts to understanding whether the new solution is accretive to your existing operations or just money poorly spent.

At Enterprise Solutions, our mission is to lower the barriers of technological adoption through increased transparency and personalization. We’re building out offerings to help your team find the perfect solutions to meet your unique situation. In today’s day and age, advanced technological innovation is often the tool kit at your fingers allowing you to compete with the bigger, faster and stronger organizations, a la a young Charles.

Where can we follow you and learn more?

Besides checking out the Enterprise Solutions website and subscribing to this newsletter, you can add me on LinkedIn and follow me on Twitter @ccampisi_EES. Historically, I’ve been a net consumer on both platforms but have made it a goal of 2021 to connect with others and share more content.

Also, feel free to shoot me an email at charles@engagemintpartners.com and share some feedback on the newsletter or just pass along interesting findings in the sports tech space.

I’m extremely excited for you to join me on this journey.

Until next time,

Charles

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