Category: Sports Marketing

Why ESPN is on a Losing Streak

As a lifelong sports fan, the debut of ESPN as a 24-hour cable TV network in 1980 felt like a tiny slice of heaven on earth. I consumed sports any way I could up to that point—newspaper, radio, TV, peer-to-peer—but if more sports content was available I was game. Cable TV fueled my obsession with sports and entertained me whenever I chose to take a break from consuming sports.

Fast-forward 37 years, and I am still a highly involved sports fan. ESPN is still at the forefront of sports programming. Its media empire has grown to multiple cable TV networks, radio network, websites, magazine, podcasts, and more. ESPN delivered on its tagline of “The Worldwide Leader in Sports,” becoming synonymous with sports media. The value of ESPN as an audience magnet was not lost on ABC, which acquired ESPN 1984, and later Disney, which acquired ABC in 1995.

Today, Disney’s media networks account for the majority of the company’s revenue and profit, with ESPN leading the way. Yet, Disney and ESPN in particular are the subject of a doomsday narrative portraying a brand in decline. Last week, Disney announced its media networks revenue grew by three percent in the second quarter, but profit decreased by three percent. A widely publicized layoff of ESPN on-air talent disappointed many loyal members of the ESPN audience. How could ESPN go from worldwide leader to a brand in trouble?

A Perfect Storm

The root cause of ESPN’s woes is due to a collision of three forces. Any of these forces on their own could wreak havoc on a business. Taken together, ESPN must figure out how to position the brand for growth to overcome these significant forces. So, what exactly has put ESPN in the box it now finds itself?

  1. Increasing costs. One way ESPN has kept its brand promise of The Worldwide Leader in Sports is to obtain broadcast rights to major sports properties. The best sports network should have the best programming, right? ESPN has locked down rights with popular properties including the NFL, NBA, MLB, College Football Championship, and the SEC. These brands are not only popular, but they attract TV audiences in numbers that most programs simply cannot deliver today. Between the value in audience ratings and reach as well as blocking other networks from buying the rights, ESPN paid a premium for broadcast rights to these properties.
  2. Decreasing revenue. The cost of escalating media rights could be chalked up to being a cost of doing business. Unfortunately, at the same time media rights became more expensive, fewer people are subscribed to ESPN. The cord-cutting phenomenon is real. An estimated 700,000 customers will drop pay TV subscriptions in 2017. An estimated five million pay TV subscribers will cut the cord between 2015 and 2020. Moreover, a generation of consumers are growing up without even having to make a decision whether to cut the cord and drop cable TV service—many of them do not have pay TV to drop. Cable subscriber revenue is a key revenue source for ESPN. Fewer subscribers means fewer dollars coming in. ESPN must figure out other channels that will make the cash register ring.
  3. Changing consumption patterns. In contrast to the cost and revenue problems facing ESPN, the third factor is beyond its control. Consumers are accessing content differently, and the traditional pay TV model is vulnerable. Global daily consumption of TV will be 22 billion hours in 2018, down from 23 billion in 2010. In contrast, consumers will spend 17 billion hours a day on the internet, up from five billion in 2010.

The death of TV is overstated and very premature, but it is clear that as we become a mobile-first world we are altering are media consumption behaviors. Not only are we using new channels to consume media, but we are engaging in a shift in how we consume, too. One can follow a football game on Twitter while doing other activities instead of parking in front of a television for three hours. Just as live event marketers face challenges in getting fans off the couch and in their venues, sports media brands face similar challenges in gaining the attention of their multi-tasking audience.

It’s Blocking and Tackling

The woes faced by ESPN can be attributed to unfavorable shifts in internal and external forces that affect its business. What is not mentioned in my analysis: Questions about whether ESPN’s stance on political and social issues has driven away customers. It is a complicated issue and difficult to pinpoint subscriber losses on differences of opinion between ESPN and customers. That said, it is likely that some customers were turned off by ESPN’s advocacy to the point they ditched the brand. Any customer losses due to ESPN’s political leanings are eclipsed by fundamental shifts in media consumption. ESPN’s business model is based on a content distribution model that is becoming less dominant with each passing year.

We can look to history for guidance. Blockbuster and other video rental stores ruled in serving consumers’ home entertainment needs. The desire for entertainment did not go away; the method by which we acquired entertainment changed. We wanted entertainment to come to our devices, not waiting for us on a shelf at a video rental store. Netflix adapted, and Blockbuster did not. The rest is history, as they say. Will ESPN be the next Netflix or another Blockbuster?

Three Defining Traits of the Dale Earnhardt Jr. Personal Brand

Dale Earnhardt Jr. was restless in the early hours of Tuesday morning. He admitted as much in a tweet.

A few hours later the world would find out the reason for Dale Jr.’s feelings. He announced his retirement from the Monster Energy NASCAR Cup Series at the end of the 2017 season. He is stepping away after 18 seasons racing in the Cup Series. Earnhardt missed much of the 2016 season after sustaining a concussion. Now, he will step away permanently at season’s end.

The planned retirement of Dale Earnhardt Jr. marks a continued changing of the guard in NASCAR. Jeff Gordon retired two years ago, followed by Tony Stewart last season. Earnhardt’s departure will leave a void for NASCAR, too. Dale Jr.’s retirement will be felt because he has one of the most distinctive personal brands in NASCAR. His brand stands out because of three traits: authenticity, accessibility, and likeability.

Authenticity

A distinctive personal brand must stand on one’s inner moral voice to guide actions. Making decisions in an effort to gain approval of others is not a sustainable approach. Your brand is not based on you at that point but rather your response to what others want from you. An authentic personal brand will not be universally admired, but that is OK. The aim of branding is not to please everyone. Instead, your task is to clarify brand meaning and act upon it—work, play, or anything else you do.

The outward appearance of brand authenticity can be described simply as “what you see is what you get.” This trait is salient for Dale Earnhardt Jr. He has not erected an elaborate facade that is his brand image. He is not the product of a PR machine. Like his father, legendary NASCAR driver Dale Earnhardt Sr., Dale Jr. seemed to become more polished over time as his role as product endorser and marketer expanded. But, he never lost the “feel of real” racing fans observed in him even before his professional racing career began.

Accessibility

Dale Earnhardt Jr. has been a fan favorite throughout his racing career. You want proof? He has been named NASCAR Most Popular Driver by fans 14 years in a row. His retirement means someone else will get to win the award, but that driver will probably have to wait until 2018! Dale Jr. is at ease engaging fans face-to-face and on social media. He comes across as very transparent compared to most people living in the public eye. Dale Jr.’s accessibility to the public is a contributing factor to his brand authenticity. There are no discrepancies between public persona and private life.

Likeability

The endearing personality of Dale Earnhardt Jr. has enhanced the marketability of his personal brand. Although he has enjoyed his share of success on the race track (26 Cup Series wins, including two Daytona 500 victories), it is Dale Jr.’s brand image that attracts sponsors. A primary car sponsorship in the NASCAR Monster Energy Cup Series can run upward of $20 million a season. Racing teams are finding it harder to secure corporate sponsors. Dale Earnhardt Jr. is an exception. Some 20 brands are partners with Dale Jr. today. In 2016, Forbes reported Dale Jr.’s earnings at $23.5 million, with the lion’s share of his earnings coming through product endorsements. Sponsors seek to link their brands with the favorable associations racing fans hold for Dale Earnhardt Jr.

A Victory Lap

The remainder of the 2017 Monster Energy NASCAR Cup Series season will undoubtedly include many tributes to Dale Earnhardt Jr. He will be showered with recognition and gifts as he visits different tracks for the final time as a Cup Series driver. At a press conference discussing his retirement decision, Dale Jr. said “I just wanted the opportunity to go out on my own terms.” That sentiment is fitting for someone that has “been his own man” even though he was the son of one of the most famous NASCAR drivers of all time.

Enjoy this video tribute to the Dale Sr.-Dale Jr. relationship by the Zac Brown Band. Dale Jr. tweeted after watching it for the first time that “it made my eyeballs sweat.” Not a surprising reaction from someone who is as authentic as they come and lives his brand.

Customer Experience is the New Black

Marketers sling the words “engagement” and “experience” like politicians trade barbs about their opponents – often and sometimes recklessly. They are ideas talked about a lot but tend to fall short in being realized. So, when good customer experience is recognized it can be like a breath of fresh air (instead of hot air). The Chief Customer Officer Council has named its Chief Customer Officer of the Year for 2013, an award that acknowledges a leader whose organization demonstrates a commitment to building customer relationships, cultivating profitable customer behaviors, and creates a customer-centric culture.

The recipient is Pete Winemiller, Senior Vice President of Guest Relations, for the Oklahoma City Thunder NBA franchise. The team has a reputation for offering one of the most exciting game atmospheres in the NBA and was number one in ESPN the Magazine Ultimate Fan Rankings this year. The fact that Winemiller and the OKC Thunder received the award is not surprising when you consider the mindset of the organization:

  • The Thunder aspires to be “the most fan-centric organization in professional sports”
  • The dedication of all employees, particularly front-line service personnel, is cited as a key to success
  • The experience created is seen as a way to reinforce the organization’s core values to customers

Curtis Bingham, CCO Council executive director, says that the customer is the most important ingredient for business success, not product, service, or technology. Bingham refers to customer experience as “the new black,” a popular mindset that must become ingrained in an organization’s values in order for it to reach its potential as a source of competitive advantage.  Bingham adds that products and services are increasingly becoming commodities, making customer experience the most powerful differentiator available to a marketer.

Customer experience may be the new black, but it should not be viewed merely as a fad or trend. When a business desires to have ongoing relationships with customers, a focus on experiences that convey the firm’s values as well as delivers value will be appreciated by customers and stand out in an environment in which many companies talk a good game about experiences but often do not deliver.

Direct Marketing News – “Aligning Customer Experience and Marketing at NBA’s Oklahoma City Thunder”

NHL’s Relevancy Problem

In my last post, I vented frustrations about the NHL’s lockout of its players over contract issues. My conclusion was that the NHL does not care about fans, so why should fans care about the NHL? Yes, I am perturbed by the NHL’s inability to avoid work stoppage and the resulting interruption in hockey, but the league faces a much larger problem that will loom larger with each passing day of the lockout. Hockey is but one sport in the sports entertainment landscape… and a relatively small one at that in the United States. Maintaining relevance as one of the major sports properties will become more difficult for the league if it continues to wage battle at the bargaining table instead of on the ice.

The early fall season is a sports fan’s dream: College football and NFL seasons are underway, MLB is headed toward its postseason, NASCAR is in the homestretch for the Sprint Cup, and the NBA and college hoops are waiting in the wings to get started. On top of all this activity, soccer is enjoying newly found interest in the U.S. through MLS expansion and expanded coverage of the English Premier League. A prolonged absence by the NHL will result in the league losing relevance among casual sports fans, the very ones needed to expand the fan base for hockey.

In a recent blog post, Bleacher Report CEO Brian Grey points out that several U.S. sports properties are on the rise in terms of heightened sponsor interest. Expanded playoff format for MLB, exciting rookie quarterbacks in the NFL, intense geographic rivalries in MLS, and new energy in New York and Los Angeles for the NBA increase the value of associating with these properties for sponsors. In contrast, the NHL sits on the bench as owners and players argue over what percentage of revenues each side should get.

The NHL has a very passionate core fan base, and while we (I have to count myself among this audience) are likely to forgive and return to the sport there are many more sports fans than us for which hockey is a take-it-or-leave-it proposition. The NHL worked diligently since the last lockout to attract people to the sport. In the process, it made the NHL more valuable to corporate sponsors, which is one reason why the league’s annual revenue increased from $2 billion to $3 billion. Sadly, many of the gains made in recent years by the NHL stand to be lost in a relatively short period of time.

The relevance clock is ticking, National Hockey League. Your great sport will become marginalized (some would say marginalized further) if you do not get your product back on the market quickly. Consumers have many other options for sports entertainment, and sponsors have other (and more effective) options to reach and engage their customers.

The NHL Doesn’t Care – Why Should We?

I am a lifelong hockey fan, which is a noteworthy claim coming from someone whose childhood years in Mississippi in the 1970s definitely did not include playing hockey. My father was French-Canadian, so I was indoctrinated on hockey history and the game itself at an early age. Today, I am still a hockey fan, and while I love the National Hockey League I am now making a point to call myself a hockey fan, not an NHL fan. The reason is simple: The NHL does not care much about its fans, so why should fans give emotionally and financially to the NHL?

I am convinced of the NHL’s lack of regard for fans given that the third work stoppage in the last 18 years is about to commence barring a miraculous 11th hour deal between the NHL and NHL Players Association. NHL team owners want to reduce the proportion of hockey related revenue players receive. Of course, players have no interest in giving up their piece of the money pie. The result is going to be another lockout. The prospects for a quick resolution are not good – heck, the two sides are hardly talking to each other to negotiate a settlement even though the deadline has been on the horizon for months.

For hockey fans, the takeaway is clear: the NHL does not care about its fans. On the surface, such callous disregard for the impact a lockout will have on fan relationships seems unthinkable. How could a business not work tirelessly to make sure its core product remains on the market and available to its customers?

The reality is that fans are down the list in importance as a customer for the league. The NHL’s primary customer is its team owners. It is understandable that owners’ interests must be protected; no owners equals no NHL. But, the perception is that owners’ interests are being served to the exclusion of paying customers. However, fans are not even at the top of the charts when it comes to paying customers. Media rights holders and corporate sponsors are a higher priority for the NHL than the hockey fan or family that ponies up for tickets to watch their local team.

The NHL will keep players locked out until a deal is reached that satisfies the interests of the league’s key customers, the owners. Oh, a sense of urgency might develop if media and corporate partners become vocal about the need to get back on the ice. As for fans, our voice is not being heard even though social media gives us a platform for venting our frustrations.

The fan base for hockey is much smaller than other major sports in the US, but fans are rather passionate about their hockey. The expectation is that these fans will return when the labor mess is sorted out. Don’t be so sure, NHL. After all, hockey is only a game. And, as long as you continue to play games with your fans do not expect us to welcome you back with open arms if there is a protracted lockout.

Prime Time is Real Time, Unless You are NBC

The London Olympics are the talk of the sports world, if not the entire world. A glance at trending topics according to Trendsmap.com shows Olympic-related hashtags are prevalent around the globe. Social media and mobile technology combine to make the 2012 Summer Olympics a new consumption experience as we can follow events in real time. Unfortunately, we cannot watch some of them in real time. In the U.S., marquee events are saved by NBC for broadcast in prime time. If you do not want to know the outcome of a medal race in swimming or gymnastics competition, stay off social media during the day. Also, it may be a good idea to avoid watching NBC promos for the Today Show as they could leak the outcome of the event you are about to watch.

We have become accustomed to on-demand access to information and entertainment. NBC seems to be stuck in the TV-dominated media generation, building its broadcasts around prime time hours. Although it should be noted that there is quite a bit of live event programming broadcast each day on NBC-owned channels, airing prime time events that have already occurred just does not fit today’s media culture. However, there is a good explanation for NBC’s approach to broadcasting major events on a delayed basis in prime time: We are not the customer, so it does not matter what we want.

The customers that NBC must satisfy are its advertisers and by extension, Olympic sponsors. Corporate partners want to achieve the greatest reach possible via TV. The time frame in which that is most likely to happen is prime time. The largest number of eyeballs will be watching during that time regardless of whether events or live or recorded. The Olympics are essentially a two-week mini-series for NBC. Its aim is to maximize viewership of the mini-series. Given the realities of the 9-5 American work life, prime time is when the most people will be watching… even if they are watching what amounts to a re-run.

Let the Games (and Stories) Begin

In a few hours, the 2012 London Olympics will officially begin. For the next 17 days, the world’s top athletes will take to a global stage. Intense competition and drama make the Olympics must-see TV regardless of how many time zones you are away from the action. And, buzz about the Olympics has migrated to social media, creating real time discussion of the Games. But, the most enduring aspect of Olympic competition is the stories of the athletes. Event broadcasts are complemented with profiles of the personalities, going beyond the uniformed competitors to give us glimpses of the people participating in the games.

Stories define athletes perhaps even more than their performances. Their Olympic moments are influential in shaping their personal brand stories. I will never forget speed skater Dan Jansen’s valiant performance at the 1988 Winter Olympics. Jansen competed through the grief of his sister dying and experienced disappointment when he fell during a race. He experienced more disappointment at the 1992 Games before finally winning a gold medal at the 1994 Olympics. Frankly, I could not recall Jansen’s medal count (he only one a single medal in three Olympics). It does not matter – his story eclipses his performances.

Sports marketing expert Jonathan Norman says that an Olympian’s “back story” plays a major role in determining his or her suitability as a product endorser. Brands are comprised of back stories, too, so the more that an athlete’s story resonates with a brand’s values, the more effective the athlete can be as a brand ambassador. Note that while being a gold medalist helps an athlete’s marketability as an endorser, it is not a prerequisite for being a valuable brand asset.

I am eager for the London Olympic Games to begin, not only to watch elite athletes compete for medals but to learn more about the stories of the competitors regardless of whether they medal. A small number of athletes will win gold medals, and an even smaller group of athletes will win marketing gold as their stories attract companies that desire to associate their brands with them. Enjoy the Games!

If You Do It, Measure It

Occasionally I run across one of my favorite quotes about advertising from John Wannamaker, a marketing pioneer. He said “half the money I spend on advertising is wasted; the trouble is I don’t know which half.” That reasoning extends beyond advertising; it can encompass all marketing spending as well as expenditures throughout a business. It is unnecessary to take “half” literally – it may be more or less than 50% that is being wasted. The point is that waste is likely occurring, but it is possible that it could be reduced if more emphasis was placed on measurement.

Measuring performance is a weakness for many marketing organizations. They may be exceptional at planning and executing strategies and tactics, but assessing results may lack the same emphasis. Or, the wrong things may be measured if activity is confused with results.

This issue surfaced for me this morning as I listened to the radio. The Chief Operating Officer of the Nashville Predators, Sean Henry, was on a sports talk show discussing the importance of a professional sports franchise being visible and active in the community. Henry stressed that the visibility is not limited to players and coaches, but rather employees throughout the organization should be engaged with the community. To that end, the organization recently launched an initiative called Project 6K. The program’s goal is to reach a cumulative number of 6,000 hours spent by team employees working in the community, or about 40 hours per employee. One comment Henry made that stood out was that employees are already active in the community; those efforts will now be quantified through Project 6K.

I applaud the Nashville Predators for an organization-wide approach to corporate social responsibility. Moreover, it is important that employees’ contributions are being measured to measure productivity in community relations. Also, it will help present a more compelling story to the Nashville community about the level of involvement the Predators organization has in the area.

It would be interesting to assess the impact of activity like the hours invested in Project 6K on marketing results. Did the program contribute to more brand awareness? Did it enhance the image local residents hold for the Nashville Predators? How many leads for ticket customers came from the organization’s involvement in the community? While it is unrealistic to expect every investment to deliver a return in the form of sales or new customers, it is realistic for initiatives like Project 6K to have marketing benefits. So, if you do it, measure it.

Bigger not Always Better when Selecting Marketing Partners

Remember times from your youth when a group was divided into teams to compete? Often, the bigger kids got picked first because, well, they were bigger. Another example of a “big bias” is shared by Zig Ziglar who points out that if a car stops at a group of kids to ask directions, the driver is likely to direct her question to the biggest child in the group… even though he may be the dumbest one in the bunch! The tendency to favor the tallest, largest, oldest or those perceived as strongest is normal, but sometimes flawed.

When it comes to selecting marketing partners, we would be well served to think back to our childhood experiences and remember bigger is not always better. This analogy came to mind this week when the National Hockey League announced a new 10-year TV broadcast deal with NBC Sports. Fan interest has grown since the NHL returned from a year-long lockout in 2005, and the Winter Classic has quickly become a New Year’s Day sporting tradition in the U.S. The NHL’s current American TV broadcast partner is Versus, a Comcast property which is now part of NBC by virtue of the NBC-Comcast merger. When the NHL debuted on Versus in 2005, it was the up and coming sports channel’s best known professional sport property.

Fast forward to 2011, and the NHL attracted the attention of other networks interested in acquiring broadcast rights, including ESPN. NHL games were broadcast on ESPN prior to the lockout of 2004-2005, but unimpressive ratings and an abundance of other sports content left ESPN with little interest in bringing the NHL after the lockout. But, ESPN was in the mix for acquiring TV broadcast rights, primarily interested in broadcasting the Stanley Cup Playoffs. In the end, the NHL saw NBC as a more committed partner, one that will put resources toward promoting hockey. In contrast, NHL would be competing for attention and air time on ESPN networks that already serve up heavy portions of NBA, college basketball, college football, NFL, and MLB.

Some observers have criticized the NHL for not partnering with ESPN. Yes, ESPN is the dominant sports media brand today… with the key word being “today.” ESPN made its mark by securing leadership of televised sports in the 1980s. The media landscape has changed, and we have many options for consuming sports content- streaming games online, blogs, podcasts, mobile applications, and social media networks, to name a few. There are no guarantees that the behemoth of sports television will be the dominant sports brand of the digital age. In fact, history suggests that companies with a dominant position struggle to adapt as technologies and consumer preferences change. Look no further than General Motors and Microsoft as examples.

Bigger is not better when it comes to selecting marketing partners. Commitment to your success matters- who is willing to invest in growing your business?

NHL.com – “NHL, NBC Sign Record-Setting 10-Year Deal”

What’s Behind our Super Bowl Obsession?

Most Americans know that this Sunday brings the biggest football game of the year. Super Bowl XLV will feature two of the most storied franchises in NFL history, the Pittsburgh Steelers and the Green Bay Packers. The Super Bowl has become more than a game; it is a cultural event that has become an unofficial national holiday. A study done for the Retail Advertising and Marketing Association projects consumers will spend $10.1 on purchases related to the big game this year.

Among notable statistics from the NAMA survey:
• 171 million people are expected to watch the game (the largest audience ever)
• 61 million people plan to attend a party
• 35 million people plan to host a party (for the 61.2 million to attend!)
• 4.5 million people plan to purchase a new television
• 75% of persons surveyed said the commercials serve as entertainment
• 18% said commercials help to increase their awareness of the brands advertised

Wow! The Super Bowl’s attraction to a large majority of the population is undeniable. It is amazing in part because fans of 30 out of the NFL’s 32 teams will feel a sense of emptiness Sunday. Their teams will not be playing, yet many of them will be watching. And, many people who watch little or no football during the season will be tuned in Sunday (including 2 people in my home). How did we get to this point? The NFL helped build the Super Bowl brand, obviously, with a great on-field product, broadcasting partners that bring the drama into our living rooms, and transforming the game into a major entertainment event.

Before we give the NFL all of the credit for the popularity of the Super Bowl, we should acknowledge it is the beneficiary of human nature. We like to be part of communities of people, whether it is fellow football fans, friends, or family. The Super Bowl is an opportunity (if not an excuse) for us to come together with others with whom we share common interests.

Marketers seeking to build a great brand can learn from this characteristic of the Super Bowl and sports in general. For all of the talk about how the Internet isolates people, most of us want to belong to a community, be it face-to-face or virtual. What can you do to promote development of a brand community, a group of customers and friends that share an affinity for your brand and products?

As for Sunday’s game, we know that among the expected 171 million viewers will be fans of the Steelers and Packers. I am sure my friends Mark, Faye, and Mike will be decked out in black and gold; my former students Joshua and Katie will no doubt be cheering on the Packers. Regardless of which team you support, enjoy as you spend time engaged with your community whether it is at home with your family, at a party with friends, in a pub with strangers, or with your hashtag-wielding pals on Twitter.