Interactive Ads Worth Billions in Incremental Media Rights and Partnership Revenue

Interactive Ads Worth Billions in Incremental Media Rights and Partnership Revenue

Thanksgiving is rooted in tradition. Americans eat the same foods (think: turkey, sweet potato pie), watch the same events on television (NFL games, Macy’s parade), and gather with the same family members and friends on the last Thursday of every November. Then many will head to the mall the following day to shop for the upcoming holiday season.

But Amazon uprooted tradition this year by streaming an NFL game on Black Friday for the first time. The e-commerce giant’s move to keep more people home on one of the busiest shopping days of the year could influence two of sports’ most important revenue streams moving forward–media rights and partnerships.

Amazon’s coverage of the Jets and Dolphins on November 26 integrated its ecommerce platform (and several advertisers’ direct websites) into the stream. Fans watching the game were able to simultaneously purchase products, like a Nintendo Switch, an Apple watch, or a pack of Gillette Labs razor blades, via QR codes on screen.

Traditionally, a consumer who sees a sponsor logo or product offering during a sports broadcast would have to leave the viewing platform or utilize a second screen to complete the transaction.

Amazon is increasingly working to sell product where customers (and potential customers) consume content. In addition to the Black Friday broadcast, the company recently announced strategic partnerships with both Meta and Snap.

The strategy makes sense as in-app shopping becomes increasingly commonplace.

“The younger generation is used to buying things on Instagram and [that] has changed its [purchasing] muscles,” Peter Scott (chief strategy officer, Play Anywhere and former VP of emerging media and innovation, Warner Media) said. “Amazon has the store and Meta [and Snap have] the targeting abilities and audience. [So, they are] pretty amazing opportunities.”

Live sports account for nearly all of the top telecasts (94/100 in ’22). But historically speaking, direct commerce integrations have not been a part of the game broadcast–or the media rights business model. Networks and streamers have instead monetized the valuable content with a mix of affiliate, retransmission, subscription, and advertising revenues.

That should be changing though. The strain that exists on cable networks as the Pay-TV universe continues to dwindle has been well documented. To date, direct-to-consumer offerings that helped upend the old system have failed to replace the lost economics.

“These leagues [know they] need to create more revenue streams for the rights holder,” Scott said. “Interactive ads will help rights holders pay the same amount or a little more for rights given these ads are new inventory, that can help [broadcasters] make more money from the rights.”

Amazon’s Black Friday broadcast showed how interactive ads have the potential to spur incremental revenue growth.

“Amazon [received] higher CPMs for the ad inventory because it knows more about those [watching],” Scott said. “Other cable and connected TV [operators will also look to] leverage first-party data to better target consumers in similar ways using interactive ads [and] increase their ad dollars.”

SPONSORED BY WMT DIGITAL

WMT Provides Custom Snapdragon Stadium App

Snapdragon Stadium’s custom mobile app solved the challenges created by multiple, diverse tenants hosting events within the same venue. Four distinct TicketMaster integrations were required to support the variety of events, in addition to a need for a public ticket purchase integration.

Leveraging cross-promotion: For fans using the app within the stadium, a real-time upcoming event schedule integration serves as an active promotional tool. Additionally, various spaces within the stadium are promoted for private rental opportunities, driving unique and additional revenue.

The mobile app also includes additional features that drive utility for those patrons at any event:

• Gameday Mode

• In-Seat Ordering

• Closed captioning (English & Spanish)

• AI Chat functionality

• Wayfinding

• Selfie Scavenger Hunt

Rights holders should also find an increasing number of interested marketing partners as interactive ad integrations become more commonplace. Companies value assets capable of driving direct returns to their business and the Black Friday game seemingly supports the notion that reducing consumer friction leads to spending.

Play Anywhere partnered with 1Q to conduct a real-time mobile phone survey panel of 120 people during the broadcast. 84% of those polled said the codes made it easier to buy products. 43% reported they used a QR code to make a purchase during game.

Amazon’s own data supports the panel insights. The company reported a record breaking Black Friday (and Cyber Monday) Holiday shopping event that saw consumers purchase more than 1 billion items. The Black Friday game was cited among the “highlights” of the two-day extravaganza. It was most-watched event of the day across all demographics.

Digital ad integrations make it easier for brand partners to calculate ROI too. Historically speaking, the challenge with many sports-related sponsorship assets (think: jersey patches, television viewable signage, and in-game commercials) is that it can be difficult to tie exposure to consumer activity.

“Companies want to see their ad dollars [are] effectively [driving] transactions,” Scott said. “[And] that is what we are seeing here.”

To clarify, interactive ads are not necessary for a sports partnership to drive revenue. Excel Analytics has found increases in top-of-funnel brand awareness and brand sentiment have strong and statistically significant correlations with revenue generation.

And one cannot fully measure the impact of an interactive ad by simply viewing the number of ecommerce transactions originated through a QR code. Consumers may see the advert and make a purchase influenced by it at a later date.

Finally, it’s not as if this is new or revolutionary concept. There were efforts to deliver a “shop and watch” experience during a Friends broadcast more than two decades ago.

It never took off.

But “the timing is better [now] than [it was with Jennifer] Anniston’s sweater,” Scott said. “The technology is [finally] coalescing around a developing ecosystem that makes the shopping experience [more intuitive] and ensures everyone involved gets paid.”

While important to note, those caveats do not change the fact that in-game ecommerce integrations have the potential to create billions of dollars in incremental rights and partnership revenues, or that the inaugural Black Friday game may be viewed, in hindsight, as a seminal moment for the industry.

“It was NFL and Amazon–two of the largest brands of the world,” Scott said. “This was tentpole event that people and companies will [look to] replicate over and over again.”

Top 5 Sports Business Headlines
Click here to subscribe to Sport & Story Daily, your industry tip sheet

✋🏼 MLB team owners set to vote today on relocation of Athletics to Las Vegas
🤑 LPGA 2024, ’25 winners get record prize boost after CME renews Tour Championship sponsorship
🚨 Sinclair: Diamond Sports Group business ‘is going to go away’
⚽ Manchester United CEO Arnold to leave club ahead of possible sale
🤝🏼 FanDuel deepens ties with Genius Sports, will offer BetVision through the expanded agreement

About The Author: Adam Grossman is the Vice President of Business Insights & Analytics at Excel Sports Management. He works with companies, sports properties, media rights holders, athletes, agencies, and events to determine the value of their most important assets. Grossman is also a professor at Northwestern University Master’s In Sports Administration program and the co-author of The Sports Strategist: Developing Leaders for a High-Performance Industry. You can find him at [email protected].