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June 13, 2023

Pivot From Sales to Marketing Should Spawn Meaningful Incremental Revenue Opportunity

Sports properties have historically focused on cultivating interest at the top and executing at the bottom of the proverbial sales funnel.

The strategy has been to “launch a brand campaign for the year and then hard-sell people on [buying] season tickets,” Sam Yardley (EVP North America, Two Circles) said.

That approach worked well when there was less competition for the consumer’s dollar and attention, and it still enables rights owners to keep the lights on today. However, an increasing number of properties are realizing to grow the pie further they must do a better job of nurturing and growing fandom.

“The focus and energy needs to shift down the funnel, [to] building out audiences and engaging with those audiences,” Yardley said.

It can be done on the platforms where fans already gather or on a direct-to-consumer basis. But many rights owners will need to enhance their digital marketing and data capabilities to do it effectively.

While that won’t come easy or cheap, the return on investment can be significant.

“If you look at it over a number of years, and [the rights owner can] really turn the dial on what [they] do, there [could be] a nine-figure incremental revenue opportunity at their fingertips,” Yardley said (think: a $10 million annual increase over a decade).

While industry leaders across music, media, and tech have altered their business models over the last decade plus, sports rights owners enjoying captive audiences and soaring revenues have largely been able to maintain the status quo.

“All these other industries [had] to adapt and change because their competitor(s) are getting [to customers] faster,” Yardley said. But sports properties have never had to worry about losing fans. Rights owners enjoy a “built-in moat that is passed down from generation to generation.”

Or at least they did. Growing competition and shifting consumer behaviors have made fandom less certain than it once was.

Personnel has also been in a factor in sport lagging behind on the audience development trend.

“A lot of CMOs of [sports properties] come from a brand background," Yardley said, as opposed to a digital marketing focused one.

They're often tasked with additional responsibilities too (like being the club's chief revenue officer).

Sports organizations do not necessarily need to bring in new talent to realize the incremental revenue opportunity. They will however need to embrace a change in mindset. Most have largely been acting as B2B licensing organizations.

“They make a lot of money from sponsorship, outsource the media, outsource the audience development and don’t really talk to customers beyond selling tickets,” Yardley said.

But the reality is a high percentage of fans will never step in their favorite team’s venue and that rights owners have the ability to communicate with people around the globe. There is a much larger opportunity to grow the business if rights owners would think of, and market themselves, the way luxury brands do.

It’s not a far stretch. Sports properties control premium IP that resonates across demographics and cultures and can be monetized in a variety of ways.

However, few rights owners have invested in digital marketing capabilities the way luxury brands have on a percentage of budget basis.

That is starting to change though as folks begin to view it as a revenue-driving function. The Golden State Warriors were ahead of the trend.

"There was a point in time where marketing was operating more as a support team," Bryan Strauss (VP growth and retention marketing, Golden State Warriors) said. As we began to think about building Chase Center, "[our digital marketing team strategically started] thinking more about audience development, audience growth and how we are working hand-in-hand with the sales team to help them identify the best leads and then go out and market to them," Strauss said.

The pandemic was a catalyst for others to follow suit. With the games on hiatus rights owners sought to find new ways to leverage their assets.

The industry is also coming around to realization that without an effective mid-funnel digital marketing strategy, the brand work and sales efforts it puts in lack longevity.

“The goal isn’t just to sell tickets to [a specific] event and then ignore the customer relationship,” Yardley said. “[It] is to build strategic customer lifetime value across different assets and different revenue lines.”

Customer lifetime value (or CLTV) is a standard metric used across most non-sports brands–and one sports teams should be increasingly thinking about moving forward.

To build CLTV rights owners will need to continue investing resources in audience development. They'll also need to learn more about each individual fan (see: build first party databases) and engage with each of those individuals on a multitude of communication channels. Every touchpoint should be consistent with the overall brand strategy, whether it is an in-stadium, retail (see:

Cavs new store

), marketing or partnership experience. 

There should be sufficient motivation for them to do so.

Rights owners have more controllable revenue streams (think: dynamic pricing) and a chance to establish a more efficient fan monetization engine than ever before. And current data capabilities allow them to better segment and target fans, and then track that if those individuals attend a game or engage in related transaction. 

There should be value in the data itself too. The more a rights owner knows about a fan, the more valuable his or her record is. Two Circles ascribes a benchmark value of ~$5 to a fan data record.

While Yardley believes a strategic pivot from sales to marketing can lead to a nine-figure incremental revenue opportunity over time, it is not easy upside to unlock. Getting ones’ data house in order is a challenge and the projection assumes meaningful international growth. 

Remember, many leagues restrict the clubs’ ability to market outside their home territory. In those cases, an eight-figure opportunity likely still remains.

Rights owners may need to add personnel with digital marketing and/or data-related expertise. But that doesn’t necessarily mean growing expenses.

“There are more efficient ways to sell tickets [than banging out calls], that would free up capital for investment in [digital] marketing [and data],” Yardley said. “You [shouldn’t be] selling stuff over the phone to people in 2023 [anyway].”

Software solutions like FanRally, combined with a savvy digital marketing approach, can replace much of what the direct-to-consumer salesperson has traditionally brought to the table.

At least, for general bowl seat sales. Clubs will still need to maintain a high-touch service arm, particularly on the premium side of their business (think: suites). And Yardley isn’t suggesting organizations do away with their sponsorship or media sales teams, either.

“Those things don’t market themselves,” he said.

While some sports properties that have started making the necessary investments in audience development, data and D2C communications, Yardley says many are not moving fast enough.

“Sports is in a wider battle for long term attention against video games, social media, etc. Without [dedicating] time and money on mid-funnel marketing there could be a lost generation of potential fans fans who don’t engage as frequently or as deeply as they should.”