Ben Wells, chief commercial officer at digital engagement company PTI Digital, feels the COVID-19 crisis has presented the sports industry with a once-in-a-lifetime opportunity to “right the wrongs” of its commercial model.
Speaking during a session at TheStadiumBusiness Summit 2020, Wells painted a sobering picture of sport’s relationship with digital.
Wells’ presentation started with a graphic presenting just how dominant digital technology companies have become over the past decade with a chart comparing the market capitalisation of the world’s top 10 companies in 2009 and 2019.
The 2009 chart featured a mix of financial services, pharmaceuticals, retail and energy companies, with Microsoft the only tech firm on the list. By 2019, Microsoft had been joined by Amazon, Apple, Alphabet, Facebook, Alibaba and Tencent.
“We can see now that sports clubs have a lot more competition for people’s time and money,” Wells said during the session, which can be viewed in full below.
“Video on demand, gaming, streaming services, social media. There’s been an enormous shift at a macro level in how brands spend their money. Fifty-four per cent of revenue now spent on marketing globally goes on to digital platforms.”
Wells pointed to how the music industry has been transformed twice in the past 15 years – from packaged goods to downloads, and from downloads to streaming services. “We’d be daft to think it’s not going to happen in sport,” Wells said.
Wells went on to discuss the average sports club’s commercial model, which he feels was “finite” even before COVID-19. According to Wells, sponsorship is “sold as a proxy for advertising”, with clubs also limited by product category exclusivity.
“As brands’ spend has shifted to hyper-targeted digital platforms, traditional sponsorship feels like it is being left ever further behind,” he said.
“There’s little differentiation between the propositions. If someone can buy the same media value up the road for half the price, they’re going to go there. There’s no loyalty to the club because there’s nothing unique about what a lot of clubs are selling. A consequence is that it’s become a race to the bottom, and no-one wants to win that race.”
Wells also discussed the return of fans but warned that we have “no idea” how many will have found opportunities to spend their time and money elsewhere in recent months.
“Even if things do return to near normal, the COVID crisis represents a once-in-a-lifetime opportunity for our industry to right the wrongs of what was already a poor commercial model,” he said. “It was already broken, totally unscalable, highly leveraged and atrophying naturally as fan bases aged.
“The reality is that the week outside of two hours of match time represents 99% of the time we have yet we focus on those two hours. Everything is a build-up to that. We need to flip our model and think about how those two hours, when we have the maximum exposure, can be a platform for accelerating, rewarding, redeeming and promoting everything that goes on throughout the week.”
Following the presentation, Wells took part in a Q&A session to discuss the topics in more detail. Attendees can view the session here.
Attendees are able to watch sessions from all three days of TheStadiumBusiness Summit 2020 through the event platform.
The Summit returns to Manchester – in person, in the real world – on June 22-23, 2021.