GUEST POST: Oscar Ugaz (@oscarugaz) is consultant on digital business (Real Madrid, SAB Miller, Toyota) with expertise in Digital Media and online businesses. Over the past 15 years he has worked for major brands in America and Europe. He holds the position of Regional Project Director at Phantasia Wunderman.
A few weeks ago, I was invited to participate in a round table at the Euroleague Basketball Summit 2012, an event that brings together the league’s 23 teams to discuss their marketing strategy and business approach for next season. The objective was to discuss digital business and the new trends in the industry. Executives from Bwin, Turkish Airlines, Galatasaray and the director of a global advertising agency were also at the table.
The exchange of ideas flowed smoothly until the moderator asked for predictions. I dared to say something that, from my point of view, is obvious: an important part of the future in our industry will be in the hands of mathematicians and statisticians. A meaningful impact will come from individuals capable of working with large amounts of data, understand them and then extract insightful, relevant and remarkable products and services.
My idea raised substantial opposition from the director of the advertising agency. From his point of view, outstanding products and services can only be produced if numerical approaches are set aside, and if just the creative and artistic thinking prevails. He believes that would be more than enough, if a relevant brand pushes the idea. “And that” he says firmly, “is the end of the discussion”.
Is that really the end of the discussion?
Sports and entertainment are some of the few industries that produce meaningful and powerful relationships with their clients/fans. This type of relationships makes some organizations behave like if they were managing an inelastic demand situation, which creates a culture of specialization in product and service deployment instead of exploring new ways to search and fight for additional sales. That’s the case for some top notch sport properties.
Let’s be honest here, the classic combination of TV rights, match day and marketing (sponsorship/merchandise/licensing) still makes sense. These traditional business models generate big amounts of money for the industry. The problem is that they also create resistance to exploring new options.
In that sense, disruptive innovation in media and the economic crisis has found many properties and sponsors unguarded. Nowadays, fans have new ways to enjoy content. Social media and online video portals (pirate versions included) bypass traditional ways to consume sports content. Meanwhile, many companies are looking for enhanced sponsorship deals that include new ways of activation and they expect not only awareness, but also conversion.
In the middle of this reality there is a new and relevant component: data.
Like never before, savvy sports properties and brands have the opportunity to obtain a lot of detailed information. Users of the mobile application of, let’s say a football club, are providing vast amounts of data each time they consume digital content. Something similar happens when they purchase from an e-commerce store or from a ticketing platform, use their membership cards to obtain a discount, consume video content on an official YouTube channel or engage with the club Facebook page. Each of these services provides aggregated, and in many cases, very personal data about demographics, behavior and consumption.
The gentleman from the advertising agency at the Euroleague round table mentioned Nike+ as an example of what can be done with a pure creative approach-that’s a very naive point of view. Simply praising these products and services only for their clever gamification techniques, savvy social media approach or outstanding marketing campaigns misses the fact that data is not just a powerful externality, but a main goal to build around. With the adequate privacy and permission marketing authorizations, data about frequency, repetition, localization and relationships is obtained smoothly.
Does all this data makes sense by itself? Absolutely not. It´s just an unconnected and senseless mess.
Here enters the mathematicians and statisticians with their clever business approach. Their mission is to make sense within the mess, and look for new insights and business opportunities. They will be able to connect them to generate new value. They will be able to see how the consumption of mobile content, the check-ins in a venue, the sales in an online store, the pattern of consumption of a membership card or the location of a run can help partners like Turkish Airlines or BWIN sell additional air tickets or bets. It will also help sport properties prepare new, insightful and more profitable products or services.
Big data is a relevant opportunity for the future of many industries including sports, but taking advantage of it requires the right approach and the right people. This is not about a sophisticated analytics system for a club website or an official mobile app. In fact, you must invest just 20% in software and platforms. The 80% must be oriented to pay clever people that can analyze the data and transform it into insightful and actionable information to generate new business. The bad news is that there is a shortage of this type of experts and it’s going to get worse. You must start to profile and search for the right people today.
But first we must get rid of our bias visions about how strong our brands and traditional business models are and start paying attention to new disruptive opportunities like the one that data represents. The point of view of agents and middlemen that are adept to the status quo and the “creative big idea” approach that have guided their services in the last 60 years doesn’t help.
Sports brands and properties with all their appeal and interaction can be outstanding examples of how powerful data can be used to exploit business objectives. Let´s avoid approaches that send us to the end of discussion and look for those who make it go further. It’s time to look beyond the obvious and avoid naive opinions on digital in our industry.