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.
In 2007 he was appointed as Digital Business Manager for Spanish Football Club Real Madrid C.F. He has been in charge of the E-commerce business, the commercial strategy of realmadrid.com portals, the online video business and the Social Media strategy of the Club. Oscar is a keynote speaker who often participates at events and conferences on Digital Business Strategy and the impact of Social Media. In the last few years he has spoken at events in Spain, Germany, UK, and Latin America
A member of the board at a top football club used to say to newcomers:
“My dear boys, you are here to help 11 guys who are well gifted to kick a ball, in their task to make millions happy.”
When you share this inspiring quote with the veterans at the marketing area they smile back and say:
“Indeed dear boy, you are going to make millions of people happy but in the meantime you will be asked to make millions of euros”.
No cynicism here. Many football clubs generate huge levels of revenue but also consume it just as fast. Therefore, there is a focus to work in the most straightforward way.
Being straightforward in business produce “cookie-cutter” approaches. Take a look at the annual report of Deloitte on the economics of European football clubs. The revenues are divided in three parts: matchday, TV rights and commercial (this is mix of sponsorships, licensing, merchandising, etc). Digital business is usually found in the commercial section .
Is digital nowadays a big business in the “football sector”?
If you review the quotes of some of the officers of the top clubs, digital represent around a 4 % of the total revenue. In most cases this includes the tickets sold through the internet (not a big task considering their high demand).
Usually, little money generation brings modest attention and resources from the board and management.
Is this lack of attention towards new and small businesses a characteristic of football clubs?. Not at all. The innovator´s dilemma explains how companies focus on big profitable markets and improve the way they do business in them. This is the logical approach of any good and responsible manager.
But the dilemma also tells us that this approach is what condemns those very same companies. The disruptive innovations that modify industries and shift market leaderships come from new segments with new demands and needs. It starts in small markets with little revenue and scarce information.
The ones who tap these disruptive innovations are small, agile companies. Big and good companies that “do the right thing” are left behind because of their revenue and margin structures, their compromises and their focus. They can´t get distracted. They need to keep the ball rolling.
You see these cases every day: music industry vs digital music consumption, mobile phones vs fixed landlines, tablets vs laptops, Microsoft vs Google vs Facebook vs the next one.
Football will confront this dilemma in some way. As the social phenomenon will not disappear or lose relevance in the near future. But it will be transformed or enhanced in the way we consume it. Every day we read about how people watch sports in a multitasking way, how they share astonishing amounts of information and opinions in social networks, how stadiums get wired to exploit multimedia experiences, etc, etc.
It is a very interesting situation with opportunities no less interesting. How to break the innovation dilemma in what is regarded as “digisport”? Please allow me to suggest some advice:
For clubs / sports organisations:
- Work to find the connections between digital business and other marketing areas and look for positive externalities. How can these new assets help enhance sponsorship deals? Is there a new pool of potential subscribers for the membership program? Can it help to distribute our video content (maybe ad supported) in a cheaper and wider way? If digital is evaluated only by itself you will only see a modest amount of money generated in comparison with other mature and tested business models. And you will drop it.
- Don’t set weak benchmarks and get frustrated about them. It’s not only about numbers of fans, followers, comments or tweets. It’s about engagement and conversion and they are ratios that put big and small organizations to “compete” side by side. Is not about the size. Is what you do with that size.
- Spin off a team inside your organization with resources and leave them to explore and experiment in this new environment. You don’t require an army of experts. You need a very small group of clever people. It’s not about big budgets, it’s about intelligent, insightful and focused approaches. “I’m too small for digital” is a lazy excuse
- Demand information, insights, knowledge and cooperation from other areas. Use this to get ready for the future. In that future (in some cases this is the present) sponsorship relationships will demand new ways to activate in digital (you will need data to make your pitch and assets to deploy it); its possible that you will negotiate TV match or highlights rights with new digital bidders (are you going to understand how they work and your opportunity cost to make a good deal or walk away?). Maybe you will be required to understand new licensing models and the opportunities around them or find new ways to create and develop products or services.
- Stop playing safe. You will only produce lame content, mediocre products and zero new knowledge. No one will pay attention, or buy, no matter the shield you put on top. Nowadays the most dangerous option is playing safe
For digital marketing professionals:
- We are in an economic crisis because banks and brokers sold one another bad debt. Today, social media “experts” are trading the wrong stuff also. Connections and actions unlikely to yield anything meaningful,. Stop bragging only about tweets, comments, likes, number of fans. By itself they are irrelevant. Start talking also about business: traffic, conversion, membership affiliation programs, merchandising sales, saves in the aforementioned activities.
- Be honest if the business numbers is not already “big”. The worst thing we can do is generate false expectations.
- Don’t concentrate on yourself. The only way to succeed is to cooperate with other areas and produce not only direct business but also externalities. By ourselves we are not meaningful. Demand that interaction and cooperation.
Sports and specially football produces some of the greatest content of our time. In a chaotic and in some ways “uncertain” time for digital business, the opportunity will be only for those who are serious and get focus enough. If we do it well it is going to be a great time.