SBD/Issue 21/Sports Media

Digital Roundtable Part I: The Economy And Multi-Platform Sales

Several Sports Media Execs Meet To
Discuss Industry With SBD/SBJ Staff
To gain an overview of where the digital media industry is today, and where it may be going next, several industry leaders met with SportsBusiness Journal/Daily staff for a roundtable discussion at our N.Y. bureau. Participants in the roundtable included: NBC Sports & Olympics Senior VP/Digital Media Perkins Miller, ESPN Senior VP & GM of Digital Media John Kosner, SI Digital President Jeff Price, Yahoo Sports & Entertainment VP & GM Jimmy Pitaro, NFL Senior VP/Digital Media Brian Rolapp, SportsNet N.Y. President Steve Raab and Accrue Advisors President Doug Perlman. The following is part one of the three-part special.

Q: There’s, of course, a lot of concern about the national economy and its impact upon sponsorship sales. How have digital ad sales been affected?

KOSNER: It’s obviously a challenging time, but I think sports continue to hold up well considering what’s going on. That gets to the importance of live events and the passion the audience has. In the case of ESPN, our biggest packages sold involve multiple media including TV, and many of them are done on long-term deals. We have a really expert sales staff that goes out and does it. So I feel like we’re holding up pretty well. In the industry, there’s a lot of discussion about the effectiveness of display ads. That’s obviously very, very important to all of us because most of us are not in the direct response business. A colleague of mine said last week that when you have dark times, it makes people innovative. So I think we’re going to come out of this time with more effective advertising, in part because we have to, and also in part because amid all the money flowing to digital, there’s a demand for better results and better brand advertising.

PRICE: I agree completely with John. In this difficult environment, you’re clearly seeing auto and pharma as two categories that from a media perspective are being impacted very heavily. When Detroit has two launches of trucks that continue to be pushed back, in a tough environment for trucks and sports being traditionally such an important vehicle for the truck market, it’s going to have an impact on what we all do. But I do think the opportunity to innovate and think about our audiences and fans we’re engaging with, and think about a multi-platform approach, allows us with a chance to come out of this much stronger.

Q: Jeff, when you sold an exclusive entitlement around Peter King to GMC a few years back, that was seen as a bellwether event for the industry. Are you seeing as many of those specific deals being sold now?

PRICE: Television has certainly set a marketplace where advertisers have an opportunity to wrap themselves and ‘own’ certain segments of shows. There are various ways they can wrap themselves around the content, and that is certainly being pushed across all mediums. You continue to have to make sure it works for both the advertiser and the fan and that you don’t sell one out for the other. But ultimately, trying to create engaging opportunities on a multi-platform basis is at the core of what many of us in the room are trying to do. 

Rolapp Admits NFL Feeling
Economic Pressure Like Others
Q: Brian, you have mandated sponsor buys as part of the advertising mix on NFL.com. How much has that insulated you from the issues in the economy?

ROLAPP: A little bit, but we’re not immune to what’s going on any more than anyone else here at the table. We’re a little akin to John’s model in that we sell cross-platform, we have a TV network and we have a sponsorship business in which people are contracted and locked in for a while. But at the same time, there’s a tremendous amount of discretionary spending that goes on in our business. So we’re feeling it like everyone else. I do agree there is a flight to quality in a market like this. And I think sports in general is classified as quality, and that the NFL holds up pretty well in that regard. But you also have to innovate, and the burden is on the content producer and the site operator to generate value. I think you’ll see a continued trend in which advertisers are looking to wrap themselves around content, not only online but in other places. And it’s an ongoing balance of creating value for them and making sure the consumer experience for them holds up and doesn’t become a complete homage to the advertiser. There’s a tactful, effective way for you to make it work both ways, and I think everybody here is figuring that out. But yeah, the tough economic times will definitely breed innovation and cause us to hustle a bit more.

PITARO: The days of us walking into a client’s office and saying, ‘This is what we have. Take it or leave it,’ are over. It’s all about customization and working with a client, cultivating partnerships. 

Q: So where are we foremost seeing the effects of the economy?

RAAB: We’re certainly feeling it, but as I think was mentioned earlier, we’re not feeling it I think as badly because so many of our [digital] deals are tied to TV deals. And for us, our upfront period has sort of become fourth quarter and first quarter. Much of our business, of course, is around the Mets and a lot of that got clarified early this year. And now, going into this period again, we’ve just picked up a huge property in the Big East, which is something we’ve never had before. Some of this we’re still figuring out, but it’s new. It’s a new opportunity and we’re out there knocking on doors.

Q: Brian, what about the NFL? Where are you seeing the effects of the economy, particularly online?

ROLAPP: Again, a lot of stuff is contracted longer-term, just like John was mentioning. But you’ve seen it -- GMC was an example Jeff brought up. Here’s a traditionally big NFL sponsor who’s just saying that the money is drying up. And if they’re pulling back Super Bowl 30 [second spots], you know they’re pulling back everywhere. I think we compete for a fair amount of discretionary spend, just like everyone else does, and it starts with sponsors who are looking to activate around their sponsorships. But there are also non-sponsors, and since the NFL has adopted a media model to go along with the sponsorship model, it means that if you’re not an NFL sponsor, you can actually get in and associate with NFL content under certain parameters. And so, I think we’re feeling it there. We’re hitting our numbers. We’re sort of on track. But we’ve got a lot of football left to play and a there’s lot of money in the market. And it’s incumbent upon us to execute not only from a sales standpoint, but also from an execution and programming standpoint. We’re not running around the building with our hair on fire just yet. But we’ve got a healthy level of paranoia to keep us moving. And as some people have often said, only the paranoid survive in this business, and I think we’re no different.

PRICE: Also looking forward, the buying cycles for digital have moved. If you look back to 2006, 2005, deals were coming literally a month prior to their running. Many of the major deals we’re now seeing are coming six, eight, 12 months in advance as digital planning has become more sophisticated and is starting to match up against TV upfronts as seasons go. So we’re now in first and second quarter [of 2009] in a lot of advertiser conversations, that’s where we need to see how this all plays out [with the economy]. I don’t think it’s been an immediate impact, but we need to see where the economy evolves.

KOSNER: Right, it’s not a static thing. This is a moment in time we’re talking about and we’re telling you where it is today, but that doesn’t mean that in another couple of months it couldn’t be more dire or it could get slightly better.

Kosner Says ESPN Has Ad Sales Advantage 
Due To High-Profile Content Like "MNF"
Q: How difficult are the multi-platform ad sales to execute and administer?

KOSNER: It’s not easy. ESPN has an advantage because it has some great properties everyone understands. No one is going to get fired for going out and buying "Monday Night Football." We have a group of people in our ad sales department who know how to go out and sell those deals and put them together. And we have the advantage of significant numbers that we can talk about. The other thing I’ll say is that the innovation is ultimately what gets you home or doesn’t. We’ve done really well with this concept of surround. If you logged on before "Monday Night Football," we had a tremendous amount of content, all the game-before-the-game content leading up to Jets-Chargers. We just made a big renewal with StubHub around ticketing that includes some mobile ticketing. We just made a big renewal with Orbitz around a really cool product called Passport, sort of like a digital scrapbook. So if you were at the final Yankees [home] game, you’d have a chance to upload your photos, participate and do that. We’re all in the renewal business. It’s easier to do those [multi-platform] deals if you can renew them. And one of the cool things is that if the deal’s a turkey, you can’t renew it, so I think everybody’s incentivized. But, no, it’s not easy getting them done. It’s not easy executing them. And the devil’s in whether there’s value in them for both sides.

Q: Brian, how about you? Does the NFL have a paradigm on all this yet?

ROLAPP: No, we’re figuring it out. We don’t have 40 years of television legacy to lean on. So we’re figuring it out as we go along. But I would just echo what John said in that there’s no magic to it. You figure it out as you go along, and if the execution isn’t performing, then it really doesn’t matter what medium it is. If the television isn’t getting ratings or if there’s not consumption online, no one’s going to be interested in it. I think it’s all a lot of trial and error, and hopefully less error than anything else. But we’ve done some things, we’ve taken segments from the NFL Network, and because we’ve reserved all our digital rights with footage, we can do unique things online that no one else can do. And when you have that kind of advantage, that’s something that people understand. So if you want to associate with NFL highlights and if you want to extend the segment, you can do that on our Web platforms, and that actually translates very well. And in a lot of ways, the Web has driven the television.

KOSNER: And online video is still growing, it’s driving interest to a lot of these sites, it was a big factor in the upfront for us this year.

ROLAPP: We’ve hung our hat on the notion that there’s not enough [online] video for us, that it’s a scarce commodity. But it drives the majority of our deals. Video keeps growing and growing and growing. I don’t want to say the appetite is insatiable, but we’ve had some good growth. We’ve used that well and it’s become a hook for us.

Price Says SI.com Saw Record
Traffic During Beijing Games
Q: Many of you here had aggressive Olympic content and advertising strategies. What were your takeaways from that period?

KOSNER: I thought NBC did a spectacular job with the Olympics. It was a watershed event for us in the industry. I also thought we did an excellent job on ESPN.com. We did not have some of the same access to events that we would normally have, but I thought the editorial coverage was very good. The traffic was very strong. For us, the biggest value comes from events that have a long season. Major League Baseball. NBA. College and pro football. The Olympics is a special event, and time sort of stands still when it happens, but it’s not really the core of what we do every day. I think we did a very solid job, but we salute the job that NBC did.

PRICE: From our perspective, it showed what a differentiator the independent voice is and the value that can bring to sports fans. Obviously, there are lots of folks going to NBC for video and engaging in that content. But we were able to set a record [for us] in Nielsen in terms of traffic for the month. Bringing the unique photography, whether it was the Phelps story and actually understanding something that TV couldn’t show, with the touch, and the behind-the-scenes storytelling that we were able to give, given the commitment we were putting forth as a franchise, we had a very successful Olympics across all measures. How well we drove traffic. How well we monetized that traffic. And the experience and engagement we had for our users. It shows that while NBC had a record-breaking performance, we had a record-breaking performance. And ESPN and Yahoo also had success. So if you can create differentiation, you can drive engagement with sports fans.

PITARO: We’re using [the Olympics] as a promotional platform for the rest of Yahoo Sports. It was a massive investment for us -- we started on our Olympics microsite around a year ago. To make that investment for a 17-day period, you have a decent amount of revenue coming in, but not really enough to justify it [by itself]. The main idea was to introduce Yahoo Sports to more casual fans. We have a lot of passionate fans, certainly driven by that our foundation has been in fantasy sports. So we looked [at the Olympics] as a way to bring in a lot of casual fans, a lot of women to the site and hopefully keep them there post-Olympics. For the first two weeks of September, we’ve seen traffic up about 100% year-over-year. So the strategy is paying off.

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