SBJ/20081117/SBJ In-DepthPrint All
Mike Kerns and Jeff Ma, the lead executives of San Francisco fantasy sports operation ProTrade, needed a plan, and badly.
Less than a year ago, the stock market-inspired fantasy gaming company had peaked at 250,000 users and achieved some critical renown within the sports industry. But the site appealed primarily to hard-core fans with decent insight into financial systems, and there was little hope of broad mainstream acceptance in a business increasingly based on size and scale.
Enter the social-networking platforms.
“We changed the company pretty much 100 percent,” said Kerns, founder and chief executive of Citizen Sports Network, the corporate outgrowth of ProTrade. “It’s all inverted. Instead of trying to bring people to a specific site for a specific experience we’ve created, we’re now bringing a wide range of content and experiences to where they already are. It’s sort of a simple thing when you look at it on paper, but for us it was a really big shift. And it’s opened up a whole new range of opportunities that hadn’t existed before for us.”
The company, like many it competes against, now builds applications that foster and support fandom around individual teams, as well as fantasy games, that are accessed within the major social networks such as Facebook. A much-hyped deal this spring linked Citizen Sports with Sports Illustrated to develop fantasy games on Facebook, giving the former a major brand to provide content, name recognition and a national sales force, and the latter a viable fantasy gaming presence it sorely lacked.
For Citizen Sports, the results from the transformation have been both immediate and striking. The 250,000 users have turned into more than 2 million overall, with a particular focus on international fan and fantasy gaming communities, including those built around English Premier League soccer. Annual revenue, arriving largely from national-level corporate sponsors, is approaching the mid-seven figures and is 600 percent higher than what ProTrade generated in 2007.
Citizen Sports is by no means alone in seeking to leverage the more than 100 million global users of both MySpace and Facebook. Dozens of other companies are pursuing similar initiatives, thanks in part to lower barriers to entry into the social media developer space. Watercooler, another Bay Area-based outfit, operates a similar set of team-based communities and recently signed a deal to get access to content from ABC and the online video portal Hulu.
And some smaller groups, including Massachusetts-based TruMedia Networks and SportsFanLive, the brainchild of former Yahoo! executive David Katz, are propagating similar team-based social communities that are clearly inspired by the big social networks but operate outside them so as to provide more control and a more distinctive voice.
“We think of ourselves as a media company,” said Kevin Chou, Watercooler chief executive. “The approach is obviously centered around building these experiences and communities. But we’ve had pro teams come in and use our platform, our community, to run promotions, move tickets at the last minute, that sort of thing. Those sorts of things have been very effective and help validate the power of what these groups are.”
Hoping to protect the images of their athletic programs, more colleges are beginning to monitor how their athletes use social-networking sites such as Facebook and MySpace.
Many are turning to Kevin Long, whose firm, MVP Sports Media Training, scans the social-networking profiles of top college athletes for any references to drugs, alcohol, sex, violence or profanity.
The price ranges from $1,000 a year for schools with up to 50 athletes, to $3,500 annually for colleges with 251 to 500 athletes. The company negotiates prices with schools that want to monitor more than 500 athletes. More than three dozen athletic programs use MVP’s software program.
Long said MVP’s YouDiligence program scans the text on an athlete’s social-networking page, including captions for photos and videos, looking for about 500 words that have been flagged. Athletic programs can also request that the program block specific terms and alert them on a Web portal when players have violated the rules. MVP also sells parents a $9.99 monthly service that allows them to monitor their children’s pages on Facebook and MySpace.
Today’s college athletes are part of a generation that relies on Facebook and other social-networking sites to communicate with friends, choosing to update their public profiles rather than picking up a phone or sending individual e-mails. “There is a lack of ability in most of today’s college students to have interpersonal communications. It’s all been virtual for them growing up,” Long said.
Several colleges have disciplined athletes for posting questionable content on their social-networking pages. Earlier this month, for example, the University of Texas kicked a player off its football team because of remarks he made on his Facebook page about President-elect Barack Obama.
Long said his program has discovered on the social-networking pages photos of athletes posing with tens of thousands of dollars in cash, guns and drugs. He said colleges are using the monitoring program to protect their athletes.
“They [athletic departments] are using it as an educational tool, not a disciplinary tool,” he said. “What we’ve seen become prevalent is the reliance on employers and recruiters to take a look at MySpace and Facebook before they make a decision on hiring. What may seem like fun now isn’t going to be fun when you’re sitting across the table from a personnel director at a job you’re trying to get.”
Steve Donohue is a writer in New York.
The creation of MyColts.net, the Indianapolis Colts’ official social-networking hub, represents a fairly new solution to a rather old problem.
The Colts, like many NFL teams, enjoy a large out-of-market following, not surprising given the national footprint of pro football and the unceasing on- and off-field ubiquity of quarterback Peyton Manning. Roughly three-quarters of the traffic to the Colts’ official Web site arrives from outside of Indiana, and more than two-thirds of respondents in an ESPN Sports Poll who identified the Colts as their favorite NFL team also reside out of the club’s home state.
“Before the Web there really was no way to reach these people,” said Pat Coyle, the Colts’ executive director of digital business. Coyle formerly worked for the team in a full-time staff capacity, but is now a contract employee as he also runs an independent new media consultancy, as well as Sports Marketing 2.0, a digital media think tank and traveling industry summit. “This was a huge opportunity that simply wasn’t being accessed.”
The MyColts.net site launched in June 2007 and now has more than 25,000 members. Many of the functions and features are similar to those seen on major social networks such as MySpace and Facebook, including fan blogs, photo and video galleries, discussion forums and surveys. But the format and tonality of MyColts.net is more free-wheeling than what is typically seen on the bigger networks. And the site features a loyalty points system in which active users can earn prizes and special offers through their activity on MyColts.net.
“As much content as we create, the fans are creating more,” Coyle said.
Such a dynamic is being replicated across the country on dozens of similar team-sanctioned sites, with some of the more prominent examples including the Phoenix Suns’ PlanetOrange.net and the Portland Trail Blazers’ Iamatrailblazersfan.com.
MyColts.net, meanwhile, is yielding some consumer patterns outside the established norm for the NFL. Like the league profile for avid fans, two-thirds of the MyColts.net users are men. But that one-third group of women represents 55 percent of the loyalty points, known as Colts Cred, earned on the site.
With that data, Coyle is looking to better position locally oriented Web outposts such as MyColts.net more firmly in the minds of national-level marketers. The site has a presenting sponsorship with RCA, the naming-rights partner for the team’s former home stadium, and prominent buys from Canon. But more national-level ad sales to fully leverage that broad out-of-market profile remain a work in progress.
“We recognize we’re not the only thing a national brand needs, but we do have a system in place now to reach those truly avid, passionate fans,” Coyle said. “The jury is still out on exactly what kinds of things marketers can do on sites like this, but our attitude is, ‘Let’s try some things.’”
Facebook co-founder, CEO and president
Open Sports chairman and chief executive
The founder of SportsLine, now CBSSports.com, Levy is making his next big move with Open Sports, looking to combine social networking, sports news and fantasy in one destination. Whether Open Sports can gain traction against the established sites from which it seeks to differentiate itself remains to be seen. But during the heady dot-com boom days of the late 1990s, few people generated as much noise in the space as Levy, and his $10 million in venture capital funding for Open Sports suggests the need for repeat watching.
MySpace co-founder and chief executive
While Facebook continues its course as the current rage in social media, it’s actually the News Corp.-owned MySpace that maintains the lead in American users. More specifically focused on music than its chief rival, MySpace under DeWolfe enjoys broad demographic reach and recently launched its own advertising platform, MyAds.
Watercooler chief executive
Watercooler is one of the most prominent companies among a growing list of outfits building applications and content designed to exploit the massive user reach of social networks, with sports standing as a primary focus. A one-time venture capital executive, Chou has landed $4 million from his prior employer, Canaan Partners, to help grow the company.
KickApps chief executive
This New York-based company actually creates the guts of social-networking applications and functions used by thousands of sites around the world. Blum, a former AOL and JumpTV executive, is leading a new focus in developing sports communities, with recent clients MSG and the San Francisco 49ers joining existing work with the Phoenix Suns, Seattle Seahawks and others.— Compiled by Eric Fisher
The two most popular social-networking sites, Facebook and MySpace, allow users to build networks of friends, families and colleagues, with subscribers posting updates on their home pages about what they are doing each day.
The sites encourage users to invite all of their e-mail contacts to join their networks. And subscribers can expand their contact lists and networks by viewing the contact lists of each of their friends and inviting them to join their social networks.
Social-networking sites also encourage users to share video and photos with friends, allowing them to upload videos or embed online videos from other Web sites, including those of TV networks. Many subscribers use the sites to plug their favorite TV show, writer, actor or movie.
Sports properties, advertisers and TV producers use the sites to reach consumers, encouraging them to become “fans” on their social-networking pages. Social-networking sites also contain thousands of pages devoted to fans of everything from individual colleges to hobbies such as fishing or skiing.
Other social networks target niche markets, such as LinkedIn.com, which caters to job recruiters and professionals looking to network with colleagues, and Bebo, which focuses on sharing media.
— Steve Donohue
The NHL does not generate any direct revenue from its Facebook page, where more than 44,000 fans have officially signed up to communicate, debate, share videos and engage in a range of other social-networking activities. And that all is just fine with league executives.
“For us, it’s really more about having another tool to expand our reach and scale, and continuing to be wherever people are on the Internet, and giving them the tools and the platform to be heard,” said André Mika, NHL senior vice president and head of new media programming.
To that end, the league has taken a more hands-off approach to its official Facebook page, allowing fans to populate much of the site through postings of messages, photos, fan videos and other content. Official materials such as highlight videos, content from the league’s YouTube channel and news feeds take on a more supplementary role.
The thinking stands in stark contrast to NHL.com, which last month debuted a drastically altered new look and digital content plan that was more than a year in development and represents a major part of the league’s overall media strategy.
“What we do is help populate the area by porting pieces of NHL.com into Facebook, and allowing fans to do the same, with the same going for other places such as MySpace, Digg and Del.icio.us,” Mika said. “It’s now sort of become its own self-sustaining thing, which is really cool to see.”
The NHL’s placement on social media networks also is in keeping with a be-everywhere-relevant policy that in the last several years has seen alignments with more than a dozen outlets including Joost, Verizon Wireless and Sling Media.
Some other leagues, meanwhile, have made their Facebook pages take more of an official look and feel to more closely mirror their flagship digital properties, at least within the design limitations of the Facebook platform. The NBA, for example, has outfitted its pages with a prominent placement of its marketing slogan, “Where Amazing Happens,” player photos, direct links to purchase tickets and out-of-market packages, and promotions for upcoming telecasts. Fans have not rebelled, though, as more than 304,000 people have signed up to be official fans on the page.
MLB Advanced Media, baseball’s digital media arm, took on more of a developer role with regard to Facebook, developing the MLB.com Fanbook, an application that combines elements from MLB.com itself, such as scores and ticket purchasing, with traditional social-networking functions such as ballpark meet-ups and trash-talking over specific teams.
So what is the end result of the league entries into social media? The general consensus is that such efforts are helping deepen fan ties, particularly among all-important younger demographic groups.
“This is something our marketing and research folks are looking into as we speak. Our sales guys are obviously very eager to know what comes of it,” Mika said. “But looking at this more anecdotally, I definitely believe we expanded our demographics by opening up like we have to social media. This is and is going to be a huge deal for us.”
Marketers are taking their battle for eyeballs to Facebook and MySpace, wooing millions of social-networking Web surfers with everything from games touting their products to videos submitted by sneaker fans.
Adidas counts 621,000 fans on its Facebook page, which features high-quality original videos that highlight its shoes. That tops Nike, which has 487,000 fans. Nike’s Facebook page features photos of customers wearing its sneakers, along with user-generated videos and debates among users over various Nike models.
As part of its “Celebrate Originality” global brand campaign, Adidas began producing original videos for Facebook and Google’s YouTube.com in February. One of the videos features Adidas founder Adi Dassler.
Nike also has a page on Loop’d Network, a social network focused on action sports. It created a page focused on athletes that Nike sponsors in surfing, freestyle skiing, BMX and Motocross racing.
Facebook launched a brand advertising program last year, creating dedicated pages on the Web site for 12 of the world’s largest brands and companies including The Coca-Cola Co., Blockbuster, Verizon, Chase, Sony Pictures, Saturn and The New York Times Co.
Its “Facebook Ads” product gives brands dedicated Facebook pages that can be used to reach subscribers on the social-networking site. Subscribers can refer products to their friends and Facebook helps the advertisers target specific groups of subscribers.
Coke used Facebook to create a page for its Sprite brand that invites viewers to add an application called “Sprite Sips” that allows users to create and interact with an animated Sprite Sips character.
Blockbuster’s Facebook page allows users to search thousands of movie titles and share movie ratings and reviews with friends. Verizon’s page allows users to download ring tones and send text messages from their Facebook accounts to friends on their mobile phones.
Pontiac created a Facebook page to support its sponsorship of ESPN’s “Game Changing Performance” college football highlights package, allowing subscribers to use the site to vote for their favorite teams.
“Pontiac is very interested in what’s happening on college campuses. That’s where people start building preferences,” Patricia Betron, ESPN senior vice president of multimedia sales, said at an Interactive Advertising Bureau conference in New York last month.
MySpace also creates branded channels for advertisers, including McDonald’s, which it recently signed to sponsor its “Who, What, Wear” celebrity fashion show.
Steve Donohue is a writer in New York.
With viewers spending more time on social-networking sites, dozens of TV networks, magazines and Web video programmers are creating pages on Facebook, MySpace and other sites in a bid to attract fans.
ESPN has pursued a strategy of driving social networking and interaction on its own Web site in addition to supplying applications to Facebook, MySpace and other social networks.
ESPN.com features 5,000 social-networking widgets that subscribers can install on outside social-networking sites. The applications allow users to track updated scores from any sport, and read columns from ESPN writers.
Ed Davis, ESPN Digital Media vice president, said a key component of ESPN’s social-networking strategy is the Fan Profiles section on ESPN.com, which allows subscribers to build profiles and post comments on ESPN articles, and respond to posts by other subscribers.
“We have deliberately fostered this notion of a conversation where fans talk to each other — that’s what’s happening,” Davis said, referring to the Conversations section on ESPN.com, which highlights the hottest topics of debate.
ESPN has seen a 200 percent jump on the number of new profiles activated on the Web site since April, the network said.
Davis said he expects social networking to drive traffic increases on ESPN.com. “The notion of allowing [fans] to get together with other people that are passionate one way or another about something on our site … ultimately that’s going to be really good for our business,” he said.
The level of participation in social networks varies by network.
On Facebook, Golf Channel counts just 134 members on its page and Fox Soccer Channel has 130 members. Neither channel updates its Facebook pages frequently. MySpace contains several “channels” dedicated to sports programmers, including Sports Illustrated, the NBA, Universal Sports, Export Village Sports, JumpTV, VideoJug Sports & Fitness, Rip Curl and Watch Mojo Sports. MySpace also features a channel dedicated to Super Bowl commercials.
CBS Corp., which acquired CNET Networks for $1.8 billion earlier this year, distributes video content on Bebo and several other social networks through its CBS Audience Network, which reaches 300 Web sites. “We talk about social networking — how do you maximize that. Social networking is about deepening the connection [with the viewer], so we welcome that,” CBS President Les Moonves said at the MIXX Conference in New York in September.
Some networks and studios have complained when users on MySpace.com upload copyrighted videos to their home pages. However, some networks have struck deals with the News Corp. subsidiary to sell advertising on videos that users upload to the site. Earlier this month, for example, MTV Networks signed an agreement to use MySpace’s Auditude advertising system.
News Corp. President Peter Chernin told analysts recently that advertisers have been spending 50 to 60 percent of their Internet media budgets on Google and other Web portals and just 10 percent on social-networking sites. But he said advertisers are beginning to spend more on MySpace and its rivals.
“That’s just an education thing. It’s just them getting more and more comfortable with the power, and value, and growth of social networking. So I think we’re seeing that happen,” Chernin said in September at a Merrill Lynch conference.
Steve Donohue is a writer in New York.
For Brenda Spoonemore, former NBA executive and head of Seattle-based start-up Atomic Moguls, social media represents the revamp that fantasy sports desperately needs — despite the meteoric growth still occurring across the industry.
“This is fundamentally a social game, something you do with your friends, but the model hasn’t really changed since it first went online back in the ’90s,” said Spoonemore, who worked back then for Starwave, which helped develop ESPN.com and was among those that helped bring fantasy sports to the Internet.
“If you were to reinvent fantasy sports today, you’d do it in a situation like this, where you had a distributed model that takes advantage of these social networks, where this kind of activity is already happening, where people are spending more of their time,” she said.
Spoonemore’s outfit — backed in part by Second Avenue Partners, a venture capital outfit founded by former Starwave Chief Executive Mike Slade — originally began two years ago trying to forge a niche in entertainment-based fantasy gaming. Games centered on projecting box-office receipts like sports fans tally yards and touchdowns.
That operational model is now on the back burner in favor of sports, but rather than seek to battle established players such as Yahoo!, ESPN and CBSSports.com in standard, commissioner-style games, Atomic Moguls is focusing on lighter, less-intense games that exist within Facebook, MySpace and Bebo.
“There is still a lot of room in the market for these kind of lighter games that don’t have quite the level of time commitment as a commissioner-style game would,” Spoonemore said. “People have talked about these types of games for quite a while, but it hasn’t fully happened before the social networks, and it’s not really there on the bigger portals.”
Atomic Moguls last month signed a deal with Fox Sports Interactive in which all of the North American-based games and team applications will be rebranded
“FoxSports.com Applications powered by Fantasy Moguls” — Atomic Moguls’ consumer brand.
Spoonemore’s company also maintains two business lines outside of the Fox agreement: a collection of international games, including those centered on the Olympics and World Cup, and production of white-label products that operate under client brands, such as fantasy games produced for the NBA and Yahoo!.
More than 2 million total installations of Atomic Moguls products have occurred, with revenue coming from a combination of ad sales and contract fees.
“This is such a better environment to run a fantasy operation,” Spoonemore said. “And the prospects are only looking better as people spend more time at home and more time on the social networks.”
Rafe Anderson, a former business development executive with Fenway Sports Group and the Boston Red Sox, said leaving his self-described dream job working for his favorite team after six years was extremely difficult.
“Probably the hardest decision I’ve had to make, and something I really agonized over because that organization is so great and a place where I learned so much,” Anderson said.
But the power of social media was simply too great for Anderson to ignore.
Three months ago Anderson became president and chief executive of TruMedia Networks, a Massachusetts-based startup that has built social-networking communities around the four major Boston sports teams and plans to take the model to other major U.S. cities. But he freely admits that he, like most executives, does not have the emerging medium close to solved.
“We’re honestly trying to figure it out ourselves, but it’s clear there is so much upside in this space,” Anderson said. “There’s obviously a lot happening within digital media at large, and that’s where my passion lies. But the national level news and information is a very crowded space and the content is quickly becoming a commodity. Social media, particularly areas that are about local fandom and local content, have such a high degree of engagement.”
Raw numbers alone speak to the scale and force of social networking: Facebook has more than 120 million users worldwide, MySpace has 110 million, Friendster has more than 85 million, and Bebo has more than 40 million — with thousands of smaller, independent sites such as those created by TruMedia devoted to specific teams, players, sports, causes or events.
Those numbers, of course, still pale compared to the reach of television. But social media, which began to gain significant traction less than five years ago, contains nearly every attribute coveted most by marketers and brands: audiences that trend younger than the population at large, with usage concentrated strongly within the 12- to 34-year-old age group; groups that are deeply engaged around specific teams and leagues; and an open-source environment in which third parties are not closed off, but encouraged to help build up the network.
“Sports obviously incites a lot of passion, which makes it a particularly good fit for Facebook and the communications layer we’ve enabled,” said Josh Elman, Facebook platform program manager. “Rivalries, for example, that are inherent to sports seem to really bring out that excitement and passion within our communities.”
The economic models existing around social media are far from fleshed out, with the majority of entries into the space losing money and many simply existing to help promote a brand or direct users to another more established site.
But any worthy content distribution or marketing strategy these days includes some meaningful social-networking component, and sports exist smack in the middle of that. Tribal and intense by definition, sports perhaps lends itself to social media better than any other genre.
Like any developing industry, though, there also have been and will be bumps along the way. Privacy and decency concerns for college athletes and the formation of activist groups devoted to protesting corporate brands and initiatives, are among the prevailing issues.
“The scalability of what’s happening on Facebook is limitless,” said Jeff Price, president of SI Digital. The company has made several investments in social media, including a fantasy games alignment with Citizen Sports Network (see story) that is deployed on Facebook, and a 2007 equity investment in Fan Nation. “And it really isn’t just about Facebook. It’s about open [source] social in general. It’s really thinking about everything you can do in an unbundled experience and taking that on.”
Senior VP, Career Sports & Entertainment
• What have you learned/gained? At the core it connects people and it controls the information so I can digest it on my time. It fills a need we all have to keep in touch and to share the passions in our lives — family, sports, friends.
• What are executives missing by not using Facebook? They’re missing the opportunity to connect with one another and being able to know firsthand trends that are emerging in how consumers interact with their passions, sports included.
Managing director, Octagon’s First Call
• What have you learned/gained? Being on Facebook is instrumental in understanding how people communicate every day. We track the hits on First Call every day, and links from Facebook are always among our top three sources. The amount of information we’re able to track looking at Facebook gives us a huge advantage in serving our clients.
• What are executives missing by not using Facebook? We can easily reach people and groups that could be interested in what we’re doing.
President, Auto Club Speedway
• What have you learned/gained? In terms of advertising, it is easy to plan and execute advertising campaigns on Facebook and the site provides tools to track important metrics surrounding campaign performance.
• What are executives missing by not using Facebook? For direct interaction, organizations can create a page, provide content and interact directly with fans. For those seeking a less “hands-on” approach, there are a number of options for performance-based advertising, which can be targeted to individuals based on geography and demographic information, and purchased based on performance (pay-per-click or impressions).
President, Ari Fleischer Sports Communications
• What have you learned/gained? As a 48-year-old who was not on Facebook until three or four months ago, I see sky-is-the-limit potential for marketing, promotion and image development. I’m also keenly cognizant of what Barack Obama just showed America about how to organize and promote through the power of young people.
• What are executives missing by not using Facebook? Given how 95 percent of young people are on Facebook, any sports organization that isn’t aggressively and cleverly using social networks like Facebook to market and promote their team, their image and their players is missing the entire future direction by which their fan base gets its information.
President, National Lacrosse League’s Boston Blazers
• What have you learned/gained? Whether we were staging the NLL entry draft and our “Blazers Day” promotion or a local grassroots clinic or appearance, we have a growing network of fans on Facebook who share information on our new franchise and are always well-informed. The way fans interact with their favorite teams has become less reactive and more interactive.
• What are executives missing by not using Facebook? The future of fan interaction. Every fan has a voice and a seat at the “Internet table,” and sports franchises are in a unique and enviable position to harness and benefit from the viral power of online social networking.
Owner, Dallas Mavericks
• What have you learned/gained? It’s a great way to catch up with old friends. Because it uses only real names, it was an amazingly huge blown opportunity for FB to [not license] access to all of us. Instead they chose to give it away. It will be interesting to see if FB can survive without a demonstrable business.
• What are executives missing by not using Facebook? Not all that much. It’s fun to keep up with people, but it’s not a great marketing tool. It’s a nice complement to other actions, more of a checklist item than anything else.
Senior VP, IMG Consulting
• What have you learned/gained? From a work perspective, we spend so much time trying to build meaningful relationships with people in business so we can know people better. With Facebook, gone are the days of note cards to remind you of birthdays, family members’ names, vacations, etc.
• What are executives missing by not using Facebook? This could be like asking people in the early ’90s what they were missing by not using e-mail.
VP, GM, Yahoo! Sports and Entertainment
• What have you learned/gained? Facebook has proven the value of providing a truly social environment for users and there’s a lot of value in that business.
• What are executives missing by not using Facebook? Great, easy-to-use applications like Yahoo!’s Pro Football Pick’em game and SI’s Bracket Challenge.
Note: See the complete responses at SportsBusinessDaily.com.