SBJ/20090413/Opinion

Social networking can help teams find way to fans’ hearts

Facebook, a social utility that connects people, is now the third largest Web site in the U.S. Only Google and Yahoo! are bigger. In fact, seven of the top 10 largest Web sites rely on user-generated content or offer social-networking features, according to the Web information company, Alexa. These social sites are making money and building gigantic market caps along the way, clearly demonstrating that there can be good business in user-generated content and online community.

The thought of a pro sports team operating its own social network for its fans seemed ludicrous just a couple of years ago, but lately there has been an upsurge in activity on the sports and social media front. Much of this activity has been fueled by software companies. These technology-focused firms sense an opportunity to sell their wares, and are scrambling to equip both team and league Web sites with Web 2.0 features. Many of these companies and the features they offer are quite good, but few seem to offer the strategic insights necessary for teams to leverage technology to build profitable digital businesses over the long term.

From a business perspective, the first goal of a team social network should be to help fans connect with each other. Charlene Li and Josh Bernoff stress this point in their recently published book, “Groundswell: Winning in a World Transformed by Social Technologies.” These Forrester Research veterans stress that the most successful Web applications today are designed to connect people to people, rather than to push information. In fact, they stress that social media isn’t about technology at all. It’s about connecting people.

With this in mind, a good strategy for teams might be to focus on building fan community, rather than worrying about having the latest techno bells and whistles. Bottom line, when fans are connected to each other, they are more strongly connected to the team, and they are less likely to defect, which ultimately means greater lifetime value for the team.

But managing fan discussions and online communities can move teams and leagues into new and unfamiliar territory. Teams are accustomed to dealing only with local fans based on their home television markets. But the Web has revealed that most team fans don’t live in the cities where their favorite teams play. Pick any team in any major U.S. sport, and you’re likely to find a majority of fans living outside the home market, and even outside the home state. Ironically, it is television that has helped to increase the number of team fans outside local markets.

Sites where fans of sports teams can connect
are multiplying on Facebook and elsewhere.

In a TV-centric model, team fans living outside the home market are typically called “displaced” fans. They are not likely to buy tickets to games at the home stadium, but through the Web these fans can stay informed and connected to their favorite team just as well as fans living in the home market. The digital channel gives teams a chance to build relationships and do business directly with these fans regardless of where the fans live. In fact, these fans are not displaced at all. They’re connected. They are part of a team’s fan base, which is the most valuable asset any team can have. Team Web sites offer content to attract these fans, and social networks offer fans incentives to register themselves into their favorite team’s marketing database. Self-service data entry is just one of the benefits of user-generated content.

Once a team has built an online audience, making money gets a lot easier. The first way to make money is through e-commerce, selling goods and services directly to fans through online transactions. The goal here is simple: sell a little bit to a lot of fans. If a team has 1 million fans, and it can get just one dollar from each, it has generated $1 million dollars from the digital channel. It should be noted that most pro teams have millions of fans visiting their Web sites annually.

Most teams are already handling the majority of ticket transactions online. Beyond tickets, teams can sell merchandise, fan club memberships, access to premium content, fan travel and other premium fan experiences through the Web. The potential for this business grows in direct proportion to the size of the team’s Web site audience. Of course running an e-commerce business requires skills that not every team has in-house, so not every team is maximizing this opportunity.

Online sponsorship is the other big revenue opportunity created by the Web. Once a team has built a Web audience through publishing stories, video and statistics, it can grow this audience through savvy use of social media. The goal here should be to maximize the numbers of visitors to the team sites, and to increase the number of page views consumed by fans. Team revenue potential once again rises in direct proportion to the size and engagement of the online fan base.

Turning content creation over to fans for the first time can cause some heartburn in the front office. Many teams are concerned about fans abusing the privilege by criticizing the team or otherwise behaving badly. Also, the teams that have never operated forums will need to learn to moderate and interact with fans in ways they’ve never done before.

But given fans’ appetite to connect with each other and with the team, and given the millions of local and displaced fans who can be engaged online, and the subsequent revenue opportunities that emerge, it seems likely that one day very soon every league and each team will follow Facebook’s example and leverage user-generated content and online community to grow their digital businesses. And if they don’t, sites like Facebook will gladly soak up the fan’s attention and money.

Pat Coyle is founder of Sports Marketing 2.0 (sportsmarketing20.com), and can be reached at pat@coylemedia.com.

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