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Marketers seek footing amid audience erosion

Marketers are looking for properties that share similar values, understand business alignment, and who “get it.”

Sounds so simple, doesn’t it? Haven’t we heard it all before? Well, yes, we write about it year after year, and while some progress is being made — on both the brand and property side — there is still plenty of room for improvement.

But now marketers have a new, more troublesome concern that has crept in over the past year: audience erosion in sports.  A major issue, considering the job of any CMO is to create greater business value through their marketing partnerships, and if the audience isn’t there, neither may be the return.

Those were the messages delivered at our Sports Marketing Symposium earlier this month, which kicked off with Rich Luker delivering an unsettling address outlining the declining interest among young people in sports (SportsBusiness Journal, Nov. 21-27 issue). With that as a backdrop, marketing leaders were pushed to convince the audience of 500 attendees that greater problems were not on the horizon, and that kept coming back to the fundamentals — properties must deliver real value and step up their game on the talent side. If they fail, be prepared for the consequences.

“I’ll make an observation, intentionally mildly provocative, and I say this as an avid sports fan,” said former United Airlines CMO Tom O’Toole, now a senior fellow at the Kellogg School of Management at Northwestern University. “It’s not the job of the brands to solve the sports industry problems [citing Luker’s data on audience erosion]. From the point of view of the CMO responsible for achieving the greatest business value out of our investment, be aware that investment will migrate to where that value can best be achieved if the trends we see aren’t reversed, because it is the responsibility of the CMO to migrate that investment.” Asked to clarify if that meant taking investments out of sports to other segments, he said directly, “We will walk. No doubt about it, because that’s our job.”

“Do the rights holders have the right mindset? … To the extent that you can’t get on the same page … that keeps me up at night.”
Ralph Santana, Harman CMO
Photo by: MARC BRYAN-BROWN
Longtime brand CMO Ralph Santana, who is now at Harman, said he worries about the talent and overall perspective at properties today.

“Do the rights holders have the right mindset?” he wondered. “The traditional model is you sell assets, you sell rights, and it’s a very transactional experience. Increasingly, the rights holders have brands unto themselves that they are trying to grow, trying to promote and trying to support. To the extent that you can’t get on the same page, that can create a conflict, and that keeps me up at night.” Noting Harman’s deal with the NBA, Santana added, “We have shared passion points and shared objectives, so it’s not an issue. But for some rights holders, and some brands that are buying into things, it’s a point of conflict.”

Last year, Momentum’s Mike Sundet participated in a panel that discussed the continued chasm between the properties and brands when it came to shared values and service. He feels progress is being made, though not as fast as anyone would prefer. “It’s moving in the right direction,” he said. “You used to get a lot of off-the-shelf proposals as a brand. But now, the norm is much more about custom solutions. The goal is breaking down walls early on. If you do that up front, you have a much better chance to be successful.”

Sundet has also been pleased with the flexibility properties have shown recently. “We are seeing properties be much more nimble than they used to be,” he said. “It’s not ideal or where it needs to be, but we are getting there. Where we used to see the mentality of ‘Build it and they will come,’ we’re now seeing, ‘Hey let’s build this together.’” O’Toole agreed, saying, “The relationships between the properties and brands have advanced considerably and admirably over the last couple of years. I think back to this conference two years ago and how far we’ve come. Those relationships have progressed considerably. … More and more often, one walks out of a meeting with a property and says, ‘Wow, those people really get it.’ That’s becoming the norm much more than it was several years ago.”

Santana said partnerships are sound when everyone is clear on shared interests and concerns from the start.

“The onus sometime is on the brand to make sure the rights holder is clear on all of those [interests and concerns],” he said. “If you have people who are passionate about their account, people who are thought partners with you and not just administrative, you can get something special done. Much of that you have to figure out during the vetting process. You should know by the time you’re about to sign a deal, ‘Is this a partner I can really partner with? Is this a rights holder that I can really have a genuine partnership with? If you haven’t figured that out before you’ve come to that point, then you probably haven’t done your homework properly.”

At Harman, Santana dismisses more than 90 percent of the sponsorship proposals that come across his desk. “About 5 percent we might sniff out, and another 3 percent that we might give a call back on,” he said.

He admitted that the number of sponsorship options in sports has its pros and cons. “The good news is there are so many choices out there, from the traditional big league, broad audience choices down to emerging things like World Surf League and others,” he said. “A lot of choices is creating a lot of competition. The bad part is that it’s an opportunity cost. I can’t afford to do them all, so where do I place my bets? I need to get comfortable with the fact that I can’t do everything. If I choose not to do option A, am I comfortable with the fact that my competitor may come along and swoop up option A? Am I more comfortable with option B, where I may get a narrow set of rights, or even have to share them in some cases? Or is that a trade-off that I want to make relative to something else where I can really own a property outright?”

In the end, everyone agreed that properties and brands could be perfectly aligned, but if the audience isn’t there, then harder decisions will need to be made.

O’Toole was frank when putting it all in perspective, admitting the trend most concerning to him is softness in sports’ vital signs. “The continued erosion of audience is what I’m watching most closely, because if it does continue, and next year will be more consequential, CMOs are going to be faced with a very difficult decision of do they start to migrate their investments? And it’s going to be difficult not to,” he said.

Sundet agreed: “I’m watching the erosion of audience — and short term, will the NFL rebound? Longer term, are we going to continue to see an erosion of millennial interest in sports, because that is very scary.”

Abraham D. Madkour can be reached at amadkour@sportsbusinessjournal.com.

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