In 2021, AC Milan launched The Studios, a bold new media house that one of the world’s most prestigious football clubs saw as the key to reaching its 500 million fans worldwide. At the time, CRO Casper Stylsvig said, “We need to see ourselves as a media business.“
At the same time, a revolution was underway in retail. Large retailers, particularly supermarkets, were realizing the additional value that could be unlocked with a retail media offering to drive supplier sales.
Fast-forward to today, retail media is a burgeoning sector of the advertising industry. Highly advanced offerings exist in the market, and while some large retailers are still evaluating the opportunity, faster movers are driving enormous revenue through existing suppliers and increasingly non-endemic advertisers and agencies.
The core to this opportunity is unlocking the power of sales attribution and combining this with the vast quantities of 1st party data that we, as consumers, hand to the premises where we shop:
- As consumers, we can be targeted throughout the day across our mobile applications and social media. Where we show interest, we can be targeted with discounts and offers via email.
- When we arrive at our local store, attractive digital screens can persuade us, and in-store radio can alert us to other opportunities.
- As we walk around a store, we can be enticed by sampling and demos, and even the products we stop to analyze can be retargeted back at us later that evening. A supplier can invest in more eyes, sales, and customers, and it’s all increasingly demonstrable. The opportunity is palpable.
But what does this have to do with sports? Sports clubs don’t sell supplier products in mass; they are community-driven businesses focusing on experience, not retail. Or are they?
It is no new phenomenon; one only needs to look at the sales figures produced by Ji-Sung Park in South Korea for Manchester United to understand the retail benefit of monetizing global audiences. As a British football fan, I will lean into the Premier League as a clear example of the wider opportunity.
Recently, we have seen announcements of Tottenham Hotspur engaging with Salesforce in a strategic move to improve the fan and customer experience. Meanwhile, Sunderland A.F.C. has used the same platform to drive new sponsorship revenue.
The above are good examples of increased investment from football clubs in the fan experience (termed the fan360°). “Bums on seats” is a core part of matchday revenue for clubs, and extending this to premium fan experiences and increasing data accessibility is supporting them in converting revenue. However, the same fan engagement projects are helping clubs to reach beyond the confines of a physical stadium and enabling intimate fan experiences for those who are perhaps not as local or previously as passionate. Increasing fan bases makes a more enticing sponsorship offer and grows the opportunity for merchandising, opening up additional revenue streams beyond 90 minutes.
As fans engage more with club content, they produce a gold mine: their first-party data. Clubs can quickly understand fan locations, interests, intentions, etc. Speaking as a football fan, I couldn’t give my club enough first-party data if it will help them invest in my fan experience or the club. Fan loyalty here is a unique commodity, and whilst this mustn’t be abused, those clubs who sail carefully can quickly create enticing audiences.
As clubs hold a unique spot within the local community, they are the perfect investment for any brand or advertiser wishing to plant a flag firmly into a geographical territory. For local businesses, it capitalizes on the immediate geographical audience and associates them with the fierce loyalty of the fanbase club. Speaking as a fan, the notion that a business is sponsoring my club, and by extension, the local area, gives them a form of “social credit,” which instantly draws my attraction. If you consider a more prominent brand or advertiser advertising across a network of football clubs, the options for precision-based marketing around club geographies are tantalizing.
The above use cases demonstrate a sports club’s opportunity to reach two powerful audiences: a highly localized one and a network of the wider fanbase. Converting the two is a new revenue channel for sports clubs. So, through which mediums can sports clubs unlock this revenue and sell media campaigns?
Channels
Sponsorship:
Sponsorship is the big proof in the pudding. Sports clubs have been monetizing sponsorship for an age. Traditionally, this comes in the form of annual or multi-year big-money agreements. This extends to stadium billboards, shirt sponsorship, player sponsorship, and more. However, we are also seeing increasing granularity. Clubs offering shorter-term, more measured sponsorship packages unlock a new tier of sponsors/advertisers and business customers.
Digital Out-of-Home:
We have seen Digital Out-of-Home take off in retail. While in-stadium advertising is already available, we can see this moving away from fixed-price annual or multi-month sponsorship to a format built more around estimated CPMs and deliverables.
Digital Out-of-Home as Fans the Leave Stadium
Print:
Matchday magazines have long been a staple of the fan experience, and selling ads here is a clear revenue generator. Clubs generally charge for the sale of matchday magazines, but free or paid, the circulation of such magazines is consistent. Underutilized is on-ticket advertising. Many clubs still operate on paper tickets, and selling ‘back of ticket’ ads would unlock a ‘CPM’ of a geographically concentrated audience. Imagine local bars or restaurants using such tickets for post-game offers/discounts and how measurable the impact of this would be via discount codes.
Digital:
The same goes for digital tickets, where offers and their success can be easily tracked. First-party data would support more comprehensive digital advertising on club-owned websites and inevitably make up a core component of sports clubs’ advertising offerings. Digital newsletters/matchday magazines and email campaigns can similarly support this.
Promoting a Local Restaurant through the Club App
OffSite & Socials:
This has been a natural development over recent years. Clubs have their own YouTube, TikTok, Meta, and other channels. OffSite has been a big monetization area within retail media, and we can expect this to be the same within the context of sports media.
Linear & CTV:
Sky and its competitors have been monetizing these channels for decades. However, club-specific TV channels have been launched over recent years, and the cost of doing this has consistently decreased. Some vendors in the market are now offering stand-alone streaming platforms built specifically for sports media. As such, we can anticipate an increasing fragmentation of viewers as they look to watch on club-owned platforms. Whilst matchday TV rights still sit firmly with the industry giants, this doesn’t stop eyeballs from watching the latest training sessions, player interviews, match replays, and the multitude of other content options that appeal to the engaged fan. Outside of the premier league, several football league clubs have already invested in such platforms to broadcast their own games.
The above demonstrates the enormous number of channels available for monetization by clubs, and the reality is that this is only likely to increase as the fan experience continues to develop. For example, in entertainment venues globally, owners are beginning to monetize tap space, that is, which beverage brand can have their lager, ale, or fizzy drink on tap. We are even seeing them monetize beer mats, and as sports venues are no different in the food and drink they serve their customers, this is also a realistic revenue channel.
Of course, as ‘media owners’ (hint hint, sports clubs) look to monetize these channels, they increasingly need to deal with scalability and inventory management challenges. More on that later.
Pressure
So, we know there is the potential to reach highly localized and engaged audiences en masse, but what pressure is there?
If we look at the Premier League, we know enormous pressure exists to maintain revenue. Transfer and wage expenditure alone is through the roof, and over recent years, despite these colossal figures, expenditure has stalled. With much of this spending triggered by Sky investment and TV rights, the slow leak in the base of linear TV audiences has an impact. As linear revenues begin to decline, what will replace them? If you add that football clubs are increasingly looking to outside investment, there is more shareholder and investor pressure than ever to demonstrate continued growth. One only needs to look at the botched European Super League attempt to see how desperate some larger clubs are getting.
In House vs Out of House
Different strategies will work for different sports types and different clubs scales. However, the options here will become clearer as the market and its players change and flex as the landscape changes.
In-house vs outsourced is an age-old topic and too big to tackle here alone. However, the more ambitious sports clubs, whose media revenue will enable them to stand on two feet, will ultimately drive more revenue by managing their media business directly. Those who may not have the scale to create relationships or manage their tech will want to work with 3rd parties.
Many vendors are already operating in this space to support cross-club sponsorship and media, and naturally, they would also offer themselves in this growing market. However, at what cost of revenue to the more ambitious clubs?
Perils of Fan Experience
As previously mentioned, sports clubs are increasingly investing in the fan experience. One outcome is happier, more loyal fans, and another is more first-party data. However, more advertising does not equal happier fan experiences, and there is a payoff here.
Careful considerations are needed when advertising is introduced into sports media. From the average fan’s perspective, the industry is already inundated with media, especially if they are watching remotely via TV. However, the core proposition is to keep the fan experience positive. Instead, it is to open eyes to the opportunity for the revenue currently distributed to clubs via TV rights (funded via ads) to go straight into the clubs’ pockets.
Most fans will likely support this move, primarily as it generates more revenue for their club. There is probably some allowance for a small effect on the fan experience if it means more revenue for clubs. However, fans must come first. Advertising is a key revenue opportunity, but it cannot come at the cost of the fan experience. This has been a balance in the launch of retail media and must also be considered here.
But, and it is a big but, sports media doesn’t have to come at the cost of fan experience. As exemplified above, if a fan can have a day out at a match and then be offered discounted food at a local venue, it won’t spoil someone’s day.
Targeted Ads at Fans in Stadiums
Scalability:
For those who in-house their sports media offering and those looking to manage sports media on behalf of others, scalability at a cost-efficient price bracket is key. As with retail media, revenue needs to be quickly demonstrable, which means providing plenty of revenue transparency. Ambitious entities looking to activate media across all of their channels and drive as much revenue as possible need to be able to manage their ad sales process without requiring a large headcount.
This is where ADvendio comes in as an option to support scaling sports media businesses. Outlined below are the key processes that would need supporting:
- As sports media looks to sell various products across several locations and channels, managing what is available, when, and at what price requires tracking. Automating this would significantly increase efficiency, reducing the operational overheads and expertise needed to do this more manually.
- Commercial flexibility is a core part of the developing offering. Offering what was once fixed-price sponsorship packages to be sold more granularly opens up the market to a new customer base. It is key to split and manage your inventory in a way that supports the sale and invoicing behind this commercialization.
- Not all events are created equal: A European match versus a Premier League match or a friendly will all draw different crowds and numbers. Being able to match your pricing to an upcoming fixture list or event (e.g., a new signing) could be key to being competitive in the market.
- Transparency: As in retail media, delivering analytics back to your advertiser is key to gaining traction. Partnering with various data providers and agencies and tracking outcomes will help support the offering. If sports clubs can do this on a single platform, sharing these analytics and providing visibility becomes much simpler.
Naturally, a lot more goes into building a sports media offering. However, the opportunity exists today, and the industry is simply waiting for the early movers before this next growth phase kicks off.
Conclusion
The transformation of sports clubs into media businesses presents a groundbreaking opportunity to unlock new revenue streams and capitalize on their unique position within local communities and global fan networks. As we’ve seen with the evolution of retail media, first-party data and innovative advertising channels have the potential to revolutionize how clubs engage with fans and brands alike. While challenges remain, such as preserving the fan experience and managing scalability, the growth potential is significant.
The rewards of direct revenue generation and control over their media assets are immense for larger clubs with the scale to in-house their media operations. Partnering with agencies may provide smaller clubs with the expertise and resources to build a sustainable media business. Either way, the key will be to balance leveraging new media opportunities and maintaining the loyalty and passion that define the fan-club relationship.
Sports clubs are at a pivotal moment — those who seize this media opportunity now, with the right mix of strategy, technology, and careful fan consideration, will lead the next wave of growth in sports media. As revenue pressures grow and traditional streams such as linear TV rights shift, clubs must adapt or risk falling behind in a rapidly changing landscape. With the right approach, the future looks bright for sports clubs as media powerhouses.
Do you want to discuss if ADvendio is the right solution for your club? Contact a member of our team today.
Originally posted on ADvendio.com on 30th October 2024.
