The NBA reached a new 10 year rights agreement with Disney/ESPN and Time Warner/Turner over the weekend that will at least double and possibly triple the current annual rights fee paid to the league. The most interesting aspect of the deal is the de-bundling of at least some games from cable TV packages. From the Wall Street Journal:
“The league also laid plans in partnership with ESPN for a new online video service that would show live regular season games, the people said. In a significant move for ESPN, which derives its huge profits from the pay-TV ecosystem, that service will be open to people who aren’t cable or satellite TV customers.”
This is a big risk for their current business model as they derive around 60% of their revenue from cable TV providers as part of your cable package. However, it is where the market is going and the potential revenue from a la carte purchases (buying a game or a package of games) and more targeted advertising could bring in much greater revenue that the current business structure. What happens when people can consume content without a cable package? What could make up the revenue shortfall?
First, these assumptions can be made about where the market is going:
Video on demand is driving content consumption. This can be live or recorded and through an internet or cable connection. The channel and time driven tune in window programming format is on the way out.
More targeted advertising through programmatic buying platforms has re-shaped how internet advertising is purchased. Big spending advertisers will demand that TV eventually be sold the same way. 65% of advertising on the internet is now purchased on a performance based model.
As smart set top boxes evolve, “smart TV” penetrates more households and more content is consumed on mobile devices the opportunity for hyper-targted advertising through TV/video will become the standard in the marketplace. The tools marketers that use to build deep data profiles constructed by piecing together a consumer’s engagement across multiple touch points that live in the cloud driven by Adobe, IBM, SalesForce, Oracle and SAP will drive more change in the $75 billion dollar TV advertising business than anything else in the last 60+ years.
Has any sports league imploded faster than the NFL over the last week? The Ray Rice video and the Adrian Peterson child abuse charges certainly seem like the tipping point in negative public sentiment against a league that has been bullet proof as a money minting machine. The big question is when will people stop watching? As a father of three daughters I find the whole week disturbingly repulsive and will skip football this Sunday for the first time in thirty or so years. I think that is the only way the owners will come to their senses and make a change at the top by firing Roger Goodell, unless they are unexpectedly influenced by Bill Simmon’s mailbag column. The only thing these guys understand is money and with the unforgettable video and graphic images of abuse how can the league ever recover?
This Wall Street Journal article really got me thinking about whether there is a ceiling on all things sports related in the US market target both men and women. TV ratings continue to climb in the NFL, NCAA football, EPL soccer and the NBA in the face of double digit ratings declines for traditional TV programming. Next season Kevin Durant will earn more from Nike than he does playing for the Thunder. What will the ceiling be on all things sports related? Are yoga pants now considered business casual? How much will LeBron James demand if he hits the open market on his next Nike deal?
It is always an interesting thing to debate – is a :30 Super Bowl spot worth the money? I think it depends on how “mass” your brand audience is (that is why beer and cars dominate the game) and of course how good your creative and integration across social platforms is, but it can be a good and sometimes great investment. Here are some things you must consider that are unique about the Super Bowl as an event:
Over half of the US population tuned into the game at some point yesterday – 162.9 M – where else do you get that sort of mass audience this day in age? Nowhere.
The average audience was 111M so lets say you paid $3M for your spot for the sake of simplicity that delivers a CPM of about $27. That is 3-4 times what you normally pay for broadcast TV but well worth it and at a smaller premium over what the NFL gets throughout the season being a live sports event. The “Force” spot for VW had 15M views on YouTube in two days, prior to even airing during the game.
Nobody DVRs the Super Bowl and it is only time people are excited about watching commercials.
The social aspect of the ads now can deliver an additional 50M or more impressions from places like YouTube, the massive TV news and print coverage, etc. everyone is an armchair ad critic following the game.
So how do you maximize your spend if you have an extra $3M lying around?
Put together a spot that is actually creative and smart. What was so compelling about the VW ad above? It wasn’t the features and benefits of the Passatt or it hugging tight corners on a mountain road. It was embedded on YouTube a couple of days before the game, people passed it around because of a great emotional connection that it triggered, not sophomoric humor which has no long tail.
Make sure your spot is for something new and is easy to find using social media and search after it airs. Use this as your opportunity to tell the second chapter in the story. All great advertising campaigns build on a message in a linear way over time.
I have been busy with my twin girls who are almost 9 months so blogging here has been sporadic. I do post odds and ends at robsheard.com if you are interested. I had to write about a new show, last night I caught the premiere episode of Steven Rinella’s show Wild Within. It is produced by a company called Zero Point Zero which produces my favorite show No Reservations with Anothony Bourdain. It is unlike anything else on TV, it is a bit of an adventure show, a hunting show, outdoor lifestyle and cooking show all in one. This is isn’t a hunting show on ESPN 2 at 6AM on a Sunday morning with rednecks and souped up pick up trucks lure deer on a game reserve. My brother and father are avid outdoorsmen and I grew up hunting so I enjoy watching Steve and his family live out a lifestyle I wish I could. People love to say “eat local” and know where there is food is coming from which is of course noble but no where near hunting and foraging for all of your meals. I would be most interested in hearing the opinions of this show from people who are anti-hunting. If you have never tried eating wild game you are missing out on some of the most flavorful and robust flavors that cannot be duplicated in domestically sourced or farmed meat.
Best Uses: Wet Weather, Hiking and Camping, Casual Wear
Describe Yourself: Casual/ Recreational
Was this a gift?: No
This is a great four season jacket. Constructed of very light PacLite but durable enough to take a beating with the Gore-Tex Pro Shell reinforcements. It is useful for just about any activity where weather is windy, rainy or snowy. I wear mine four seasons out of the year. In winter I layer it with an Arc’teryx Apache or Covert fleece and there is plenty of room. I am 5’11 and 185 lbs. and the large fits great.
I have enjoyed watching Lebron James play basketball since high school. I thought he would go down as the best ever in 2008 after he took down a tough Pistons team scoring 48 points, nine rebounds and seven assists in the Cavs’ win over the Pistons in Game 5 of the East Finals, scoring Cleveland’s final 25 points and 29 of its last 30. He showed a killer instinct that was everything that Jordan had with an ever higher level of athletic ability. Then he went to the Olympics, met his sole mates and got soft. He’ll never get that back. Larry Bird didn’t give a shit about endorsements and his “brand”…he wanted to kick your ass on the court and go back home to French Lick to practice all summer. So Lebron and his posse of yes men and idiots can take their “talent to South Beach” and bask in their glory with their rapper buddies while players that actually have ice in their veins knock the Heat out of the playoffs for the next 5 years.
It will be interesting to see how many times we see this add though the World Cup and how many different versions Nike creates to fit into :30 and :60 spots. Why buy the media time when the YouTube clip already has 8 million views the first week up and the World Cup doesn’t start for 16 days? One thing I wonder about is the decision that Adidas has made over the last couple of World Cups to be the “official” sponsor. The only problem with that strategy is that most of the top countries and star players wear Nike or Umbro (a Nike brand). The most interesting strategy is that of Puma who has been the sponsor most top African national teams for over ten years. This World Cup could be a huge payoff for them, especially if a team like the Ivory Coast with super star Deiber Drogba advance far into the competition. The Puma kits look fantastic.
Personal feelings about Tiger Woods aside this is probably the best TV ad in the last five years. Classic Nike, it is why they are the greatest marketer in the world (Apple is close). Creepy to use your deceased father’s voice to sell golf clubs and hats in a commercial that is running because you bonked a bunch of porn stars and sluts while your wife was pregnant? Of course, but Tiger seems like a pretty creepy dude. This ad will probably run on TV twice but be viewed 5 million times on YouTube with all of the buzz it is generating. Can you say “turning lemons into lemonade”?…and further burning the swoosh into the retinas across the planet.
Umbro was acquired by Nike in November of 2007 for $580M and it seems the swoosh started working their design and story telling magic shortly thereafter. They hired designer Aitor Throup as a creative consultant to redesign their 2010 World Cup kit. The jerseys and accompanying gear are inspired by English bespoke tailoring with understated logos, quite traditional fabrics and small touches that you usually do not see in sportswear. The tags are a great touch to emphasize the craft behind the kits (even though they are made in China).
To tell the story they have created lots of cool content from the behind the design video above to concerts in Paris to unveil the away kits. It remains to be seen how the Three Lions will perform in South Africa but if gear makes any difference the boys should do quite well.