Commercializing Virtual Advertising in Sports – Strategies for Growth – By Eric Amstein
The sport industry provides a product with fantastic inherent qualities: the potential to gather huge audiences, to enthral audience with live, edge-of-your-seat action, and to create lasting memories for fans. And all the while this industry energizes an entire ecosystem around itself. At the same time, the positive business prospection still seems smaller than one might think. Clubs, leagues, federations, and events rights holders are in constant need of additional income, particularly in the aftermath of a two-year drought. Clearly there is a need for a strong growth strategy. With the huge potential at hand and the revenue demands omnipresent, in this piece I’ll explore virtual advertising technology as one possible solution to the challenge.
So how can the sport rights holder achieve this needed growth?
The service, which in our case refers to the action on the playing field itself, can’t (and many would argue shouldn’t) be adapted to make it more commercially attractive. Instead, the advertising and marketing opportunities that are presented alongside that playing action must be utilized to deliver this additional revenue. These are increasingly driven by emerging sports-tech solutions. One of these is the above-mentioned virtual advertising. With its versatile implementation opportunities, virtual advertising has the potential to turn traditional advertising around the playing field into one of the most promising and stable growth strategies. When considering growth, I turn to the product-market matrix developed by US economist Harry Igor Ansoff, who proposed working with two components to achieve growth: the market (where we sell) and the product offered.
For sports rights holders, the markets are the sales territories. This can be a global or territorial right or a category exclusivity, for example. The product, in the case of virtual advertising, is essentially brand visibility around a sports event. Virtual advertising solutions, like uniqFEED’s AdApt, can potentially address all four situations, allowing us to explore some commercial growth opportunities:
Market Penetration Strategy: Increase the Current Market Share
Increasing the market share can be achieved by improving sales and advertising capabilities. Selling advertising space is standard practice within the professional sports industry. Therefore, I would like to focus on how we can stimulate the market we play in order to get more out of it.
We can stimulate markets, adapting price or quality. While lowering the prices for advertising space is not really the direction we want to go, we can use virtual advertising as a tool to improve the quality of the advertising space we are offering. But how do we do this?
Virtual advertising enables our clients to use different, targeted messaging or display distinct product categories in different territories. The opportunities for brands to geo-localize their messaging and – in the future – to hyper-target their customers are potentially limitless.
Market Development Strategy: Growing by Reaching New Markets
With this approach, growth is achieved by enlarging the sales market. We create new revenues by introducing our current offering, the advertising space, to new clients in new territories. It could be argued that virtual advertising is the single best tool that allows that type of market area growth. Reaching new markets is the one of the core advantages of using this technology.
Segmenting the market by territory multiplies the current revenue potential, and new clients operating in new territories can be reached. With the opportunity to sell the same advertising space several times by virtually overlaying the physical advertising space and broadcasting different feeds containing different marketing messages to the segmented territory, we achieve this increase in revenue.
Similarly, current clients hold untapped revenue potential, as splitting the broadcast into territories will increase the price for global category exclusivity. Current partners will have to increase their spending or select specific territories which would also open up space for new clients in the remaining territories, as described above.
A specific case is that of local advertising bans, e.g., for alcohol, betting or similar. In fact, Virtual Advertising is one possible solution to offer betting and alcohol brands a commercial opportunity while respecting and complying with local restrictions.
Product Development Strategy: New Ideas for our Current Market
This third situation enables us to create growth in our current market by modifying our offering. Again, virtual advertising is one of the drivers to do this. There are several applications within the advertising and media rights that will increase the overall revenue potential.
For one, in the media rights sales process, implementing virtual advertising allows the rights holder to offer in-game advertising to the rights-buying broadcaster. This increases the value of the media rights and represents an improved business opportunity for the broadcaster, who can now not only sell subscription models or TV-ads pre and post-live broadcasts, but also offer in-game advertising to its advertising clients.
In sponsorship/advertising or marketing rights, the insertion of advertising on spaces within the TV feed that in reality do not display advertising is one opportunity. This provides a method to commercialize unused spaces inside the camera angle, such as open areas within an arena. We have seen good practice cases when sports suffered due to empty stadia during the pandemic and virtual fans or advertising messages were displayed onto the empty stand space. Here, the rule of thumb is: be as creative as possible without deteriorating the TV product with too many ads displayed. A further development is the separation of live, re-live, and highlight rights to sponsorship or advertising clients. By selling these rights separately, a rights holder can improve advertising revenue by opening the door for more clients to benefit from the opportunities presented by one single sporting event.
Product Diversification Strategy: All is New or Modified
The fourth strategy is one of higher complexity but also higher potential. New products are introduced to new markets via diversification. We have already discussed here that virtual advertising enables the modification and development of the advertising offerings around sport. Virtual advertising technology enhances the later implementations and creates new commercial opportunities within these activities that often represent non-core business activities for sports rights holders.
With OTT streaming, sports rights holders are looking to broadcast their sports events and therefore fully own the contact with the viewer. This direct access to 1st party data combined with the implementation of virtual advertising will create more and better advertising opportunities and increase the value of the advertising space.
Virtual advertising provides opportunities to achieve growth and is certainly one of the most promising tools with which to generate revenue from advertising and media rights. Here we have discussed four core strategies and how virtual advertising can be implemented but of course, the possibilities don’t end there.
Interested in learning more about virtual advertising?
Get in touch with the team.
This article was written for uniqFEED by sports industry expert, Eric Amstein