Inside My Brain

Thoughts about startups, tech, marketing, and life

The Power and Weirdness of Sports

Sports is probably one of the most powerful forces in many people’s lives. Passion for your favorite teams can make you act angry and crazy or joyful and elated. It can also make you desire things you never thought you would. Here are two distinct examples.

Let’s start with craziness and anger. Last night, I watched ESPN’s “Catching Hell”, which told the story of Steve Bartman’s infamous attempt at catching the foul ball at Wrigley Field during game 6 of the 2003 NLCS (for more info, click here. It was a pretty awesome movie.). After the Cubs lost that game (and eventually the series), fans were livid and many sent Bartman death threats for basically doing something they would have done if they were sitting in his seat. Nevermind that Cubs shortstop Alex Gonzalez made a critical error and the pitchers couldn’t get out of the inning.  It was all Bartman’s fault. Irrational now? Of course.  Back then? Pure passion.

Now to the weirdness of desiring stuff you wouldn’t normally. I’m a big Yankees fan, have been since I was 7. But we’re playing Tampa Bay tonight, and they are dead even with the Red Sox for the final playoff spot in the American League, and tonight is the last game of the regular season.  I want the Yankees to lose, only because I want the city of Boston to cry that the Red Sox didn’t make the playoffs. Yeah, I want my team to have outfielders pitch and attempt to bunt at every at bat so the Sox will lose. What the what?

Sports can make people crazy like nothing else out there. And I love it.

Good Luck, Tim Cook: The Test of Apple’s Culture

Unless you live under a rock, you know that Steve Jobs has resigned as CEO of Apple, with COO Tim Cook taking over the reins. What kind of company will Apple become without its uber-creative, visionary leader? I think this is the absolute biggest test of all of the organizational management theories about culture development at a company.

I don’t think there is a better example of a brand that is so inextricably linked to its leader than Apple (to me, Virgin and Richard Branson come in a close second). Steve Jobs’ laser-like focus on minute details, such as fonts and angles, helped Apple create some of the most elegant products ever.  And his ability to predict what consumers want without surveys or focus groups (Jobs has been saying, “It’s not the consumers’ job to know what they want,” for years now) is unmatched. On the other hand, I’m sure Tim Cook is a very smart man, but his expertise is in logistics and sourcing – super-valuable to keep profit margins high, but not too relevant to product development and design.

Will Tim Cook have the vision that Jobs had?  How will he uphold the design-centric culture at Apple? Another way of asking the question is, has Steve Jobs ingrained his philosophies deep enough into the culture to allow the company to succeed without him?  

Only time will tell. Good luck, Tim Cook. The world is watching.

More Important in Marketing – Data or Creativity?

I read an article on Clickz yesterday called “Data Geek or Creative Genius?”  (http://bit.ly/nTPQxn) that touched upon the argument of which is more important in marketing today – creative ideas or data-driven decisions. The bottom line is that these aspects must work in synchronization to produce effective marketing that drives business results. Yeah, it’s kind of a cop out (like saying “it depends”) but it’s true.

I wrote about this topic in the SportsBusiness Journal in 2009 (http://bit.ly/ro61gj) and have reposted the article below.

What are your thoughts on this? It would be great to hear from marketers from both sides of the spectrum!

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Let science of marketing drive creative solutions

Published September 21, 2009

Greg Economou’s article (SportsBusiness Journal, Aug. 31-Sept. 6) about the art and science of selling was spot on, and I believe that this philosophy could and should be applied to marketing in sports as well.

Sports marketing is many times inextricably defined by big events, captivating advertising, eye-catching design of signage and collateral, and sometimes simply slapping a logo on a product. Of course, these artful elements of the marketing mix are imperative to success, but the science of marketing should be applied to drive decisions regarding these creative components.

The first scientific element of marketing is market and consumer insight (or more boringly named “market research”). To start, properties, agencies, and brands must have a detailed, thorough understanding of their fan base, including demographic characteristics and psychographic/behavioral traits, in addition to analysis of the competition and the overall economy. Additionally, companies must use research to understand what their fans think about the positioning of the brand in order to properly develop effective advertising, engaging design, and exciting events. For example, Red Bull understands that their core audience is typically young and involved in high-energy activities; thus they allocate their sports marketing funds to extreme sports such as surfing, motorbiking and flying and highlight these activities in their advertising to really connect with their consumers and differentiate from their competition. I highly doubt you’ll see the Red Bull logo on the Pro Bowlers Association sponsor roster any time soon nor will you see Red Bull’s primary competition leapfrog them in market performance.

Second is testing and measurement to drive decision-making about the use of marketing assets. This can be broken down into two types of measurement: testing of key performance indicators (KPI) and measuring financial performance, or return on investment (ROI). 

Regarding testing KPIs — let’s say you’ve just designed a few handsome e-mail templates to send out to your fan base. Everyone in your organization looked at a few of your designs, threw in their 2 cents, and chose design No. 1 to launch. Art had great influence in the decision, but where’s the science? Instead of using just a few insiders’ eyes to choose, you can use your fans’ eyes to select the best design. Most e-mail programs have A/B testing capability, where you can send multiple designs to different segments of customers, see which designs resonate more by comparing open rates, click-throughs, etc., and select the best template based on these KPIs. Testing has been historically applied in direct marketing, but isn’t used enough in the digital sports world, where it is much easier and cost-effective. This can be applied to Web sites, landing pages, microsites and most other digital assets. 

In today’s economy, ROI is a hot topic, and why not? Who wouldn’t want to know how much money you’ll make from sponsoring a property or holding an event and compare that to the cost of your initiative? Bank of America stated that for every sponsorship dollar they spend, they obtain $10 in revenue and $3 in earnings. With their huge stable of sponsorships, they’ve obviously put a lot of work into measurement, and rightfully so (after all, those TARP funds didn’t grow on trees). Though measuring ROI isn’t easy, any kind of financial measurement will help sell initiatives to upper management. 

I’m not downplaying the art of marketing, as it’s clearly very important; all I’m saying is that the science of marketing should be the driver of a lot of creative decisions. A thorough understanding of research, testing and measurement will help sports marketers become more effective in executing creative ideas.

Mike Chan
Washington, D.C.

The Importance of Consistency

You could be a smart QB with a rocket arm who throws for 4000 yards and 40 TDs over the course of a season, but if you alternate between games of 350 yards/3 TDs and 150 yards/0 TDs, you’re likely not taking your team to the Super Bowl.

A TV show can be entertaining and deliver great ratings in a season, but if the show can’t replicate that success season after season, it’s going to lose viewers and won’t be on the air for long.

You could be a great marketer and run a great campaign for your product and service but if you’re not continually communicating with your customers and delivering value, you’ll likely lose them to your competitors.

Being good or smart once or twice isn’t enough to win. You have to deliver at a high level, all the time. Consistency is really, really important.

I hope that my blog posts are somewhat interesting and provoke some thoughts, but if I posted more often than once a month, I might have more than 30 readers. I’ll try to be more consistent. :)

Intellectual Curiosity

When you interview someone for a job, what do you typically look for? There are plenty of really important aspects, such as a relevant background, success in school or past jobs, ambition, strong people and communication skills, personality, fit into the company culture, among others.

What I’ve found to be the most compelling trait is intellectual curiosity. I’m not the most seasoned recruiter, but I’ve been part of the interview process for full-time and intern positions here at the Caps, at my former consulting firms, and even back in high school when I worked at Champs Sports and the local supermarket. I’ve discovered that to me, the most influential characteristic of a candidate is the ability to ask insightful questions to garner a deeper understanding of how things are done and how s/he can impact and improve the company, even if the job is selling sneakers or scanning groceries. I think that intellectual curiosity can overcome certain shortcomings, such as a lack of direct experience for the position at hand, as it shows the ability to learn, assess, understand, and adapt.

What do you think? Have you found that intellectual curiosity is something that’s important to you?

Get Your Preak On, Kegasus

Like a lot of people, I don’t give a crap about horse racing. But when the Preakness comes up with creative yet controversial ad campaigns like “Get Your Preak On” in 2010 and “Kegasus” this year, I’m paying attention. And when attendance grows from 77,850 in 2009, to 95,760 in 2010 (+23%, but partially because of beer was allowed on the infield again) to 107,398 this year (+12), this makes a marketer pretty happy.

The Sport of Kings is dying and the Preakness understands that. They identified the need to stop “doing what’s always been done” – catering to old people who wear funny hats and drink bourbon – and targeted a younger, more diverse crowd who chugs beer. They’ve caused an uproar among critics and horse racing purists, yet they’ve increased attendance and have become relevant once again. This is an amazing example of understanding the situation and being proactive to address it, even if it ruffles a few feathers. I can’t wait to see what the marketing folks at Pimlico come up with next year.

The (Artificial) Intelligence to Adjust

Check out this article in Business Week. The idea is cool – teach a computer how to read stock market conditions and adjust on the fly to produce steady returns. And the founder is pretty buff.

I’ve always wondered if this can be done for advertising media buying. Put in a bunch of channels (print publications, online and mobile sites and ad networks, radio stations, outdoor, etc.), enter some objectives to achieve, and let the computer optimize away. Do you know of anyone working on this? I’d imagine Horizon Media and those big media buying agencies have something like this.

The idea itself is pretty fundamental, whether or not a computer with artificial intelligence is involved – execute an initiative or project, see if it meets the objectives you’ve set, adjust accordingly and continually improve. But can it be done in real time? And how do you know it’s actually optimized?

The Rise and Fall of Online Poker

Last week, the U.S. Justice Department shut down online poker in this country, accusing 11 people of  bank fraud and illegally operating online gambling sites. You can read about it in the Wall Street Journal Online here and check out the very official notice on PokerStars here and below. I have a bunch of money on PokerStars and dreams of a very independent, lucrative career in poker (ehh, kinda), so I am not pumped about this.

This got me thinking about two things:

  1. The ongoing argument is that poker is truly a game of skill, and not chance, so is poker really gambling? In the short term, luck is a huge factor, but I do believe in the long run, it is truly a game of skill.
  2. More importantly, how amazing has the impact of online poker been to the overall industry?

Major online poker sites like PokerStars, Full Tilt Poker and the defunct PartyPoker have transformed the poker world just like Amazon.com changed retailing – the internet has been a disruptive technology that forever altered the landscape. Just like Amazon gave shoppers access to millions of products and streamlined the purchase process, online poker gave millions of poker players instant access to each other, and thus access to a plethora of poker games at all times of the day. Trips to Las Vegas, Atlantic City or the local cardroom weren’t necessary anymore. No more playing (and crushing, if he’s reading this :) ) my old roommate heads-up; I had access to full ring games with people from Europe and Asia in the middle of the night.

This easy access for poker players ultimately led to the Moneymaker effect, which sparked the growth of poker shows on TV networks such as ESPN, The Travel Channel, and NBC, and the transformation of poker nerds to celebrity status. This then proliferated a virtuous cycle where poker players saw the potential for riches and fame, jumped online or to the local casino to play, achieved success and TV air time, and became role models for other poker players, and so on and so forth, leading to the explosive growth of the poker industry.

Now a lot of that is all gone. And for what?

Will the poker industry be able to survive without its online component? And what if other brick-and-mortar industries were stripped of their online components? Could they survive?

Would you work for (or with) the enemy?

Fandom for a favorite sports team might be one of the strongest emotional bonds in the world. But is it strong enough to get in the way of a paycheck?  So my question for those working in the sports industry is, would you be able to work for or with your favorite team’s archrival?

What made me think about this? When watching SportsCenter earlier in the week, I saw an image of LeBron James, whose fandom for the Yankees is well-known (but in my mind, pretty dubious), wearing a Red Sox hat. I then learned that he reached a agreement with Fenway Sports Management to work with his LRMR firm to handle his marketing and sponsorship. Though LeBron called this a purely business decision, and may be a very good one, it still got me thinking about this “working for the enemy” concept.

I then thought back to the time when I was in business school, working hard in trying to break into the sports industry, and I interviewed for a summer internship with the Philadelphia Eagles (I’m a big Giants fan).  Though I got rejected for the internship (by who is now my current boss at the Caps, so it worked out) and never had to make the decision, I was seriously considering how my fandom for the Giants would affect this process. Kind of crazy.

I also thought back to the times when I was asked if I would ever take a job with the Boston Red Sox (I’m a big Yanks fan, so the job would have to be huge for me to take it).  I also thought about my Caps colleagues who are fans of the Pittsburgh Penguins and what they go through. 

Some rivalries are bigger than others, and some fans are bigger fans for a team than others, but I think it’s an interesting question to ask. Am I crazy to think that fandom for a sports team could get in the way of a paycheck? What are your thoughts?

Accounting for Groupon

In the class that I teach at Georgetown, we assigned a midterm where our students had to build a media plan to promote a local sports team. Costs were assigned to various marketing channels, e.g placing banner ads on a local website cost $5K, building a Facebook page costs $10K, etc.  One of the students then asked how much it would cost to run a promotion on Groupon, which got me thinking:

How exactly do you account for the “cost” of using Groupon and other social coupon sites?

The beauty of Groupon, LivingSocial, and other coupon sites is that there is no upfront advertising fee paid by the company offering the deal, and running the promotion leads to increased exposure to new customers, upshot in foot traffic to retail stores and of course incremental revenue, thus garnering an ROI that is essentially infinity. But is that totally accurate?

For companies selling distressed, perishable inventory (such as sports teams, where an unsold seat for a game on Wednesday has no value on Thursday), all revenue is incremental and the ROI pretty much is infinity. But what if the company is a retailer who essentially sells their product for 25% of list price on Groupon, but may have sold it later for full price?

Let’s say company A sells widgets at $100 list price. If they sold 100 of these widgets at full price, the revenue will be $10000. But if they run a Groupon promo and sell 100 widgets at 50% off ($50), the total revenue garnered by the deal is $5000, and Groupon and company A will typically split that revenue down the middle, so company A nets $2500. How is this loss in profit margin accounted for on the books? Should you count that $7500 profit margin loss as the advertising cost (rhetorical question, I know that’s wrong)? How can you determine how many widgets you would have sold without Groupon to predict that profit margin loss?

Kinda makes you think, doesn’t it? Does anyone know how retailers who have used Groupon do their accounting? Am I thinking about this correctly or am I off base? Let me know!