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The Fan Exchange: How to Use Your Team's Biggest Asset

Eric Fernández's picture

One can argue that the stock exchange is a modern technology marvel. A system that seamlessly matches up buyers and sellers to complete transactions in real-time at agreed upon prices. At some point in our careers, I’m sure we’ve all wondered why this same rational system did not apply to sports and media. Brands are the buyers, teams and publishers are the sellers and the “stock” sold is fan engagement via various forms of inventory. It could all be very rational and non-emotional versus today’s environment of heated, drawn out negotiations and pricing that varies based on property, category and market.

Over the past 24 months, in the digital media marketplace, we’ve seen the emergence of such a “rational” system, better known as “Real-Time Bidding” (RTB), quickly emerge as a viable platform for buyers and sellers to transact, namely with online display inventory. I use the term “emergence” loosely. Today, 5 billion1 display impressions are served daily through the RTB exchanges and that will double in the next 24 months. A simplified version of how RTB transactions, called auctions, work:

• Sellers of excess inventory place the available supply on the RTB exchange expressing the amount of impressions they’re willing to sell and the minimum dollar amount they’re willing to take (per impression, expressed in CPM)
• Buyers do the opposite – express how many impressions they want to buy and the maximum amount they are willing to pay per impression.
• The RTB exchange matches the buyers and sellers within the buy/sell range and upon finding matches will serve the display ads.

The key to making the RTB system work?          DATA!

Buyers want to know who they are reaching – age, gender, behaviors, interests, etc. Inventory and impressions don’t carry value unless we know something about the viewers, beyond the context of the site’s content they are visiting. And there is no shortage of data tagging today – on average 5-7 different data companies will “tag” you on most sites. Frequently visit espn.com? Six companies including DoubleClick, Dynamic Logic and Omniture are keeping tabs. (Note: No need to be concerned, all Personally Identifiable Information (PII) is not accessible – you are just a piece of binary code to these companies).

So what does all this have to do with sports?          Fans are DATA.

Fans are arguably the best form of data if you use sports sponsorship, media and rights fees as the corollary metric. This underscores the fact that the greatest asset a team has is THEIR RELATIONSHIP WITH FANS: Not a select piece of inventory, but the underlying relationship and the ability to facilitate a connection with the fan.

How can the RTB system be applied to sports?

Teams can more efficiently sell tickets and merchandise. Teams can provide sponsors with new ways to connect with fans. Teams can create new inventory to monetize among sponsors and other advertisers. Brand sponsors can more efficiently and effectively reaching fans with promotions and activation initiatives.

As an example, today, some teams are running ticketing “retargeting” campaigns. This is a very basic form of using RTB – tag users who visit the team’s web site and at a later time when they are surfing the web, serve them a ticket offer display ad with inventory bought through the RTB exchange. Results are promising with reported ROI of 2X- 3X+.

This is the tip of the iceberg as to how the sports marketing eco-system can best leverage the RTB exchange. More work is still needed, and being done, but opportunities exist now. Some examples of how teams should be thinking about their “Data”:

Extend your reach beyond the avid fans who visit your website. Using avid fan data, build deeper fan profiles (casual, occasional fans, etc) and reach them via the RTB exchange to sell tickets and merchandise.
Create a virtual digital network whereby you sell sponsors and advertisers “access” to your fans anywhere they are on the Internet...no longer just on your website and without having to invest in inventory.
More efficiently manage marketing spend. Beyond broadcast, you’ve established a target pool for efficient tune-in messaging that can be targeted by time of day, geography, demographics, etc.
CRM and fan management. Create a deeper understanding of who’s buying what (i.e. tickets vs. merchandise vs. participating in a sponsor promotion) and use that data to drive your marketing spend.

For all the teams out there, it’s time to take stock of your greatest data asset: your fan relationship.
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Eric Fernandez is Senior Vice President at MediaLink LLC a next generation, boutique consulting and business development firm specializing in marketing and media. Eric can be reached at 210.288.1888, eric@medialinkllc.com or on Linkedin and twitter (@eman14).

1Source: Metamarkets

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