A new cash cow: How DTC can maximise sports franchises’ ad revenue

On January 22, 1984, Ridley Scott’s ‘1984’ launch film for Apple Macintosh, premiered during Super Bowl XVIII, marking the start of a deep relationship between brands and sports as advertising platforms. Decades later, in the 2020s, Super Bowl commercials have entered the new normal.

Coinbase’s QR code, for example, grabbed eyeballs without any branding or imagery, but just a code bouncing across spectators’ screens. Notably, this was likely millions worth of ad investment that garnered so many QR code scanners that the Coinbase app crashed.

Digital streaming could provide more bang for the million bucks by linking the QR code to digital assets like viewers’ registered SMS or email. All Coinbase needed was a simple opt-in button for users to agree to receive an email or SMS, reducing the load on the company’s app, and using less frustrating ways to connect with curious and engaged viewers.

You see where I am going with this, right? TV advertising simply can’t pull the viewer engagement stunts that OTT can. Advertisers should be getting more in return for the inflation in ad spot pricing between 1984 and 2023.

And, it’s not just about unique ways to engage viewers. Even in 2023, linear TV advertising can only send a standard message to millions of viewers. It is, at best, a percentage game, casting the net wide and hoping to catch as many paying consumers as possible. TVs lack of personalisation, engagement and measurability has become a glaring drawback for the digital-savvy, RoI-focussed CMO.

Modern advertisers demand what traditional TV can’t yet deliver. Can DTC fill the gap?

Sports advertising has arrived in the post-TV era, and so have marketers. As many as 93% of brand CMOs are under tremendous pressure to demonstrate higher returns on advertising and marketing spends. Technology has shifted the role of the CMO’s office from innovation and creativity to include data, analytics and measurement.

In such times, TV still lacks accurate audience insights and campaign measurement mechanisms. At best, Nielsen and other rating systems provide a ballpark figure of how many people watched a particular show. Their method – a random selection of households paid to allow their TV viewing to be tracked by a physical device – suffered from inherent flaws.

Opt-in participation for monetary consideration encourages more lower-income families to enroll, providing a skewed perspective that leaves out the behaviour of other socioeconomic segments. Ratings also underreport urban preferences, since people in cities are less likely to opt to be tracked than rural households.

And, of course, there is no way for rating companies to provide granular user data that could allow advertisers to focus on precise, data-backed campaigns and measurements. This meant that sports advertisers have relied far too long on extrapolation and gut feel, with a high margin of error.

Sports content owners on digital streaming and, more specifically, DTC platforms have the opportunity to fill the insights and measurement gap for modern marketers. While subscription services have a market, over half of streaming viewers are open to viewing ads in return for lower or no subscription fees. This makes ad-based monetisation models a massive opportunity for sports content owners, franchises and clubs.

Direct access to granular viewer insights also puts sports franchises on a sound footing with their advertisers. First, it allows for a transparent measurement of ad spends based on actual viewership numbers and post-ad behaviours rather than estimation.

Advertisers increasingly use path-to-purchase data and behavioural segmentation based on customers’ interests, and digital and purchase behaviours to create sharper customer personas for accurate targeting. Creatives can also be tested in real time to narrow down to the right messaging for the right audience cohorts. Ultimately, these capabilities address advertisers’ most crucial needs – audience insight and ad measurability.

A sports franchise that can provide these data-driven audience and campaign measurement insights, is more likely to attract and retain brand advertisers, as compared to linear TV, developing a direct and mutually profitable relationship with them. After all, these capabilities are precisely what every brand CMO is looking for.

A new generation of consumers is demanding more personalised engagement. A new generation of brand marketers is demanding more accountability and measurability of their ad investments. The stage is set for sports content owners to make the move. And, the time is ripe for sports franchises and clubs to take a bigger piece of the advertising and sponsorship pie.

DTC maximises advertisers’ effectiveness and leagues’ profitability: A win-win for all

Sports franchises were once tied to TV channels and OTT streaming services, but this is rapidly changing. As sports franchises recognise ad-based revenue and fan engagement opportunities that access to audience insights opens up, they are steadily moving towards DTC distribution models.

This trend is reshaping how franchises engage not just viewers, but advertisers as well. It gives franchises a potentially huge direct revenue stream via advertising and sponsorship deals, making them less dependent on broadcast fees and subscriptions. A data-driven approach also widens a franchise’s advertiser base, enabling it to make the most of its content monetisation possibilities.

This changing landscape provides sports franchises with an excellent opportunity to monetise their content. What’s exciting is that the complexity of setting up a DTC service has come down drastically, making DTC platforms well within reach.

With technology partners specialising in data analytics, monetisation and measurement, franchises can implement a tech stack that’s reliable, scalable and, most importantly, data driven. Such a partnership will ensure that, as sports shift towards digital, franchises stay poised to make the most of the opportunities new advertising streams and advertiser priorities offer them.

Far-sighted clubs and franchises have the technology and the seasoned partners they need to transition from vanilla content owners to fully equipped ad platforms that every modern brand marketer seeks. The ball is now in their court.

(Our guest author is Manik Bambha, co-Founder at ViewLift.)