Upside down
For those who were paying attention in the physics lesson you might recall Newton’s 3rd law of motion, that every action has an opposite and equal reaction. This is often expressed as “what goes up must come down”. And subsequently the expression is used to suggest something good or positive will not last for long. The rise and fall of gold or bitcoin, an unexpected run of good form by a sports team or brands that defy the odds and outperform the competition. And so, it becomes conventional wisdom that nothing good lasts forever and life operates in cycles.
After the last 12 months people quite rightly ask if life will be as good as before the pandemic. Will we be able to enjoy social and sporting experiences like we used to? Everywhere you look across the sports industry questions have been raised about the long-term sustainability of live sports events, tournaments and leagues all the way down to grassroots sport. Following the Superbowl last week, media experts were quick to comment on the smallest viewing audience since 2007. A 5.5% reduction from 102 million viewers in 2020 to 96.4 million in 2021 and well below the highest ever of 114.4 million in 2015. These figures include traditional television and streaming platforms. This trend was predicted several years ago due to cord-cutting of younger generations and the emergence of other platforms offering immersive content, gaming and entertainment. But almost 100 million is still damn good in turbulent times.
Despite the impact of the pandemic and reduced viewing figures advertisers still paid $5.5 million for a 30 second TV commercial. Given recent socio-political events in the US, the content and messaging were different to previous years, but brands still felt able to engage. And, despite the disruption to the 2020 NFL season, year-on-year sponsorship growth increased 10% to $1.62 billion, twice the average yearly growth. Admittedly, this was driven by two large naming rights deals of the Las Vegas Allegiant Stadium and Los Angeles SoFi Stadium for an estimated $55 million. The NFL is still a strong and stable brand for fans and sponsors.
Conventional marketing wisdom suggests acquisition and retention of customers is achieved through greater investment. At Netflix, revenue in 2020 increased by 24% but advertising expenses were reduced by 23%, including digital and television advertising. As a percentage of total revenue Netflix’s marketing costs have dropped from 15% in 2018, to 13% in 2019 and 9% in 2020. One of the key success factors in recent years for Netflix has been the ability to activate the Netflix fan base. According to Co-CEO and Chief Content Officer Ted Sarandos, “what we’re trying to do in our marketing is to get people to talk about those things they’re watching and get it into the conversation in everyday culture”. Netflix is not alone. Amazon cut its advertising spend for the first time in 17 years as sales surged 37%. Google also reduced advertising expenses by 20.6% against a revenue increase of 12.8%. Should these achievements be exclusive to the tech leaders? Why?
As most European sports struggle to recover from the disruption in 2020 and 2021, there are still new entrants keen to take advantage of big tournaments such as UEFA’s EURO 2020. One of these is TikTok, the first time a digital entertainment platform has sponsored a major football tournament. It is expected TikTok will deliver content features including augmented reality, hashtag challenges and live video streams to allow fans to engage and share their passion of one of the largest sporting events.
So, getting back to Newton’s 3rd law, it did not explicitly say “what goes up must come down”. The law describes the interaction of forces between two objects, not gravity. Perhaps two countries, two teams, two players or two fans. Even at the most basic level, simply creating this fan engagement makes a difference. They cannot defy the laws of gravity, but they can interact with each other through content, platforms and shared experiences. In sport, we have always had highs and lows, good times and bad times. In sport upside down is the norm, it would never feel the same without it.