Market Focus: Sports & Entertainment -- Build a Good Event and They Will Come

If we’re in an economic slump, the effects are certainly being buffered by a grand slam of entertainment fit for all audiences.

It’s been a year of what ticket reseller StubHub refers to as marquee events. The New York Giants and New England Patriots, both teams with national fan bases, kicked off the year battling it out in Super Bowl XLII. The Boston Celtics and Los Angeles Lakers revisited their historic rivalry for the first time since 1987. In its 85th and final year, Yankee Stadium hosted this summer’s All-Star Game, a squeaker that lasted 15 innings. Teen pop star Miley Cyrus broke box-office records with her Best of Both Worlds 3-D concert movie, grossing the highest amount ever earned during a Super Bowl weekend. Music legends from Bon Jovi to Bruce Springsteen, Bob Dylan to Brian Wilson, are rocking their way across the nation, to record grosses at the box office.

“This year has been close to a perfect storm for us,” says Rob Singer, StubHub’s director of customer intelligence and relationship marketing. Singer argues that, while consumers may be cutting their spending, the belt-tightening is more likely to affect the daily $4 cup of coffee than tickets to an event. Similarly, instead of spending on a getaway, customers may instead choose to repurpose those dollars toward local activities.

No matter what happens to the economy, sports and entertainment are cushioned by one unique factor: the fans themselves. “The sports culture in this country is unlike any other entertainment dollar,” adds Sean Pate, head of corporate communications for StubHub. “People are so entrenched and emotionally connected that, downturn or slowdown notwithstanding, you’ll still see people find their last dollar to get to that playoff game.”

Pollstar, a California-based publication covering the music industry, announced a midyear gross for that industry of $1.05 billion, similar to 2007’s figure. Merely maintaining total revenue may be a sign that the industry isn’t totally insulated from the effects of the economy—critics point out that a 5.6 percent decrease in tickets sold was countered by a 5.9 percent increase in prices. While average ticket values on StubHub decreased from $112 in 2007 to $97 so far in 2008, Pate says that, as of July 1, nearly two million more tickets have been transferred on the site than during the same period last year. “People might not spend as much, but they’re still going,” he says. Still, vendors such as StubHub typically rely on the marquee events—where people are more willing to dig deep—to really drive the core of the business.

Recent consumer surveys further suggest that the market may soon see a decline—if it hasn’t already. A study conducted in June by market-research firm Nielsen indicated that 63 percent of roughly 50,000 customers surveyed had cut spending due to rising gas prices, an 18-point increase since June 2007. Moreover, the impact of higher gas prices has resulted in 51 percent of consumers staying home more often. In a separate Nielsen survey of 3,500 consumers, 55 percent reported attending outdoor or indoor events less often than they did a year ago.

As an event-based business, ticket sellers have the challenge of maintaining consumer interest, especially in seasons devoid of marquee events. This year, StubHub has increased its marketing department from five to 25 people, part of which is a dedicated relationship-marketing team that focuses on customer retention and conversion. A 2007 report, Internet market-research firm eMarketer projected that advertising spend in the United States on sports-related Web sites would reach $1.1 billion in 2011, up from $407 million in 2006. Not surprisingly, marketers in sports and entertainment are increasingly shifting their dollars online, where the results are much more quantitative and measurable.

By 2010, says Jayne Hancock, chief executive officer of interactive marketing agency JHG, the millennial generation—which she pegs as those born between the years 1980 and 2000—will outnumber baby boomers and Generation Xers in the 18-to-49 buy-in demographic. This generation grew up on technology, so marketers are targeting them where they’re looking—cell phones. JPMorgan Chase’s retail bank, for example, ran a promotion inviting consumers to text “WIN” to C-H-A-S-E (24273) for a chance at receiving free tickets to the U.S. Open in New York. Consumers were immediately notified of their status via text message. Those who did not win were encouraged to access the bank’s Web site for more ways to enter the contest, such as opening up a free checking account or depositing $15,000 into an existing savings account.

“As things change with new technology, things also don’t change with regard to passion,” Hancock says. “For sports teams, athletes, and other entertainment entities,” she adds, “it becomes an even stronger play to embrace new technology so that they can have an even more direct communication with their passionate consumers.” 

Top 3 Vendors in Sports/Entertainment
Source: Kimberly Collins, managing vice president of CRM at Gartner

• Eloqua
• Consona (formerly Onyx)
• Salesforce.com

 

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