COMMENTARY

Sustaining Sports Marketing: Embrace Present While Building Future

• by Jon Last , Columnist, March, 2024

The economic oxymoron that we are living in continues to present unprecedented opportunities for sports marketers.  Nearly two thirds of Americans continue to express high levels of concern about inflation -- the most serious issue among 20 that we regularly track.

Concurrently, February saw 72% agree that “it has become very expensive to feed my family,” while a similar percentage continue to report higher prices for consumer goods and services, relative to where they were four years ago.

Yet at the same time, we are seeing no slowdown across multiple categories of leisure spending, and a continued escalation in the desire to actualize in the short to medium term.

And while the data points to a very somber mood among Americans, we are spending with what could be construed as reckless abandon.  In a recent presentation, we dubbed it a “vibecession.” Our outlook on things remains at the depths, yet consumer behavior isn’t reflecting this, particularly on discretionary leisure purchases. Naturally, the popular questions, then, are, what is driving this ostensibly contradictory behavior, and how sustainable is it?

To the first question, there appear to be several factors at play. The impact of post-COVID “revenge spending” is still prevalent.  As I outlined last month, in this space, there is an increased urgency to live for today rather than tomorrow.  I see this being driven in part by a heightened need to find escape valves from the pressures of the day to day.

But there’s another, often-overlooked dynamic: what Merrill Lynch and others have defined as the greatest wealth transfer in United States history.  An estimated $84 trillion is forecast to change hands over the next 20 years, with nearly half of it going to Gen X, the often-overlooked cohort that is now entrenched in the lifecycle stage that typically sees a peak in career earnings. This is a generation that remains committed to optimizing unique experiences, while concurrently revering tradition, with a soft spot toward nostalgia.

As to the second question on how to sustain things, it makes sense that sports marketers continue to focus on delivering unique experiences through enhanced and often premium access points to maintain and grow the relationship with older core customers, while not eschewing the past. There’s also a need to continue to embrace change, building out social spaces at live venues and repeating the never-ending cycle of reinvention and the creation of aspirational superstars – while pandering to the next generation with a heightened pursuit of digitally driven quick hitting soundbytes and attention-seeking clickbait.

This two-pronged approach may sound inherently contradictory, but I see it more as reflective of a need for a highly segmented marketing strategy that plays to multiple audiences with different types of messaging and distinctively targeted offerings.  It milks the cash cow, while being mindful of a less-assured future audience.

 

OpenAI's New Search Engine and the Future of SEM

• by Grace Mante , 3 hours ago

OpenAI's announcement regarding the development of an AI-powered search engine marks a potentially critical development in the search landscape. The tool, which would be partially powered by Microsoft, is positioning itself as a direct competitor to Google. While it is unlikely that there will be any major shifts in the short term, advertisers should keep an eye on shifting user behavior trends.

There is no reason to think the search industry will be disrupted in a major way in the near future by this event.

The current market share discrepancy between OpenAI’s ChatGPT and Google serves as a helpful reference point. ChatGPT currently captures around 2% of search traffic, with an estimated 1.6 billion monthly visits compared to Google's 84.2 billion (December 2023). For additional context, Bing still only maintains 3.4% of global market share versus Google’s 91% - even after Bing integrated ChatGPT in 2023. While OpenAI's entry into the search engine space would introduce a player to the market, the immediate impact will likely be low.

One notable area of impact, however, will be the acceleration of Google’s AI tool Gemini. We’ll also see a larger and faster change in how people use search engines, especially to shop. The final version of OpenAI’s engine will help predict how shopping ads and retail media networks may be affected. The use of visual search for purchasing a pair of shoes or previewing a hotel room in a virtual video tour will change how people search but may not immediately determine how they buy.

The industry shift toward generative AI in search engines is reshaping the strategies of SEM and SEO marketers. As the industry goes through a transformation from conventional link-based results to succinct and conversational AI-generated responses, a deeper understanding of the nuances of generative AI and its impact on user behavior will be required. Advertisers should adapt strategies to align with these changes, ensuring they resonate with the increasingly concise nature of search results.

With search behavior on the verge of a shift, advertisers should maintain a full-funnel approach to media where they can. Strong creative, an airtight measurement strategy, and tailored audience targeting on all channels will ensure any drop-off from Google search is covered. It’s unlikely that ChatGPT will take much market share from Google in a direct way, especially since apps like YouTube, Google Chrome, and Gmail are still some of the most widely used apps in the suite, but it will be important to monitor user volume closely over the next few months. Understanding how AI-generated search results use organic and paid content to build answers will be key to maintaining visibility in the evolving search landscape.

Overall, the potential entry of OpenAI into the search engine arena adds a layer of complexity to the industry. However, the focus should remain on how AI will impact search journeys, rather than just the players in the space.

 

What the current research says and doesn't say about where to place targeted consumer ads in which sports: Philip Jay LeNoble, Ph.D.

COMMENTARY

TV Sports With Younger Viewers: It's Still a Thing

• by Wayne Friedman , Staff Writer, 7 hours ago

Where is the intersection now with sports on linear TV and young viewers? Apparently there are still decent viewing levels to consider.

For example, while viewing all linear TV content for persons ages 2 to 17 is down a massive 86% since 2015, levels are down just 35% for sports content over that same time period, according to MoffettNathanson Research.

“Sports still has legs across younger demographics,” according to Michael Nathanson, media analyst for MoffettNathanson Research. 

“The declines in younger audiences for sports is not nothing, but it is an order of magnitude different from the declines seen across the rest of the ecosystem.”

What do they still watch? Seems the upcoming annual college basketball tournament -- “March Madness” is one.

A 2023 report from YPulse says the top sport for Gen Z/Millennials is basketball (44%) followed by football (43%). 

There is also the question of how traditional video business mechanics fit into young viewers' viewing habits. Many reports point to the strong likelihood that young media consumers will never buy a cable TV bundle subscription.

But that doesn't mean that won't get it on connected TV apps or other digital platforms.

Overall, a broader view of sports says its importance on linear TV platforms will continue. Much of this recent history is based on viewers 50 years and up, which have seen a 120% increase in sports viewing since 2015.

MoffettNathanson says that on an absolute basis, sports viewing is up. In the fourth quarter of 2023, it commanded a 28% share of all linear TV viewing versus an 18% share in the fourth quarter of 2019.

As for non-sports programming, it is down 45% among all viewers.

Although they will probably never be cable TV subscribers, they will still watch sports -- sometime, somewhere.

You can make the case that linear TV is hanging on by a thread because of sports. But looking further, we see that older and younger viewers are key reasons.

 

With U.S. Prices Rising at Less Than Half the Rate of the Rest of The World, How Will It Impact Budgets?

• by Joe Mandese  @mp_joemandese, March, 2024

I was planning to do publish this analysis comparing U.S. and worldwide ad inflation as a follow up to last week's ECI Media Management report when I received a dispatch from Brian Wieser's Madison and Wall newsletter poo-pooing the value of such analyses, for a variety of reasons.

I recommend you read Wieser's rationale here, because it makes some excellent in-the-weeds points, but as he and I have debated a number of times in the past, journalists don't necessarily have the same access to the kind of granular data he may be looking at and we have to rely on publicly released data such as ECI's to benchmark the way we cover the industry.

It may be cruder than the nuanced data impacting specific media company revenues, or advertiser ad prices, but it's better than nothing.

And I don't think it takes away from the point I really wanted to make, which is that there is a notable spread between ad inflation in the U.S. and the rest of the world. It's about a two-to-one ratio overall, with many distinct media in the U.S. actually experiencing deflationary ad pricing rollbacks -- notably TV, newspapers and magazines.

The point I'd like to make is that I think it creates an opportunity for many global advertisers and agencies to hedge budgets across international markets, to the extent they can.

The U.S. currently accounts for about 40% of worldwide ad spending, which is down from the dominant position the U.S. had when I first began covering the global ad marketplace years ago.

If advertisers can buy U.S. media at relatively lower inflationary rates will that mean more or less overall money will be spent in the U.S.?

Will advertisers pocket the savings and put it to their bottom line, or shift some of it to other international markets?

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MRC Accredits Comscore for Both National and Local TV Ratings

• by Joe Mandese  @mp_joemandese, 4 hours ago

The Media Rating Council (MRC) has granted accreditation to Comscore for household and average audience estimates for both its national and local TV audience measurement services.

The move makes Comscore the only local TV audience measurement service accredited by the MRC, following the council's decision to suspend accreditation of both Nielsen's local and national services in 2021.

It also makes Comscore the only "alternative currency" currently accredited for national TV audience measurement utilizing a "Big Data" methodology.

The MRC re-accredited Nielsen's panel-based national TV service in April 2023.

iSpot.tv currently is accredited for TV occurrence data only.

Comscore noted that it also marks the first time any TV audience-measurement provider has been accredited in all 210 measured local markets based on device-tuning measurement.

Comscore's accreditation comes as big advertisers and agencies are planning their 2024-25 upfront TV buying strategies, although many so far have indicated they plan to stick primarily with Nielsen's unaccredited service for continuity reasons and to supplement with enhanced audience-measurement deals utilizing alternative currencies.

 

Why Retailers Are Losing Faith in Self-Checkout

• by Sarah Mahoney , Staff Writer @mahoney_sarah, 5 hours ago

Target is one of many retailers rethinking its commitment to self-checkout

Self-checkout’s moment seems to be fading fast. Retailers, who had been experimenting with the technology for a decade, piled on during the pandemic. Human-less checkout seemed like a perfect antidote to the COVID era’s never-ending labor shortages and a way to ease the long lines that irk so many shoppers. Yet Target has announced it is limiting self-checkout to 10 items or less. Dollar General is cutting back. And Costco is shifting more humans to self-checkout areas. Jennifer Fagan, EY retail partner, tells Retail Insider why stores are changing their minds.

Retail Insider: Once upon a time, self-checkout seemed magical, solving the biggest pain point of shopping: standing in long lines. Why are retailers reversing course?

Jennifer Fagan: Retailers initially thought self-checkout was promising because they needed more store productivity. They had labor challenges. Customers had become more independent and familiar with online shopping, so they knew how to check out themselves. So, adding self-checkout lets them prioritize speed, just as technology has caught up. Customers could figure out how to weigh their bananas. Maybe not as fast as a cashier, but they could do it. And there was usually an associate in the area who could help.

Then came the pandemic, when we wanted less human contact, so it seemed like an even better idea. But then customers started getting frustrated.

Retail Insider: How so?

Fagan: There’s a nervous reaction, and people start to hurry through. That led to both intentional and unintentional theft. And even before COVID, customers began to feel watched because of the assistance needed. So there’s a sales associate just observing.

Now, customers think they’re doing the work the associate could be doing. And there are frequent error messages. People are starting to say, "You used to help us for free. Now I’m expected to work through that myself." And there are no discounts associated with using it.

Retail Insider: How significant a factor is rising theft rates, known as shrink, in reducing self-checkout?

Fagan: Shrink is increasing, in general. For many years, it hovered at 1% and is now rising as high as 2% in some cases. Not all of that is happening at self-checkout, of course, and retailers are focusing on all the places where theft happens. However, self-checkout is one area they can control.

Retail Insider: Customer experience is also a factor, right? Drexel University recently published some findings indicating that self-checkout erodes loyalty. In some ways, people want to interact with a cashier, making them feel more valued.

Fagan: Shoppers want to control their destiny. Maybe you’re having a leisurely shopping trip. Or maybe you’re slammed that day, have just a few items and want to get out of the store as fast as possible. And there are generational differences. Gen Z, especially, likes self-checkout.

Retail Insider: Self-checkout is a step that stores have taken towards omnichannel thinking, bridging tech and in-store. Is stepping away from it a setback?

Fagan: Retailers have already reconfigured their stores for self-checkout. They’ve invested in the footprint, the technology and the backend systems. So they won’t eliminate it entirely. But they are saying, "Let's take a step back. Let’s evaluate it as a leakage point." That includes limiting the number of items, perhaps to 10. Or limit the hours it can be used. They want more control, and are starting to test and learn around that.

Retail Insider: What’s the next evolution?

Fagan: I would say the future may not be self-checkout lines. The progression of RFID and the ability to track items to the SKU level is changing things. In the next wave, we’ll see a combination of RFID use, so the store will know what I'm putting in my cart. I'm putting it in my app. They know who I am, and they have my credit card data. So I can just walk out the door. It’s a bit of a bridge too far for today, but the technology is there and getting cheaper.

Retail Insider: That was initially the promise of Amazon Go, Amazon’s cashier-less stores. But Amazon seems to be backing off, recently announcing that it will close eight out of its 20 Amazon Go locations.

Fagan: This kind of shopping is a little before its time. It’s also aimed at a unique customer set. Amazon also had an additional barrier to entry, which is that you need an Amazon account to shop there.

Retail Insider: Target has scaled back to a 10-item limit for self-checkout. And Walmart is reportedly testing the idea of using self-checkout as a perk, available only to Walmart + members. Will we see more kinds of experimentation?

Fagan: I can’t speak to those stores, specifically. They are audit clients. But in general, stores will find a balance that works for them.

Retail Insider: We’ve been talking about grocery stores, where self-checkout is most common. Do you see it expanding effectively in other formats?

Fagan: Fast fashion is adopting this rather quickly. And again, the benefit is that it lets the shopper create their own experience, depending on whether they want human contact.

 

With U.S. Prices Rising at Less Than Half the Rate of the Rest of the World, How Will It Impact Budgets?

• by Joe Mandese  @mp_joemandese, March 4, 2024

I was planning to do publish this analysis comparing U.S. and worldwide ad inflation as a follow up to last week's ECI Media Management report when I received a dispatch from Brian Wieser's Madison and Wall newsletter poo-pooing the value of such analyses, for a variety of reasons.

I recommend you read Wieser's rationale here, because it makes some excellent in-the-weeds points, but as he and I have debated a number of times in the past, journalists don't necessarily have the same access to the kind of granular data he may be looking at and we have to rely on publicly released data such as ECI's to benchmark the way we cover the industry.

It may be cruder than the nuanced data impacting specific media company revenues, or advertiser ad prices, but it's better than nothing.

And I don't think it takes away from the point I really wanted to make, which is that there is a notable spread between ad inflation in the U.S. and the rest of the world. It's about a two-to-one ratio overall, with many distinct media in the U.S. actually experiencing deflationary ad pricing rollbacks -- notably TV, newspapers and magazines.

The point I'd like to make is that I think it creates an opportunity for many global advertisers and agencies to hedge budgets across international markets, to the extent they can.

The U.S. currently accounts for about 40% of worldwide ad spending, which is down from the dominant position the U.S. had when I first began covering the global ad marketplace years ago.

If advertisers can buy U.S. media at relatively lower inflationary rates will that mean more or less overall money will be spent in the U.S.?

Will advertisers pocket the savings and put it to their bottom line, or shift some of it to other international markets?

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